Senate Republicans and Democrats yesterday reached a tentative agreement on a bipartisan housing stimulus bill containing several tax-exempt bond provisions, including $10 billion of additional mortgage revenue bonds for the refinancing of subprime loans and first-time mortgages, as well as permanent relief from the alternative minimum tax for housing bonds.
Housing sources said yesterday that Senate leaders are working on final specifics of the legislation, and could vote on it as soon as today. The sources said the Senate leaders hope to get support from House leaders on the bill, so that it can be approved by both chambers and sent to President Bush within the next few weeks.
"We're cautiously optimistic and we're very pleased that our critical bond and credit priorities are in the tentative agreement," said Barbara Thompson, executive director for the National Council of State Housing Agencies.
Senate Banking Committee chairman Christopher Dodd, D-Conn., and ranking minority member Richard Shelby, R-Ala., announced the agreement yesterday, and detailed several of its provisions.
The bill would contain nearly all of the tax-exempt bond provisions found in legislation approved by the House earlier this year, as well as some new items.
A new provision would allow single-family mortgage revenue bonds to be used to finance mortgages for victims in presidentially declared disaster areas. That provision would apply to bonds issued after May 1, 2008, and prior to Jan. 1, 2010, and is estimated to cost $96 million over 10 years.
Another new provision would extend and expand certain GO Zone incentives, under the Gulf Opportunity Act of 2005, to rebuild the local and regional economies devastated by hurricanes. This provision is estimated to cost $1.3 billion over ten years.
In addition, the measure contains many tax-exempt bond provisions similar to those found in the House bill. The additional $10 billion of mortgage revenue bonds would be provided in 2008 and is estimated to cost $1.475 billion over 10 years. The repeal of the AMT on tax-exempt housing bonds, low-income housing credit, and the rehabilitation credit would cost $2.093 billion over 10 years.
To minimize the harmful effects of foreclosures, the bill would provide $3.92 billion in supplemental community development block grant funds to communities hardest hit by foreclosures and delinquencies.
The bill also would simplify technical rules for tax-exempt housing bonds. It would allow for a one-time refunding of bonds reissued within four years of the original issuance, and would also update the housing bond rules to conform to certain aspects of the low-income housing tax credit rules. These proposals would cost an estimated $592 million over 10 years.
The bill would allow all tax-exempt bonds to be guaranteed temporarily by the federal home loan banks. Currently, only housing bonds can receive the guarantee and remain tax-exempt. The estimated cost of this proposal would be $126 million over 10 years.
In other benefits for multifamily low-income housing, the bill temporarily would increase the low-income housing tax credit, which is currently set at $2 for each person residing in a state. In 2008 and 2009, the credit would be increased an additional 20 cents for each person residing the state for large population states. For small states, there would be an increase of 10% for the small state set-aside. This provision is estimated to cost $1.084 billion over 10 years.
In addition, the measure would simplify the technical rules relating to the low-income housing tax credit for an estimated cost of $254 million over 10 years.