Tax Bill Contains Provision That Could Hit Affordable Housing Sector Hard
Tuesday, November 14, 2017
Photo by Andrew Bowen
A federal tax credit program that is the cornerstone of much of San Diego’s subsidized affordable housing could be cut. It is a proposal being considered in Washington, D.C., to help pay for the tax reform bill.
A federal tax credit program that’s the cornerstone of much of San Diego’s subsidized affordable housing could be cut. It is a proposal being considered in Washington, D.C., to help pay for the tax reform bill.
Affordable housing is rental housing available to people below a certain income level. It is subsidized with federal and state tax credits; investors contribute because they earn tax breaks.
Anne Wilson, of Community Housing Works, said a provision buried in the tax bill would eliminate a kind of tax-exempt bond that would result in the elimination of a crucial federal tax credit for affordable multi-family units.
“In the last five years over 6,000 apartments have been funded with the 4 percent tax credit for San Diego County alone,” she said.
Wilson said funds for the affordable housing industry have already been reduced 70 percent since 2009. The sector lost a major funding source when redevelopment money was eliminated in California in 2012, and removing the four percent federal tax credit would be another blow.
“The tax credit programs are the foundation of all of our new construction,” she said. "And to take the 4 percent out would pretty much take half of the resources away from us. It will devastate us.”
Wilson said affordable housing developers are already scrambling to close bonds this year in case the new provision goes into effect.
She said the tax credit program has always had strong bipartisan support, and for many years it created over 90 percent of all the rental housing built every year.
She said a new state bond measure on the 2018 ballot relies on the federal tax credits to reach its affordable housing goals.
The California Housing Partnership said the loss of the tax credits could cost the state $2.2 billion in federally catalyzed investment annually and lead to the loss of 20,000 affordable housing units a year in California
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