Time is Short to Speak Up for Affordable Housing, Community Development, Historic Preservation and Renewable Energy

Published by Michael Novogradac on Monday, July 1, 2013 - 12:00am

Last week’s announcement from Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch proposing a “blank-slate” approach as a starting point for tax reform should serve as the firing of the figurative starting pistol for tax reform. Advocates for affordable housing, community development, historic preservation and renewable energy should pick up the pace and start even more aggressively advocating for the tax credit programs so crucial to their cause.

Sens. Baucus and Hatch have stated that they believe that “some existing tax expenditures should be preserved in some form” but they have also said that tax expenditures and other provisions should be added back to the tax code only if they: help grow the economy, make the tax code fairer, or effectively promote other important policy objectives.

This means the Senate Finance Committee will begin with a tax code devoid of all tax credits, including the low-income housing tax credit, new markets tax credit, historic tax credit and renewable energy tax credits. Each tax credit would only be added back in if enough Senators make a compelling case for it.

In order for a tax provision to be considered during the crafting of the Senate Finance Committee’s bill, senators must submit proposals by July 26. Sens. Baucus and Hatch say they will give special attention to proposals that are bipartisan.

For the tax credit community, this means there’s no time to spare. Supporters of tax credits for affordable housing, community development, historic preservation and renewable energy have only a few short weeks to contact their senators to champion these programs.

The Novogradac LIHTC Mapping Tool and Novogradac NMTC Mapping Tool can help demonstrate the tangible, beneficial results of these programs in urban and rural areas across the country.

At a national level, the report “Affordable Rental Housing After Tax Reform: Calculating Corporate Tax Reform’s Possible Effects on Equity Raised from Low-Income Housing Tax Credits,” describes the projected impact of tax reform on the LIHTC.

In addition, “Low Income Housing Tax Credit: Assessment of Program Performance & Comparison to Other Federal Affordable Rental Housing Subsidies,” highlights the remarkable track record of LIHTC-financed properties and the efficiency of the LIHTC program as a whole.

Similarly, the “Historic Rehabilitation Tax Credit Recapture Survey” describes how, because of key characteristics of the historic tax credit such as third-party investors, careful screening of properties, economies of scale and uniform practices, and IRS guidance and enforcement, historic tax credit transactions have experienced very low recapture rates.

And finally, “NMTC Program Outperforms Comparable Cash Grant Program,” a report by the New Markets Tax Credit Working Group, reveals that the NMTC is more efficient than a comparable cash grant program and as the price paid per credit rises so does the efficiency of the NMTC.