Source: United States Senator for California – Dianne Feinstein
Senators push to lower the threshold of Private Activity Bond financing in order to help build an additional 17,000 housing units throughout the state annually
Washington—Senators Dianne Feinstein and Alex Padilla (both D-Calif.) today called on Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Finance Committee Chairman Ron Wyden (D-Ore.) to strengthen the Low-Income Housing Tax Credit – our nation’s primary tool to produce and preserve affordable housing – to address the nation’s lack of affordable housing as part the Senate’s final budget reconciliation package.
The National Low-Incoming Housing Coalition estimates that the United States has a shortage of 6.8 million affordable homes available to low-income renters, including a shortage of over 2.3 million affordable rental homes in California.
The senators are advocating to free up more funds for affordable housing projects by lowering the threshold of required Private Activity Bond financing. This lowered threshold would allow states to fund nearly twice as many affordable housing developments and finance the construction of an estimated 1.4 million additional affordable homes for low-income households over ten years, which could result in the production of 17,000 additional housing units throughout California annually.
“The Low-Income Housing Tax Credit is our nation’s primary tool to produce and preserve affordable housing,” the senators wrote. “However, accessing the 4 percent tax credits for the rehabilitation of affordable housing is constrained by the requirement that at least 50 percent of such projects are financed by tax-exempt bonds. Yet, these bonds are subject to a private activity bond volume cap and are currently oversubscribed in a growing number of states – including California – which ultimately limits the amount of affordable housing projects that can move forward.
“That is why we urge you to reduce from 50 percent to 25 percent the minimum threshold of tax-exempt bonds needed to receive an automatic 4 percent low-Income Housing Tax Credit award,” continued the senators. “This change is a critical step to combating the affordable housing crisis by allowing states to fund nearly twice as many affordable housing developments and finance the construction of an estimated 1.4 million additional affordable homes for low-income households over ten years.”
Full text of the letter follows:
September 2, 2021
The Honorable Charles Schumer
Majority Leader
United States Senate
Washington, D.C. 20510
The Honorable Ron Wyden
Chairman, Committee on Finance
United States Senate
Washington, D.C. 20510
Dear Majority Leader Schumer and Chairman Wyden:
We write to urge you to ensure the final budget reconciliation package will help address the shortage of affordable housing in California and across the United States.
Specifically, we ask that you strengthen the Low-Income Housing Tax Credit to address the affordable housing shortage that has been exacerbated by the ongoing COVID-19 pandemic and is a leading factor that causes homelessness. The National Low-Incoming Housing Coalition estimates that the United States has a shortage of 6.8 million affordable homes available to low-income renters—including a shortage of over 2.3 million affordable rental homes in California.
The Low-Income Housing Tax Credit is our nation’s primary tool to produce and preserve affordable housing. However, accessing the 4% tax credits for the rehabilitation of affordable housing is constrained by the requirement that at least 50% of such projects are financed by tax-exempt bonds. Yet, these bonds are subject to a private activity bond volume cap and are currently oversubscribed in a growing number of states—including California—which ultimately limits the amount of affordable housing projects that can move forward.
That is why we urge you to reduce from 50% to 25% the minimum threshold of tax-exempt bonds needed to receive an automatic 4% Low-Income Housing Tax Credit award. This change is a critical step to combating the affordable housing crisis by allowing states to fund nearly twice as many affordable housing developments and finance the construction of an estimated 1.4 million additional affordable homes for low-income households over ten years.
Thank you for your attention to this matter, and we look forward to working together to address our nation’s affordable housing crisis as part of the upcoming reconciliation process.
Sincerely,
Alex Padilla
United States Senator
Dianne Feinstein
United States Senator
###