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Special Meeting Report on the Housing Credit

September 10, 2014

On September 9, Rep. Pat Tiberi (R-OH), chair of the House Ways and Means Subcommittee on Select Revenue Measures, convened a small working group to discuss the LIHTC modifications proposed earlier this year by Ways and Means Committee Chairman Dave Camp (R-MI) in his tax reform discussion draft. I was invited to participate in the roundtable. Other participants included Brian Tracey (Bank of America), Kevin Kelly (NAHB Chairman of the Board), Doug Garver (Executive Director of the Ohio Housing Finance Agency), and Phillip Swagel (University of Maryland School of Public Policy). 

Joining Rep. Tiberi were Ways and Means Committee members Tom Reed (R-NY), Erik Paulsen (R-MN), and Kenny Marchant (R-TX). Staff from the Ways and Means Committee and Joint Committee on Taxation participated as well.

The LIHTC participants were asked to comment on the discussion draft modifications, their potential impact, and what improvements could be offered within the budgetary constraints. 

I commented that there are several key elements of the program included in the discussion draft that have led to its success:

  • First, state housing finance agencies administer the program. This ensures that properties are developed according to local housing needs. I also complimented the Committee for recognizing the role of the state housing finance agencies. 
  • Second, the private sector provides market discipline throughout the P3 structure. 
  • Finally, I noted that the Housing Credit program is well designed within the Internal Revenue Code. Tax credits are not earned until the development is completed, in operation, and housing qualified residents. This means the real estate construction and other risks are borne by the private sector, not the federal government.  

Doug Garver (Ohio Housing Finance Agency) mentioned that in Ohio, there is a red hot need for affordable rental properties, and that in the past four years, 50 of the 174 properties funded by the agency were 4% bond deals. Brian Tracey of Bank of America supported the idea that the Committee should support new construction and acquisition rehab properties, and that the P3 structure should be retained. According to Kevin Kelly (NAHB), who has development experience with both the 9% and 4% bond credits, the elimination of private activity bonds in the discussion draft would hurt production by over 40%. 

Chairman Tiberi asked Mr. Kelly to expand on which types of existing housing benefit from the 4% bond structure, and Mr. Kelly mentioned the 515 (rural) program, as well as a variety of HUD-assisted properties such as the 236 program. Rep. Reed asked what would happen if the Committee retained only the 9% credit and asked what properties would not be rehabbed. He requested examples of “before and after” photographs of 4% transactions. Rep. Marchant stated that his district needs more seniors housing, and expressed interest in rehab. The Members seemed surprised that the discussion draft’s elimination of private activity bonds would reduce production as much as 40%. 

There was much discussion on HFA administration in terms of HFAs ensuring that properties receive only the allocation amount needed to be feasible, and are not over-sourced.  Our LIHTC participants concluded with a sharing of ideas and concepts. I encouraged the Committee to look at immediate and future fixes to solve our affordable housing needs gap and noted that in the short term, the 9% and 4% fixed bond rates would ensure financial feasibility against interest rate increases, and suggested that in the long term, Congress should set a course that either includes private activity bonds or raises the per capita amount from $31.20 to $42.70 initially and indexes upward annually by 10% over 10 years. My closing comment: "Let's not get behind in housing like we have with transportation infrastructure."

This meeting was the final wrap up for the subcommittee, and for David Camp and his tenure as Chairman. I look forward to his portrait unveiling next week in the Longworth Building, and will always be thankful for his support of the Housing Credit. 

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  or 617-648-1406.

Follow Bob: @BobMoss42

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