Senators Introduce Bill to Eliminate Qualified Contracts Option
Senators Ron Wyden (D-OR) and Todd Young (R-IN) and Representatives Joe Neguse (D-CO), Don Beyer (D-VA), and Jackie Walorski (R-IN) recently introduced the Save Affordable Housing Act of 2019. The Save Affordable Housing Act was introduced both the Senate and the House. This bill will make a correction to the Qualified Contract provision in Section 42 of the Internal Revenue Code to stem the loss of thousands of LIHTC sites.
Under current law, an owner of a LIHTC site at Year 14 or after may require the state Housing Credit allocating agency to find them a buyer who is willing to purchase the property at the “qualified contract” price. In the vast majority of circumstances, the qualified contract price, which is set by statute, far exceeds market value for the property as restricted by the affordability requirements. If the state agency is unable to find a buyer, which, in most instances, is due to the inflated qualified contract price, the site must be released from its affordability commitments. Recent analyses from the National Council of State Housing Agencies indicate that the Qualified Contract process is resulting in the premature loss of well over 10,000 low-income units annually. As of 2017, approximately 50,000 units nationwide have already been lost, and in that year alone, owners served notice to state allocating agencies that they wanted to begin the Qualified Contract process on additional properties comprising approximately 18,000 units.