Affordable Housing: As time runs out for Congress to pass legislation this year, state officials who are dealing with a national shortage of affordable housing are hoping that lawmakers will restore nearly $100 million a year in additional federal tax credits to build housing for low-income households. This would help alleviate the housing crisis that has been plaguing the nation for the past several years.
In 2018, Congress approved a temporary increase of 12.5% in the total amount of tax credits that the federal government pays to each state in order to encourage the construction of low-income housing. But there was no longer any increase after 2021.
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Fighting for More Support for Affordable Housing
Stockton Williams, executive director of the National Council of State Housing Agencies, stated in an interview that this reversal resulted in a reduction in the number of credits available on a national level from $935 million the previous year to $870 million this year. This occurred at the same time that rents were skyrocketing and rising land prices and supply chain problems raised the cost of building more affordable homes.
In a separate interview, Andrea Bell, the executive director of Oregon Housing and Community Services, stated that “the expiration of the 12.5% increase, it came true at the worst time possible.”
Restoring the increase, in conjunction with another proposal that would enable states to build more affordable housing using a particular type of municipal bond, according to an estimate done on behalf of the association of state housing agencies, could lead to the construction of 1.54 million affordable homes.
The United States Congress will need to enact a tax plan within the next few weeks in order to be able to restore financing for what the Department of Housing and Urban Development of the United States considers the nation’s “most critical resource for developing affordable housing.”
The legislative process being held up by the question of whether or not Congress will adopt separate legislation for the federal budget makes the future prospects unclear.
Rising housing costs are a major contributor to inflation, making up ~1/3 of costs in October’s Consumer Price Index.
As Congress considers government funding legislation, we should prioritize strengthening the Low-Income Housing Tax Credit to create more affordable housing.
— Rep. Katie Porter (@RepKatiePorter) November 29, 2022
In reference to the reinstatement of the 2018 tax credit hike, Senate Finance Committee Chairman Ron Wyden, a Democrat from Oregon, stated in an interview that he is a “strong proponent” of the proposal.
However, when asked about the likelihood of a tax measure being passed by the end of the year, Wyden responded by expressing less certainty. He stated that “we are going to do the best that we can” in response to the question.
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Rep. Kevin Brady, a Republican from Texas and the ranking member of the Ways and Means Committee of the House of Representatives, did not make a firm commitment either way on the inclusion of affordable housing credits in a tax package.
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