Across the country, the same story is being told. Housing is expensive. Renters cannot afford their skyrocketing costs, let alone save for downpayments to purchase a home. Even if they do, affordable homes are impossible to find in tight markets. Inflation, we know, is being driven by the cost of shelter. And shelter costs are being pushed higher by interest rate hikes intended to help cut inflation. The vicious cycle has left many housing policy advocates frustrated with the lack of progress as more and more cities face their own housing crises. The answer to this problem is remarkably simple – we must build more housing. Two pieces of legislation would do just that: The Affordable Housing Credit Improvement Act (AHCIA) and the Neighborhood Homes Investment Act (NHIA).
AHCIA makes vital updates and improvements to the existing Low Income Housing Tax Credit Program (LIHTC), the nation’s most successful housing production tool. LIHTC is responsible for 90% of federally funded affordable construction and financing nearly 3.7 million affordable homes since 1986. NHIA focuses on revitalizing communities through a similar model that fills the value gap of homes that struggle with the cost of rehabilitating or building being greater than the post-construction value of the home. Each of these bills invests in the development of attainable, affordable housing. If enacted, the AHCIA is estimated to finance construction of nearly 2 million affordable homes over ten years. The NHIA would build or rehabilitate 25,000 homes with every one billion dollars invested.
This week, the housing industry is cautiously hopeful that at least parts of these pieces of legislation will be enacted after the release of a bipartisan tax agreement from Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.). The agreement includes two of the key provisions of the AHCIA: restoring the 12.5% allocation increase for 2023-2025, and lowering the 50% bond financing test to 30% for Private Activity Bond allocations made in 2024 and 2025. These two changes alone would finance the construction of 200,000 new affordable housing units. While not as impactful as passing both pieces of legislation, the inclusion of housing provisions at all in the deal is encouraging after years of exclusion from tax packages altogether. NHC issued a statement in strong support of the deal, noting that it would make a significant downpayment on bipartisan solutions to produce more housing.
“The compromise bill isn’t perfect. We would have liked to see provisions to incentivize more housing for extremely low-income Americans and build and rehab more housing in underserved neighborhoods,” said NHC President and CEO David Dworkin. “But we also recognize that the perfect cannot be the enemy of the good, and this is a good bill.”
The need is dire, and we know the solutions. We cannot afford to wait another two years to pass meaningful housing legislation. All across the country, more states and localities are feeling the impact of unaffordable housing. Every American is impacted directly or indirectly by this crisis – the people we rely on to take care of our kids, serve our food, clean our teeth, and teach in our schools. We simply cannot continue to leave them behind as we negotiate the very tax packages that could make a difference. According to the National Housing Conference’s Paycheck to Paycheck database, the need for affordable housing is clear when comparing to wage data. Childcare workers can afford to rent a one-bedroom apartment in only 15 out of 390 metropolitan statistical areas (MSAs). Cashiers can afford to rent a one-bedroom apartment in only 13 of those MSAs. This is true for higher-paid workers as well. Dental assistants can’t afford to rent a one-bedroom unit in 101 MSAs, and Middle School Teachers cannot afford a one-bedroom apartment in 17 of those areas.
Year after year we have heard from our Representatives that housing is important, and yet it always seems to earn a legislative participant ribbon rather than enacted legislation. Housers are uniquely united in their support for these two bipartisan bills. We cannot miss this opportunity. We must not miss this opportunity. NHC will be continuously advocating for the passage of AHCIA and NHIA in the upcoming weeks. We hope that you will consider reaching out to your representatives and asking them to fight for the critically needed inclusion of housing in any final tax agreements. We have drafted talking points you can use in emails or conversations with Congressional staff. AHCIA and NHIA are top legislative priorities for NHC and many of our members who have been working tirelessly for years to get them enacted. It’s time to show our support for that work, and hope for housing to finally be recognized as the critical policy to help our friends and neighbors live prosperous, healthy, and happy lives.