WASHINGTON DC [11/18/2022] – Today Congresswoman Suzanne Bonamici (D-OR), Congressman Earl Blumenauer (D-OR), and Congressman Peter DeFazio (D-OR) urged House leadership to include provisions that would improve effectiveness of the Low-Income Housing Tax Credit (LIHTC) in any end-of-year tax legislation.

The LIHTC has been used for the construction or rehabilitation of more than 3 million affordable homes nationwide since 1986, and is the largest federal program designed to incentivize more affordable housing. Currently, to access a 4 percent tax credit through the LIHTC program, 50 percent of a development must be funded with Private Activity Bonds (PABs).

The Oregon lawmakers called for reducing the proportion of PABs needed to access the 4 percent tax credit from 50 percent to 25 percent, and increasing the state allocations of PABs to mitigate the competition for bond resources. According to analysis prepared for the National Council of State Housing Agencies, this change would raise nearly $100 billion annually for the development of affordable housing.

“By lowering the PAB threshold test and increasing the PAB allocation, state and local affordable housing investments can build more homes for working families, expand access to supportive housing to better serve older Americans and people experiencing mental health crises, and maintain progress in addressing the housing crisis,” the lawmakers wrote. “We look forward to working with you to make sure that any end-of-year tax legislation unlocks these and other affordable housing tools to make housing more affordable in our communities.”

More than twenty states, including Oregon, have already reached their federally-allocated PAB cap. Without further congressional action, state and local governments and affordable housing developers are limited in their ability to finance critical new housing stock. This barrier makes building affordable housing more costly and burdensome.

“This work by Oregon’s Congressional delegation has been vital in creating new tools for building affordable housing,” said Metro Council President Lynn Peterson. “Private activity bonds help limit the amount of locally-generated money needed to build affordable housing as our nation faces an affordable housing crisis. Without this action, Metro-area taxpayers could have to double their subsidy for the affordable housing we’re building for more than 12,000 people. We call on members on all sides of the aisle to take action to reduce the 50% threshold for private activity bonds and want to express our deep appreciation to the members of the Oregon delegation who are taking a leadership role on this issue.”

“Private Activity Bond funds represent more than 30% of the financing for typical affordable housing development, but the current need for these resources in Oregon is more than double the amount of funding available in the immediate future,” said Molly Rogers, Interim Director of the Portland Housing Bureau. “This resource shortage threatens to impede our progress toward meeting the goals of our voter-approved Portland and Metro housing bond measures and delay the production of urgently needed affordable housing at this critical time. We are thankful to our Congressional delegation for leading this effort at such a critical time.”

You can read the lawmakers’ full letter to House leadership below

The Honorable Nancy Pelosi
Speaker of the House
U.S. House of Representatives
H-232, The Capitol
Washington, D.C. 20515

The Honorable Kevin McCarthy
Minority Leader
U.S. House of Representatives
H-204, The Capitol
Washington, D.C. 20515

Dear Speaker Pelosi and Minority Leader McCarthy:

The lack of access to affordable housing affects communities throughout our nation, and especially in Oregon. The National Low Income Housing Coalition estimates that there is a shortage of nearly 130,000 available and affordable rental homes for Oregonians at or below 50 percent Area Median Income.[1] Throughout Oregon, state and local governments are committing additional funds to build and preserve more affordable housing. A critical part of that commitment is the use of Private Activity Bonds (PABs) to help finance Low Income Housing Tax Credit (LIHTC) projects. To allow Oregon to fully leverage these investments with federal housing tools, Congress must remove impediments that are limiting the effectiveness of the 4 percent LIHTC and PABs. Because this is an urgent issue, we strongly encourage that these provisions be included in any end-of-year tax legislation.

Since 1986, LIHTC has created more than 3 million affordable homes nationwide. As the largest federal program to create more affordable housing, it is essential that it continues to work for every community. Currently, to use 4 percent LIHTC resources, 50 percent of a development must be funded with PABs. Unfortunately, twenty states have already reached their federally-allocated PAB cap. Without further congressional action, state and local governments and affordable housing developers are limited in their ability to finance critical new housing stock. This challenge is not unique to Oregon, nearly two dozen states around the country are also at their PAB cap. This barrier makes building affordable housing more costly and burdensome.

Congress can free up essential affordable housing tools for our state, counties, and communities by reducing the proportion of PABs needed to access 4 percent LIHTC resources from 50 percent to 25 percent. In an analysis for the National Council of State Housing Agencies, estimates show that reducing the PAB threshold to 25 percent could free up as much as $93.2 billion in financing for housing development.[2] This proposal has passed the House of Representatives,[3] been explored in a Ways and Means Committee hearing, Nowhere To Live: Profits, Disinvestment, And The American Housing Crisis[4], and is included in the broadly supported, bipartisan Affordable Housing Credit Improvement Act.[5]

In addition to reducing the PAB threshold test to 25 percent, Congress should also increase the state allocations of PABs to mitigate the competition for bond resources and make LIHTC financing more readily available.

By lowering the PAB threshold test and increasing the PAB allocation, state and local affordable housing investments can build more homes for working families, expand access to supportive housing to better serve older Americans and people experiencing mental health crises, and maintain progress in addressing the housing crisis. We look forward to working with you to make sure that any end-of-year tax legislation unlocks these and other affordable housing tools to make housing more affordable in our communities. We greatly appreciate your continued leadership to help Americans access safe, affordable housing and appreciate your prompt attention to this important issue.