What a difference a month makes. Since my last update, Speaker McCarthy advanced a standalone continuing resolution (CR) through November 17th, which led to a motion to vacate the chair, which resulted in McCarthy becoming the former Speaker. Three tumultuous weeks later the House finally elected relative newcomer Mike Johnson of Louisiana, Speaker of the House. No one could have predicted the drama that led to that series of events and thus, my prediction that no one can predict what the next few months will yield.
We are hearing a lot of talk about a tax bill and have been working to both build support for the Affordable Housing Credit Improvement Act (AHCIA) and mobilize our supporters to tell leadership and the tax committee chairs the LIHTC must be included in any tax bill. There is talk about attaching a tax package onto the November 17th CR, an idea that is feasible but difficult as we are not sure the new Speaker has even had a conversation with W&M Chairman Smith about tax. The Speaker is just beginning internal discussions on the CR and has yet to engage his counterparts in the Senate. It is likely he will propose budget cuts and potentially policy riders which will not fly in the Senate. The potential for a shutdown is real and all of this while the House and Senate continue to work on individual appropriations bills and the issue of supplemental funding for Israel, Ukraine, and the border.
As to what we are pushing, we continue to advocate for restoration of the expired 12.5% 9% allocation which would fall into the expired tax provision bucket, reduction of the 50% test to 25%, and the basis boosts for bond deals and rural developments. With so much in play we would take a combination of these but have emphasized with the folks that matter the significance of each. The activity on this may be fast and furious and you should already be reaching out to your Members of Congress on Ways and Means to urge inclusion of the LIHTC in any tax bill.
We are also working closely with the administration on the tax bill. I was contacted by the senior staff of the National Economic Council and had a discussion with them on how they can help advance the LIHTC in the tax discussion. The White House is committed to getting more resources for affordable housing and the LIHTC is one of their priorities. Since then, they have begun reaching out to our LIHTC leads and leadership on the Hill.
As most of you know, the new Community Reinvestment Act regulations were released by the regulators on October 24th. The entire LIHTC and banking industry are digesting the new regs and it will take some time as banks will not be graded on the new rules until 2026. That said, the question is to what extent will banks be motivated to make community development investments to secure an outstanding rating versus high satisfactory or just satisfactory. We continue to review the regulations and learn something new after every review and discussion.
It is going to get very busy on Capitol Hill and we will be looking to you and your colleagues around the country to actively advocate for the LIHTC.
Thank you for all your efforts.
David