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CohnReznick Capitol Connection: A New Era for Housing & Community Development Credits


12/18/15

With the passage of the permanent extenders bill entitled “Protecting Americans from Tax Hikes Act of 2015” we finally have the return, and now permanency, of the 9% fixed rate for the Housing Credit and a renewal of the New Markets Tax Credit. The financial feasibility for 2016 LIHTC deal structures gets a huge boost, not to mention that valuable soft monies (back to $950 million for HOME in the Omnibus) will now go further to aid additional production. For community development, there is now some certainty for the New Markets Tax Credit.
 
After last year’s disastrous extenders bill (which hit the wall after Thanksgiving for many reasons), we were not expecting much. After all, the path of least resistance has been the path Congress has chosen for quite some time. It was only a few weeks ago, when speaking in Florida, I reported that this big bi-partisan deal including permanent extenders looked like it would take the same road to nowhere. House Democrats were insistent on the inclusion of social programs and indexing the Earned Income Tax Credit (EITC), and House Republicans were adamant that items like the Research and Development Credit (R&D) were included. The consensus was that there would be no consensus. The ideological gap was getting wider.
 
As recently as December 7th, Ways and Means Chairman Kevin Brady even introduced HR 34, a two-year extenders package, as back-up legislation, should the big package fall off the road.
 
But there is a new Speaker in town now, and two things Paul Ryan did last week could have made the difference. First, he announced that he would not be negotiating issues in the press, with the press, or for the press and that all of the work to be done would be done within “regular order,”, giving his conference three days to review potential bills. Second, he took a page out of the playbook he used two years ago when he negotiated the budget agreement with Senator Patty Murray and he asked Minority Leader Nancy Pelosi over to his office for dinner last Friday night. There, in a room with new carpets, Paul Ryan and Nancy Pelosi dined on steak and fries, and got to know each other better.
 
Speaker Ryan had stated that he wanted to get this package done right, and for affordable housing and community development programs, he did get it right. The New Markets Tax Credit has been extended for five years at $3.5 billion annually. There was a lot of concern within both industries that we might have lost traction with the tax-writing committees, that moving from Camp to Ryan to Brady, and Boehner to ultimately Ryan, happened too fast and that affordable housing and community development were no longer keeping up with the changes.
 
Not only did we gain traction, but we can now go forward next year to find ways to improve both programs – through education. Speaker Ryan has said that he believes 2016 is the year to build on comprehensive tax reform for 2017, and Ways and Means Chairman Brady has echoed his words. At this point, we now know that even the hardest of path is not too difficult to attempt.
 
That makes 2016 the year we build upon grand openings with Members of Congress so that in 2017 we come out on top. 
 
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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