For Immediate Release: ‘The Future of Affordable Housing in Massachusetts Hangs in the Balance’ of Federal Tax Bill Reconciliation, Say Housing Advocates at CHAPA

BOSTON — Citizens’ Housing and Planning Association (CHAPA), the leading statewide housing policy organization in Massachusetts, issued the following statement on the tax bill currently in a congressional conference committee. Conference committee members must reconcile differences between the House and Senate versions of the bill.

“The future of affordable housing in Massachusetts hangs in the balance,” said Rachel Heller, CEO of the Citizens’ Housing and Planning Association. “While both versions of the tax reform plans will be devastating for so many people, the Senate plan preserves programs that are critical to affordable housing and community development and provides opportunities for individuals and families with low incomes to live in safe, healthy, and affordable homes.”

“The House tax reform plan would result in 30,000 fewer homes built or preserved in the Commonwealth in the next decade,” continued Heller. “The House bill also eliminates the tax exemption for private activity bonds as well as the Historic and New Markets Tax Credits. The loss of these programs combined with the reduced value of the Low Income Housing Tax Credit will mean tens of thousands of people being left homeless or struggling to hold onto homes they cannot afford.”

“In the midst of our state and region’s housing crisis, Congress must protect these programs and invest in the affordable housing resources Massachusetts families need,” Heller continued. “We need more investment, not less. We hope that as Congress moves forward, members of the House and Senate will preserve vital housing programs to help people who need an affordable home and to grow our economy which needs affordable housing choices for our workforce to support continued growth and success.”

Background

Both tax bills:

• Significantly weaken the Low-Income Housing Tax Credit, a successful public-private partnership that has become the foundation for affordable housing development across New England and the nation. While the credit itself is retained, it would be significantly weakened due to the corporate tax rate being lowered from 35% to 20%. With less of a demand for tax credits, the value of the Low-Income Housing Tax Credit would drop, greatly reducing investments in affordable housing by private investors. The tax proposal contains no changes to the credit that would help address this impact. Massachusetts would lose $264 million per year in Low-Income Housing Tax Credit investment. Over the next five years, this means the Commonwealth would lose access to the critical funding resources that would have supported the construction or preservation of over 16,000 apartments for nearly 40,000 people.
• Increase the federal deficit by more than $1 trillion, putting immense pressure on lawmakers in future years to make massive cuts to programs benefiting low- and moderate-income people, including federal housing programs.

The House tax bill:

• Eliminates the tax exemption on Private Activity Bonds, including multifamily housing bonds. This tax exemption allows bond-financed multifamily projects to access ‘4% Housing Credits,’ which have helped produce or preserve tens of thousands of affordable homes in New England. Developments financed with 4% credits often serve households with extremely low incomes, and these credits have also been used on mixed-income developments, helping to meet overall demand for market rate housing while providing rents that households with lower incomes can afford. Tax-exempt bonds are also used for reduced interest mortgages for first time homebuyers. In Massachusetts, the 4% credit has leveraged over $2.2 billion in investments for affordable housing and supported over 29,000 apartments over the past decade.
• Eliminates the New Markets Tax Credit, a vital resource for community revitalization efforts in distressed areas. In Massachusetts, projects supported by the New Markets Tax Credit include community health centers, Boys & Girls Clubs, the Dudley Municipal Center in Boston, and a grocery store in Brockton. Housing and community development investments work together in revitalizing neighborhoods. Neither investment can do it alone. Since 2003, the New Markets Tax Credit has supported over 241 business and economic revitalization projects with $1.8 billion.
• Eliminates the Historic Rehabilitation Tax Credit, which has had a great impact on the Commonwealth's Gateway Cities, including Lowell, Haverhill, Fall River, and Worcester. This credit attracts developers to invest in once vacant, deteriorated, and underutilized structures, such as old mills, schools, and hospitals, and transforms them into much needed housing and commercial space. Hundreds of historic and iconic buildings in Massachusetts have been returned to use, creating homes, having direct and indirect economic benefits, and resulting in tens of millions in new local tax revenues. In 2016 alone, the Historic Tax Credit invested $306 million into completed historic rehabilitation projects in Massachusetts.
• Reform the Mortgage Interest Deduction, which has been a long-standing effort of affordable housing advocates and would ordinarily be a major step in the right direction. Unfortunately, the tax proposal uses the resulting savings to pay for tax cuts, not to fund new investments in affordable housing.

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Citizens' Housing and Planning Association (CHAPA) is the leading statewide housing policy and research organization in Massachusetts.  Established in 1967, CHAPA represents all interests in the housing field, including non-profit and for-profit developers, advocates, homeowners, tenants, lenders, property managers, government officials, and others. This year, CHAPA is celebrating 50 years of leadership in promoting solutions to critical housing and homelessness issues across the state.

FOR IMMEDIATE RELEASE
December 13, 2017
Contact: Andrew Farnitano, Crawford Strategies
857-753-4132, andrew@crawfordstrategies.com