Rep. Johnson introduces bill to expand, reform tax credit A key House legislator has introduced a bill to expand and reform the low-income housing tax credit program, Washington's primary low-income housing production vehicle.
Created by the 1986 tax act, the program provides 10-year tax credits for investors in housing projects where at least 20% of units are rented to tenants with incomes at or below 50% of area median income or at least 40% of the units are leased to tenants at or below 60% of median.
Credits are allocated by state agencies, subject to a $1.25 per capita limit that hasn't changed since the program was established.
Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Committee's Oversight Subcommittee, has introduced a bill (H.R. 3290) that would increase the credit cap to $1.75 and index the cap for inflation beginning in 1999. The Clinton administration has also proposed to raise the cap to $1.75, but it doesn't favor indexing.
Johnson's bill would also make a number of changes to the program, based on hearings held by her subcommittee and a report by the U.S. General Accounting(GAO).
Before credits could be allocated to a project, the developer would have to produce - and pay for - an independent market study showing a demand for the project.
As part of their monitoring responsibilities, state credit allocation agencies would have to make regular site visits to enforce the program's housing habitability requirements. Agency fees would be limited to the amount needed to administer the program.
In a provision welcomed by developers and other program advocates, the Johnson bill would make it easier to use tax credits in combination with the U.S. Housing and Urban(HUD) Department's HOME housing block grant program.
The tax credit law generally provides a lower credit rate for projects with other federal subsidies, including HOME-funded loans with below-market interest rates. This restriction doesn't apply if at least 40% of the units are rented to tenants with incomes no higher than 50% of area median, but the HOME-funded projects aren't eligible for a 30% credit increase generally available in HUD-designated low-income and high-cost areas. Johnson's bill would remove this exclusion, allowing below-market-rate HOME loans to be combined with the 30% credit increase.
Another provision in the Johnson bill would require state agencies to give a preference in allocating credits to projects that would support a community revitalization plan. This would elevate community revitalization to the same status as housing the lowest-income families for the longest period.
The bill would also change the process for correcting the overallocation of tax credits. Currently, if an agency allocates more credits than it has available, project allocations are canceled in the reverse order in which they were made. Under the change, projects which received the excess credits wouldn't be penalized. Instead, the agency's credit allocation for the following year would be reduced by the amount of the excess, or by twice that amount if the overallocation wasn't an inadvertent mistake.
Takings bills move ahead in House and Senate; future uncertain Legislation to make it easier for owners to receive compensation for government takings of their property is moving ahead in both houses of Congress, but prospects for enactment are uncertain at best. The bills have strong Democratic opposition and face the possibility of a presidential veto if they reach the White House.
The Senate Judiciary Committee has approved a House-passed bill (H.R. 1534) to make it easier for owners to get takings cases into federal court. The bill would allow an owner to file suit over a property rights dispute in federal court once a final decision has been made under state law. A decision would be considered final after one appeal or request for waiver has been rejected.
The owner wouldn't have to exhaust any remedies in state court before suing in federal court. Also, a federal district court couldn't yield jurisdiction to a state court if no violation of state law has been alleged. Where an issue of state law must be resolved, the district court would certify that issue to the highest state appellate court and then resume the proceedings when the issue is resolved.
The Senate committee amended the bill to allow owners to file cases simultaneously in federal district court and the U.S. Court of Federal Claims, eliminating jurisdictional problems when a case involves both a request for injunctive relief and a claim for monetary compensation. The House has approved similar provisions in a separate bill (H.R. 992).
Rep. Johnson's tax credit bill would:
* raise the credit cap by 40%,
* facilitate combination of credits and HOME housing block grant funds and
* promote the use of tax credits for community revitalization.