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New Senate Tax Reform Bill Released; Call for Action in the House

by

Matt Schwartz President & CEO

Senate Finance Committee Chair Orrin Hatch (R-Utah) released his modifications to the tax reform bill last night having just added a provision that repeals the Obamacare individual mandate to generate approximately $330 billion in savings over 10 years to pay for the 20% corporate tax rate they are desperately trying to achieve. (Unlike the House, the Senate is bound by the Byrd Rule to demonstrate that the bill will not increase the deficit at all beginning in year 11.) It is unclear if the Senate has the votes to pass the bill with the repeal of the Obamacare individual mandate in it. California’s Senators are not part of Senator Hatch’s Finance Committee and, being of the minority party, appear unable to influence what has become a completely partisan process. The Finance Committee is currently scheduled to vote on this version of the bill on Friday.

Senator Hatch included several no-cost provisions from the Cantwell-Hatch Affordable Housing Credit Improvement Act of 2017 (S. 548) that are of interest (my redacted versions): 

  • Section 303. Replaces the right of first refusal, after the close of the compliance period with a purchase option.
  • Section 307. The State housing credit agency (TCAC in California) shall define comprehensive community revitalization plan using various criteria including the extent to which the proposed plan (1) is geographically specific; (2) outlines a clear plan for implementation and goals for outcomes; (3) includes a strategy for applying for or obtaining commitments of public or private investment (or both) in non-housing infrastructure, amenities, or services; and (4) demonstrates the need for community revitalization.
  • Section 308. The selection criteria under a qualified allocation plan shall not include consideration of (1) any support or opposition with respect to the project from local or elected leaders, or (2) any local government contribution to the project, except to the extent such contribution is taken into account as part of a broader consideration of the project’s ability to leverage outside funding sources, and is not prioritized over any other source of outside funding.
  • Section 401. Requires that qualified allocation plans include selection criteria that take into consideration the affordable housing needs of members of Indian tribes.
  • Section 501. Affordable housing tax credit: The proposal renames the “Low-Income Housing Tax Credit” the “Affordable Housing Tax Credit.”

While it’s nice that the Senate is considering renaming the program from LIHTC to AHTC, it is disappointing that Chairman Hatch did not include other provisions that would have strengthened the Housing Credit such as adjustments he had proposed on Monday that would have increased its value to compensate for losses resulting from a lower corporate rate and other changes. It’s also disappointing that the Chairman did not include a well-vetted change to allow states to serve households up to 80% of Area Median Income (AMI) in return for keeping average affordability the same by serving a proportionate number of extremely low-income households earning no more than 30% of AMI.

Meanwhile, the House Rules Committee is meeting today to decide on what final amendments they want to add to HR1 to get them the 218 votes they need to pass the bill. A floor vote could come as early as Thursday. Under intense pressure from California affordable housing advocates and professionals, Rep. Ed Royce (CA-39) has offered an amendment that, according to his staff, would restore Private Activity Bonds and with them the 4% Housing Credit. This appears to be a successor or friendly second of an amendment offered by Rep. Randy Hultgren (R-IL-14th). House Rules Committee, which is controlled by Speaker Ryan, will make the call on whether to include this amendment. 

Action request: Ask California Reps to ask Majority Leader McCarthy (CA-23) to include the the amendment by Rep. Randy Hultgren (R-IL-14) to restore Private Activity Bonds and the 4% Housing Credit ASAP.

Californians Representatives who have access to Majority Leader Kevin McCarthy include:

Please email and call them via the Capitol Switchboard (202-224-3121) with the following message:

“Please ask Majority Leader McCarthy to include Rep. Royce and Rep. Hultgren’s request to restore Private Activity Bonds and the federal 4% Housing Credit, which is creating more than 20,000 affordable homes in California annually and is far and away the most important tool we have to address our affordable housing crisis, in HR1 when it goes to the House floor for a vote.”

This message will be given more weight if it comes from someone in the Representative’s district or with properties in the district. So, please think of anyone you know who lives and works in these districts and forward this request to them.

To maximize the effectiveness of your emails, I suggest you download the fact sheet documenting the benefits that the Housing Credit has delivered to each Representative’s district by clicking here and selecting their names individually.

Please join me in taking 5 minutes to make this a priority today with at least one California Representative.

Thank you, 

Matt Schwartz
President & CEO