Joint Committee on Taxation Highlights Risks to Tax-Exempt Bond Supported Affordable Rental Housing

Published by Michael Novogradac on Monday, April 14, 2014 - 12:00am

A recently released Joint Committee on Taxation (JCT) letter provides information related to certain changes contained in the tax reform discussion draft released by House Ways and Means Chairman David Camp that would eliminate tax-exempt private activity bonds, including qualified residential rental (QRR) bonds. QRR bonds are often used in connection with the 4 percent low-income housing tax credit (LIHTC) to finance affordable rental housing, and their elimination would negatively affect the supply of affordable housing.


Blog Chart Total Private Activity Bond New Issuances, 2007-2011
Click to Enlarge


Between 2007 and 2011, the JCT estimated that $23 billion worth of QRRs were issued, which amounted to about 8.4 percent of the total tax-exempt private activity bonds issued.

The National Council of State Housing Agencies publishes data on the number of low-income apartments supported by bond issuance each year. Using that data, we estimate that that the 4 percent LIHTC supported the construction of approximately nearly 200,000 low-income apartments between 2007 and 2011. Eliminating tax-exempt private activity bonds would therefore present a major loss of affordable housing.