The White House and Congressional leaders began this week to release detailed legislative language of the near-final $1.75 trillion Build Back Better reconciliation legislation—which currently includes $150 billion for affordable housing programs.

Federal advocates have noted, however, that one of CHC members’ top priorities—the $30 billion expansion of the Low Income Housing Tax Credit—is not currently in the bill. This same is true of most of the bill’s community development credits, including the Neighborhood Homes Credit, Historic Tax Credit, and New Markets Tax Credit, which have been temporarily pulled from the legislation until scores are available on the larger revenue items.

These provisions can still be included into the legislation, and we hope they will be.

As tax provision negotiations continue, there is still time to advocate for the inclusion of the tax credit proposals, which are so essential to financing affordable housing. See below for background and actions you can take today to remind your Congressional representative—and the White House—about the need to include both HUD funding and tax credit reforms in the final legislation.

What’s in the bill for affordable housing

The current Build Back Better framework includes $150 billion for affordable housing programs under the jurisdiction of the House Financial Services Committee, including:

• $65 billion for public housing
• $25 billion for tenant-based vouchers, including $1 billion for project-based rental assistance
• $15 billion for the National Housing Trust Fund
• $10 billion for the HOME Investment Partnerships Program

What’s not in the bill yet

The bill does not include the House Ways & Means Committee’s proposed update to the Housing Tax Credit, including:

• Lowering the 50% bond financing threshold test to 25%
• Increasing the annual Housing Credit allocation by 12.5% per year for 4 years
• Providing a 50% basis boost and 10% set-aside for developments serving Extremely Low-Income (ELI) households for 10 years 

What you can do today

Federal advocates are encouraging us to keep the pressure up, especially with the White House, but also with Congressional leadership.

Here is what the Affordable Housing Tax Credit Coalition suggested we can do this afternoon: “If there are any members of Congress who have been helping us on the Housing Credit, now is the time to reach back out to them and make sure they call the White House. If you called before, call again. Especially now that we know there is so much funding set aside for other housing programs, making calls on the Housing Credit specifically is what is needed now.”

AHTCC also shared these helpful talking points on why the credit is needed (modified slightly for California):

• Build Back Better includes historic investments in affordable housing, but it’s missing a critical piece without the Low-Income Housing Tax Credit. The Housing Credit will help make many of these other housing investments successful—for example, making sure voucher holders have places to live where their vouchers are accepted and providing a foundation for gap financing sources like HOME and the National Housing Trust Fund that do not cover the bulk of construction or rehabilitation costs. The Housing Credit is what breaks ground on developments. It is the primary way to increase supply, which is the only way to catch up with the growing affordable housing supply shortage.
• For a relatively low cost, Housing Credit investments can have a huge production impact. The House initially proposed Housing Credit investments totaling $30 billion that would produce 1.4 million affordable homes—more than double the one million affordable units produced by the current Build Back Better package, for only a fraction of the cost. The vast majority of these homes would come from an increase in the Housing Credit allocation and a proposal to lower the bond financing test from 50% to 25%.
• There is a pipeline of Housing Credit developments ready to go. The Housing Credit is already a well-established program and is vastly oversubscribed, especially in California. Nationwide, in 2020 Housing Credit developers requested nearly 2.5 times as many Housing Credits as there was available authority. Any new resources can be deployed immediately to these shovel-ready developments.
• There is an imminent cliff approaching in the Housing Credit program at the end of the year, and we will go backwards on housing production if we don’t include Housing Credit resources now. There was a temporary 12.5% cap increase enacted in 2018 that expires at the end of 2021. There is no time to waste and no guarantee of any other way to extend this provision, meaning we are potentially cutting production by 55,000 affordable homes over the next ten years if we don’t include Housing Credit provisions now.