NALHFA: Camp's Plan Would Reduce Affordable Housing Opportunities

WASHINGTON — The National Association of Local Housing Finance Agencies has warned House Ways and Means Committee chairman Dave Camp that provisions in his tax-reform plan would eliminate tools used to finance affordable homeownership and rental housing.

"These tools have been a crucial engine for economic growth over many years," NALHFA executive director John Murphy said in a letter sent to Camp last week. "Ending them would have a major adverse impact on such growth in many parts of the country."

Camp's draft legislation would terminate the tax exemption for qualified private-activity bonds issued after 2014. It would also disallow the federal tax credits for mortgage credit certificates, which state and local governments can provide to homebuyers in lieu of issuing mortgage revenue bonds.

Additionally, the proposal by Camp, a Michigan Republican, would repeal after 2014 the 4% low income housing tax credit that can be claimed by owners of certain residential rental property. The credit can be used for buildings that are bond-financed.

"The impact of your proposal would be to eliminate many of the tools that are used extremely efficiently by local and state governments throughout the country to help assure affordable housing opportunities," Murphy told Camp in the letter. "In particular, your proposal would dramatically reduce housing opportunities for hard-working, potential first-time homebuyers and lower income renters."

Over the last four years, an estimated 200,000 families were able to purchase their first home as result of PABs used for single-family bonds and mortgage credit certificates. These financing tools in many cases have been important in helping to stabilize areas affected by the foreclosure crisis and in providing housing in areas where a lack of housing holds back job growth, the letter said.

Additionally, PABs and the related 4% low income housing tax credits have helped enable an estimated 50,000 working families to find affordable rental units in new or rehabilitated buildings over the last four years, it said. The bonds and credits have helped with affordable housing during a period when rents have been rising in most metropolitan areas and many families are struggling, Murphy said in the letter.

He noted that Congress has already enacted a number of restrictions on tax-exempt housing bonds to make sure the bonds serve a public purpose.

Mortgage revenue bonds have to serve first-time homebuyers purchasing a principal place of residence. Homebuyers in households of at least three people must have incomes of no more than 115% of area medium income, and homebuyers in households of less than three people must have incomes of no more than 100% of the area's median income. The houses financed must have a purchase price of no more than 90% of the average area prices.

Multifamily housing PABs have to be used for projects in which either at least 20% of the units are set aside for households with incomes no greater than 50% of area median income or at least 40% of the units are for households with incomes no greater than 60%.

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