Senate Finance Committee Holds Hearing on Tax Incentives and Affordable Housing

July 26, 2022

On July 20, the Senate Finance Committee held a hearing to discuss how tax incentives could help address housing insecurity, with senators in attendance advocating for specific policies to lower housing prices and increase supply. The tone of the hearing was polite and thoughtful, reflecting bipartisan support for several potential approaches to improving the housing crisis.

Low Income Housing Tax Credit (LIHTC). Sen. Young (R-IN) urged colleagues to pass the Affordable Housing Credit Improvement Act of 2021, a bipartisan effort to expand and strengthen the LIHTC program. One of the witnesses, Buzz Roberts, president of the National Association of Affordable Housing Lenders, shared that several factors contribute to LIHTC’s success, specifically private market discipline. Sen. Bennet (D-CO) signaled his support for the effort, also advocating for swift implementation of an improvement Congress already passed to expand LIHTC-developed housing. Chairman Wyden (D-OR) highlighted the LIFELINE Act, which would allow states and localities to loan COVID recovery funds to LIHTC projects.

Middle-Income Support. Chairman Wyden also shared his support for the DASH Act, which seeks to improve the affordability of rental housing for renters earning a little more than the traditional LIHTC income-targeting threshold nationwide. Another witness, Jerry Konter, chairman of the board at the National Association of Homebuilders, said that the “missing middle” is the hardest area to serve because they don’t qualify for LITHC or other subsidies, even direct subsidies such as the Section 8 voucher program. Separately, Sen. Hassan (D-NH) advocated for her bipartisan bill to provide tax cuts for middle-class homebuyers that use mortgage insurance. Mr. Roberts shared that mortgage insurance is particularly important for first-time buyers, allowing them to purchase homes even if they lacked the funds needed for a 20% down payment.

Community Development Financial Institutions (CDFIs). Sen. Warner (D-VA) highlighted the importance of CDFIs, pointing to his recently introduced legislation to create a CDFI tax credit for private sector investors that make equity, equity-equivalent investments, or long-term capital available to CDFIs. Mr. Roberts explained that community development requires long-term capital, and it must be available at a cost that makes sense.

Housing Trust Fund (HTF) grants. Sen. Hassan also said that she is developing a package of housing legislation to incentivize investment in state affordable housing trust funds. Andrea Bell, executive director of Oregon Housing & Community Services, shared that these funds typically have a designated revenue source and can be particularly helpful in providing additional housing resources for state needs.

A common theme throughout the hearing was the need to reduce regulatory burden. Witnesses and senators alike called for a decrease in regulatory red tape at the federal, state, and local levels, pointing specifically to zoning and permitting processes.

Contact 

Sairah Burki
Managing Director,
Regulatory Affairs &
Sustainability
703.201.4294
sburki@crefc.org
A common theme throughout the hearing was the need to reduce regulatory burden. Witnesses and senators alike called for a decrease in regulatory red tape at the federal, state, and local levels, pointing specifically to zoning and permitting processes.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.

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