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CohnReznick Capitol Connection: Born to Run


8/31/15

by Bob Moss, National Director of Governmental Affairs

Each presidential candidate has undoubtedly heard the 1975 Springsteen hit “Born to Run” (40 years old—tell me it can’t be true). The song rings in my ears as the race for the White House heats up. We have been hearing a lot of talk about immigration reform, the economy, and taxes, but we’re left wondering where each candidate stands when it comes to affordable housing and community development. Regardless of anyone’s politics, from Hillary to Jeb to Biden to Trump, they all believe they were born to run. Take a quick look back for a reference point at the history of the Low Income Housing Tax Credit (LIHTC) and the New Markets Tax Credit (NMTC) programs, and under which administration they were conceived. The Tax Reform Act of 1986, encouraged by Reagan’s Treasury Department, was the most recent simplification of the tax code. It increased incentives for home ownership by increasing the Home Mortgage Interest Deduction. It also created the LIHTC, ensuring balance and investment in multifamily housing. In 1993, under President Clinton, the LIHTC was made a permanent part of the code. 

The NMTC, or Section 45D, was also created under Clinton in 2000 as part of the Community Renewal Tax Relief Act. The idea of community re-investment emerged in the late 1990s as think tanks and foundations started to look for a way to increase access to capital in low-income communities. Never a permanent part of the code, the NMTC has expired and needs another extension or permanence. 

So what can we presume our candidates’ positions are?  

We can assume, if elected, that Hillary Clinton will be a big-time supporter of these programs; the rumor that she will pick HUD Secretary Julian Castro as vice president for the ticket has been speculated about in DC for some time. Castro has emerged as a possible pick ever since he entered the national scene with his 2012 speech before the DNC. This ticket would be a pro-housing and economic development platform. This past April, Vice President Joe Biden cited in his speech at HUD some recent proposals by the administration that could help aid the affordability crisis, including the expansion of 9% low-income housing tax credits through the conversion of private-activity bonds that go unused. While it was not that long ago (2012) that Biden and then vice presidential candidate Paul Ryan were sparring at a debate in Kentucky, you might wonder how a President Biden and Ways and Means Chairman Ryan would find consensus on tax reform in 2017, the year when we next expect action on that front. 

On June 17, Jeb Bush laid out what he considers a modest framework for tax reform in a conference call with the Alabama Republican Party. He called for “simplifying the code, eliminating as many tax expenditures, tax deductions, tax credits as possible and lowering the rates.” Expenditures like the NMTC and LIHTC were not mentioned directly, but the hope is that he recognizes that these expenditures provide for an activity that would otherwise not occur in the marketplace. As the Governor of Florida until 2006, he presided over the state agency that allocated the LIHTC. After Hurricane Katrina ten years ago, he also observed how effective the Katrina Disaster LIHTCs worked under Presidential order by his brother. 

Candidate Donald Trump, a developer himself, knows affordable housing was a big part of his father’s (Fred Trump) business, which successfully built affordable rental apartments throughout New York City starting after WWII until the 1970s. Fred provided the capital support for Donald to go into real estate in Manhattan while Fred stayed active in Brooklyn. Perhaps through genetic osmosis Donald, as President Trump, might have some recognition of the importance of affordable housing. 

Of course, there are other serious candidates in this race who will emerge over the coming months. Hopefully, they will favor incentives like the NMTC and LIHTC. Both credits have performed immensely well since their inception and are revitalizing communities and building local economies. 

So my question for each candidate is: “If you were born to run, were you born to build?” 

If so, let’s talk more publicly about the need for affordable housing and economic development.

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.

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