[MCN] MarketWatch: Tax plan will likely decimate new affordable rental housing

[Lance Olsen]

Excerpt:  The tax plan proposed <https://www.marketwatch.com/story/heres-a-breakdown-of-how-the-new-house-tax-bill-impacts-your-taxes-2017-11-02> by Congressional Republicans will likely decimate production of new affordable rental housing, even as housing shortages across the country are driving rents higher and taking ever-larger shares of Americans’ incomes.
The plan released last week by the House Ways and Means Committee preserves a well-regarded program called the Low Income Housing Tax Credit — but effectively guts it. That’s because about half of all low-income housing credit development is done in conjunction with private activity bonds, a financing method that the plan scraps.

Private activity bonds are tax-exempt bonds issued by municipal government entities for special projects, often involving a private developer. In each of the five years after the recession, an average of about $5 billion of PABs were issued for housing, according to the Council of Development Finance Authorities. Issuance surged to $14 billion in 2016.

What’s more, the other half of all affordable housing deals, which rely purely on the tax credit program, would become more expensive as tax rates go down and make tax credits worth less.

“It’s shocking. It’s devastating,” said Michael Novogradac, who runs an accounting consultancy that tracks the tax credits. Novogradac estimates the changes together will result in a reduction of about two-thirds of new affordable housing units each year for the next decade.

https://www.marketwatch.com/story/republican-tax-plan-could-grind-affordable-housing-construction-to-a-virtual-halt-2017-11-08 <https://www.marketwatch.com/story/republican-tax-plan-could-grind-affordable-housing-construction-to-a-virtual-halt-2017-11-08>

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“The scary thing for me is that the stuff our models is showing happening decades from now, we’re already seeing,’ he says.’ “These models are the best 
we’ve got at the moment, and when we see how the complexity of the world operates, it seems that it may be worse than these models are indicating.’

Carl Zimmer. Predicting Oblivion. Science 17 August 2007 Vol. 317

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