New Developments: Summer Break? Not for Advocates!
By Thom Amdur
3 min read
It’s summer! The kids are out of school, the heat and humidity are rising, and, since it’s an even year, political campaign season is ramping up! I won’t try to handicap the outcome of this November’s elections, but if the primaries to date are any indication, the ideological and rhetorical divide between the Republican Party and the Democratic Party is only going to widen.
Amidst the politics, our industry faces new headwinds. The Federal Reserve has telegraphed further interest rate increases. Trade wars are driving up the cost of lumber, steel and virtually all building supplies and materials. A shortage of available labor across the building trades is exacerbated by low unemployment (generally), an aging workforce (specifically) and high-demand, particularly in areas impacted by natural disasters.
While it may be summer, there is no time for an extended vacation for housing, community development and tax credit advocates. Now more than ever, we need legislation to fix the flat four percent Low Income Housing Tax Credits, to build on the expansion of the nine percent LIHTC enacted in the last round of appropriations and, in relatively “new” news, speedily adopt recently introduced (on June 13) legislation (HR. 6081 and S. 3058) sponsored by U.S. Senators Bill Cassidy, M.D. (R-LA), Ben Cardin (D-MD) and Susan Collins (R-ME), as well as U.S. Representatives Darin LaHood (R-IL) and Earl Blumenauer (D-OR) to strengthen to the Historic Rehabilitation Tax Credit (HTC) after it was diminished in tax reform.
The Historic Tax Credit Enhancement Act, in particular, will boost the value of HTC investments from urban cores to rural Main Streets across the country. Presently, the tax code requires that building owners subtract the amount of Federal Historic Tax Credits from a building’s basis (the amount a property is worth for tax purposes). Eliminating this requirement will increase the basis of rehabilitated historic buildings for building owners, providing a tax benefit, and attract more capital from tax credit investors. This legislative change preserves the vast majority of the savings achieved by the Tax Cut and Jobs Act.
Eliminating the basis adjustment will also bring the HTC in line with the LIHTC, which does not require a basis adjustment. Enacting this legislation will strengthen the credit and improve the incentive for building owners who are revitalizing historic properties in communities nationwide.
We anticipate at least one or two other potential legislative vehicles for tax policy adjustments before the end of this Congress and it is critical that we take advantage of the upcoming summer recess to continue to meet with elected officials and advocate for bipartisan tax legislation.
The 116th Congress is a great unknown. What we do know is that some of our most ardent champions, like Senator Orrin Hatch (R-Utah), will be retiring at the conclusion of this Congress and that there will be dozens of new representatives and senators to educate. Just six months post-tax reform, it is critical that we act NOW and forcefully advocate for these enhancements while there is still some momentum for technical corrections and a core stable of legislative champions who can get these bills over the finish line.
