WASHINGTON UPDATE · May 23, 2017 WASHINGTON UPDATE for the CHFA 2017 Housing Credit Summit...
Transcript of WASHINGTON UPDATE · May 23, 2017 WASHINGTON UPDATE for the CHFA 2017 Housing Credit Summit...
May 23, 2017 www.novoco.com
WASHINGTON UPDATE for the CHFA 2017 Housing Credit Summit
Michael Novogradac Managing Partner Novogradac & Company LLP
@Novogradac
Outline
Tax Reform
House of Representatives
Senate
Presidency
Affordable Housing Credit Improvement Act
Advocacy Efforts
HUD Budget
May 23, 2017 www.novoco.com
Focus: Tax Reform
HOUSE SENATE PRESIDENT TRUMP
May 23, 2017 www.novoco.com
May 23, 2017 www.novoco.com
Broaden the base, lower the rates
Expensing/ Interest Expense
Special rules for financial institutions
1 2 3 4 5
May 23, 2017 www.novoco.com
Ways and Means Republicans believe the low-income housing tax credit is important and they are working through how this credit will fit in our next system.
Emily Schillinger, communications director for the House Ways and Means Committee.
WSJ – March 21, 2017
“ “
May 23, 2017 www.novoco.com
LIHTC Pricing Sensitivity Analysis
www.novoco.com/blog
May 23, 2017 www.novoco.com
LIHTC Pricing Sensitivity Analysis
www.novoco.com/blog
May 23, 2017 www.novoco.com
And, Our Two Step Recommendation
www.novoco.com/blog
May 23, 2017 www.novoco.com
A Two Step Recommendation
STEP 1 Increase allocable LIHTCs
May 23, 2017 www.novoco.com
A Two Step Recommendation
STEP 2 Modernize Credit Percentage Formula
May 23, 2017 www.novoco.com
A Two Step Recommendation
STEP 2 Modernize Credit Percentage Formula
May 23, 2017 www.novoco.com
Plans from the Senate
• House of Representatives to take the lead
• Awaiting President Trump’s feedback
May 23, 2017 www.novoco.com
Plans from the White House
“ “ Tax reform plan released on April 26th Prior to it’s release:
It will be a massive tax cut. It will be bigger, I believe, than any tax cut ever. Maybe the biggest tax cut we’ve ever had.
May 23, 2017 www.novoco.com
Plans from the White House
Business tax rate – applies to corporations and small businesses
Tax brackets
Tax deductions Estate tax Alternative minimum tax and Obamacare taxes
15 % 3
ELIMINATE THE MAJORITY OF
ELIMINATE ELIMINATE
May 23, 2017 www.novoco.com
Plans from the White House
WHAT ABOUT LIHTCs?
May 23, 2017 www.novoco.com
A White House Perspective
May 23, 2017 www.novoco.com
Will Tax Reform Happen?
With Republican control of the White House, Senate and House, chances for some type of tax law changes have increased.
We always knew some type of tax reform would be likely beginning in 2017, even if the Democrats won the presidency and controlled the Senate. ‘17
? Question is—what type of tax reform? Corp. Indiv. Corp. Indiv. Both
& Int’l
Congress can call any change to the tax code “tax reform.”
May 23, 2017 www.novoco.com
Care to Make a Prediction?
NO ONE KNOWS!
May 23, 2017 www.novoco.com
Care to Make a Prediction?
Tax bill in December
Some Democrats, but not 60 Budget
Reconciliation Lower Rates
Pay-Fors – Towards Revenue Neutrality
•Extenders •Dynamic Scoring • International Dollars
• Infrastructure could affect this •State Income Tax Deduction
May 23, 2017 www.novoco.com
Care to Make a Prediction?
Tax bill in December
Some Democrats, but not 60 Budget
Reconciliation Lower Rates
Pay-Fors – Towards Revenue Neutrality
•Extenders •Dynamic Scoring • International Dollars
• Infrastructure could affect this •State Income Tax Deduction
May 23, 2017 www.novoco.com
More LIHTCs via
Affordable Housing Credit Improvement Act
May 23, 2017
50 percent increase
Income-averaging
Minimum 4 percent
rate
CANTWELL HATCH
TIBERI NEAL www.novoco.com
More LIHTCs via
Affordable Housing Credit Improvement Act
May 23, 2017
50 percent increase
Income-averaging
Minimum 4 percent
rate
CANTWELL HATCH
TIBERI NEAL www.novoco.com
More LIHTCs via
Affordable Housing Credit Improvement Act
Additional Resources • Give states discretion to provide 30% basis
boost for bond-financed projects
• Repeal QCT population cap
• Relocation costs included in eligible basis
• No basis reduction for certain energy tax incentives
• Indian areas generally treated as DDAs
May 23, 2017 www.novoco.com
More LIHTCs via
Affordable Housing Credit Improvement Act
Financial Feasibility • 50% basis boost for ELI units
• Modify student occupancy rules
• Codify increased tenant income guidance
• Modify 10-year rule
• Limits apply to acquisition basis
• Adopt uniform income eligibility for rural projects
May 23, 2017 www.novoco.com
More LIHTCs via
Affordable Housing Credit Improvement Act
Other • Modify the rent-setting rule
• Clarify the community revitalization plan
• Prohibit local approval or contribution requirements
• Change the official name of the LIHTC to Affordable Housing Tax Credit
May 23, 2017 www.novoco.com
Advocacy Efforts
May 23, 2017 www.novoco.com
www.taxcredithousing.com
May 23, 2017 www.novoco.com
www.taxcredithousing.com
May 23, 2017 www.novoco.com
May 23, 2017 www.novoco.com
www.novoco.com
Frontline Unit Count Critique
May 23, 2017
May 23, 2017 www.novoco.com
www.novoco.com/blog
May 23, 2017 www.novoco.com
www.novoco.com/blog
www.novoco.com
HUD Budget Update
May 23, 2017
FY 2015 Enacted
FY 2016 Enacted Senate FY 2017
THUD Bill House FY 2017
THUD Bill FY2017
Enacted Bill
Housing Choice Voucher $19,304 $19,628 $20,431 $20,189 $20,292
Project Based Section 8 $9,730 $10,620 $10,901 $10,901 $10,816
Public Housing Operating Fund $4,440 $4,500 $4,675 $4,500 $4,400
Public Housing Capital Fund $1,875 $1,900 $1,925 $1,900 $1,942
Section 202 $420 $433 $505 $505 $502
Section 811 $134 $150 $154 $154 $146
HOPWA $330 $335 $335 $335 $356
CDBG $3,000 $3,000 $3,000 $3,000 $3,000
HOME $900 $950 $950 $950 $950
Homeless Assistance $2,135 $2,250 $2,330 $2,487 $2,383
Choice Neighborhood Initiative $80 $125 $80 $100 $138
Overall $45,372 $46,978 $48,434 $47,955 $48,055
Note: amounts in millions HUD Budget
May 23, 2017 www.novoco.com
FY 2015 Enacted
FY 2016 Enacted Senate FY 2017
THUD Bill House FY 2017
THUD Bill FY2017
Enacted Bill
Housing Choice Voucher $19,304 $19,628 $20,431 $20,189 $20,292
Project Based Section 8 $9,730 $10,620 $10,901 $10,901 $10,816
Public Housing Operating Fund $4,440 $4,500 $4,675 $4,500 $4,400
Public Housing Capital Fund $1,875 $1,900 $1,925 $1,900 $1,942
Section 202 $420 $433 $505 $505 $502
Section 811 $134 $150 $154 $154 $146
HOPWA $330 $335 $335 $335 $356
CDBG $3,000 $3,000 $3,000 $3,000 $3,000
HOME $900 $950 $950 $950 $950
Homeless Assistance $2,135 $2,250 $2,330 $2,487 $2,383
Choice Neighborhood Initiative $80 $125 $80 $100 $138
Overall $45,372 $46,978 $48,434 $47,955 $48,055
Note: amounts in millions HUD Budget
May 23, 2017 www.novoco.com
May 23, 2017 www.novoco.com
WASHINGTON UPDATE for the CHFA 2017 Housing Credit Summit
Michael Novogradac Managing Partner Novogradac & Company LLP
@Novogradac