With lawmakers in the House and Senate announcing that they’ve reached a deal, affordable housing advocates are anxiously waiting to see which version of the bill wins out with regard to housing. They say the House bill has a poison pill in it.
“The effect would be devastating,” says Diane Yentel, president of the National Low Income Housing Coalition. “It would mean a loss of around 800,000 affordable rental homes over the next 10 years.”
Critics of the emerging tax bill say it gives huge benefits to the wealthy and corporations and doesn’t do much for the working class. But advocates like Yentel say it could be much worse than that when it comes to affordable housing — a lot of working families, people on lower incomes and the elderly would lose out on the chance to get a place they could afford to live.
Yentel says for decades there’s been this bedrock funding mechanism that’s helped millions of affordable housing units get built. It’s called a “private activity bond.” And it allows banks and other companies to get a tax break if they invest in affordable housing construction.
In the House version of the tax bill, these bonds lose their tax exempt status. So Yantel says this bedrock funding mechanism gets destroyed. “This essentially eliminates nearly half of the affordable homes that can be developed or preserved throughout the country with the low-income tax credit program.”