Rep. Curbelo Replaces Rep. Tiberi as Lead Sponsor of LIHTC Bill
Since President Trump signed the Tax Cuts and Jobs Act into law, the price investors are willing to pay for LIHTC’s has dropped and may fall further because the new law reduced the corporate tax rate from 35 percent to 21 percent starting in 2018. This change will sharply reduce the need companies will have for such tax benefits. However, since passage, some factors will help offset the expected lower demand for LIHTCs. For example, Fannie Mae and Freddie Mac have both announced plans to begin investing in LIHTCs for the first time since the two government-sponsored enterprises (GSEs) were seized by the government during the 2007–2008 financial crisis. The GSEs once bought roughly 40 percent of the LIHTCs available.
Another factor that may mitigate falling LIHTC pricing is the potential passage of the Affordable Housing Tax Credit Improvement Act of 2017, a bipartisan proposal to expand the tax credit program by 50 percent. This was introduced about a year ago by U.S. Senators Maria Cantwell (D-Wash.), and Orrin Hatch (R-Utah) introduced a bipartisan proposal. Other co-sponsors include Senator Chuck Schumer (D-N.Y.).
One hiccup to its passage is that Senator Hatch, the longest-serving Republican senator, recently announced that he won’t seek reelection in November. Also, in addition to Senator Hatch, Ohio Representative Pat Tiberi had announced in October that he won’t seek reelection and is leaving early to lead the Ohio Business Roundtable in January 2018. As a member of the Ways and Means Committee, Representative Tiberi introduced the House companion legislation to the Cantwell-Hatch Affordable Housing Credit Improvement Act of 2017.
One promising note is that since Tiberi’s retirement announcement, Representative Carlos Curbelo of southern Florida has received unanimous consent from the House to take over as the lead sponsor of the bill, and advocates have been working closely with him and other Ways and Means Republicans to reinvigorate House Republican support for the legislation.