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Law360 (May 22, 2020, 5:57 PM EDT) -- An overdue expansion of the low-income housing tax credit should be included in any legislation Congress considers to blunt the economic impact of the novel coronavirus pandemic, Senate Finance Committee ranking member Ron Wyden, D-Ore., said Friday.
Wyden said he would push for an expansion of the federal program, which provides tax incentives for private and nonprofit developers to build affordable multifamily housing, to alleviate the nationwide shortage of affordable housing faced by struggling American families.
"The pandemic and resulting economic crisis have laid bare the fact that millions of Americans are one or two missed paychecks away from not being able to pay their rent or mortgage," Wyden said in a statement.
Wyden included the tax credit proposal in a list of his priorities for the federal government to prevent homelessness by preserving and creating affordable housing. He said his "common sense" policies would ensure that affordable housing projects in the pipeline are not abandoned.
Wyden also said regulations designed to stop the transmission of COVID-19, the disease caused by the novel coronavirus, are causing shortages of construction materials and delaying permits for affordable housing projects. He said housing compliance deadlines should be suspended for 12 months so housing tax credit developments can move forward.
Wyden also suggested setting a minimum value of 4% for housing tax credits, which would reduce the need for additional gap financing for projects and expand the incentive to produce new units once the economy revives. He suggested closing a housing tax credit provision that allows for the sale of affordable housing projects after 15 years.
He also suggested that the U.S. Department of the Treasury provide one-time grants of housing tax credits that could be used to provide owners with missing rental payments during the outbreak. In addition, affordable housing buildings that are not fully leased should still receive tax credits, he said.
Wyden's proposals were welcomed by groups such as the National Rural Housing Coalition, which called the priorities extremely important for rural areas where the combination of low incomes and a lack of rental housing supply has resulted in 41% of renters paying too much for housing.
Wyden's priorities would "provide the resources and flexibility to manage existing projects and make housing opportunities available to those households in great need," Bob Rapoza, the coalition's executive secretary, told Law360.
The House is expected to vote in the coming days on bipartisan legislation to give more flexibility to small businesses that participate in the Paycheck Protection Program established under the Coronavirus Aid, Relief and Economic Security Act.
House lawmakers recently approved a $3 trillion virus relief bill that the White House has threatened to veto and Senate Republicans refuse to consider.
--Editing by Neil Cohen.
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