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CohnReznick Capitol Connection: The Times They Are a-Changin’


11/6/14

Since 1986, the housing industry has built a well-oiled machine around the Housing Credit. The public/private partnership structure, which places the construction and operating risk upon the private sector, has resulted in a very long period of housing stability and enterprise. Both the 9% and 4% credit have produced remarkable housing communities of either new construction or preserved housing. In this time, we have also seen many changes and improvements to the program, and we have survived various legislative battles.
 
However, one thing we have not faced since 1986: major tax reform. In fact, it is tax reform itself that helped to create an environment for the housing credit to be born. When it happens again, either in this Congress or the next, the status quo for housing programs may not be good enough. In fact, it may shatter your windows and rattle your walls.
 
The return of a Republican majority in both houses Tuesday night has already fired up thoughts of tax reform for many lawmakers. On Wednesday, Senate Minority Leader Mitch McConnell said an ambitious overhaul of the tax code was his number one priority in terms of a cooperative agenda with President Obama. In fact, he spoke by phone with the President and said they agreed tax reform could be an area of common agreement. All of a sudden the discussion draft put forward by Chairman Camp and the modifications to the Housing Credit come alive again.
 
Yes, we were included as a program in the draft, where many other programs did not even make the cut. But the way we do things—all of the things that developers and not-for-profits do to produce housing, including the way state agencies allocate credits—could change unless we evolve and create ideas that can survive a corporate rate reduction (35% to 25%) and the loss of accelerated depreciation. Is it true that our old, trusted road is rapidly aging? Just take a look at the modifications again because I can tell you they are very real.
 
While in DC on election night, I spoke with many long-time Washington folks who believe tax reform cannot happen until after 2016—it is such a Sisyphean task. But I had the privilege and pleasure to watch the election returns with Speaker Boehner and his team. He has a five-point plan for resetting the country's economic foundation and number one on his list is reforming our tax code. In 1986, tax reform had the support of President Reagan and the leadership in both the Senate and House. Some 28 years later, we have that once again.
 
The time is now for the affordable housing industry to take a good look "outside of the box" and bring all creative ideas to the table. Certainly, the Ways and Means committee did that with the Camp Housing Credit modifications. If we can envision and create such a great program that has stood the test of time, then we can certainly improve upon it. Let's not let others do it for us, for he that gets hurt will be he who has stalled.
 
Bob Moss is a CohnReznick Principal and National Director of Governmental Affairs. Bob leads the Firm’s federal and state government relations efforts, particularly in the area of affordable housing. He can be reached at bob.moss@cohnreznick.com or 617-648-1406. For more legislative insight from Bob, visit our Capitol Connection webpage.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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