Washington, D.C. – Today, the U.S. Senate failed to approve a bipartisan tax package, with votes falling largely along party lines. While the tax package would have provided resources to build more affordable housing, it does not go far enough in addressing the pressing housing needs of America’s lowest-income and most marginalized households. Moving forward, Congress should ensure that any housing legislation prioritizes those with the greatest needs.
The tax package would provide important resources to build more rental homes; however, it falls short of providing needed reforms to ensure those homes are affordable to people with the lowest incomes. By failing to reform the Low-Income Housing Tax Credit (LIHTC), the tax package would not do enough to address our nation’s most urgent housing needs. The tax package would restore a temporary 12.5% increase to the Low-Income Housing Tax Credit that previously expired in 2021 and would support the increased use of private activity bonds to finance affordable housing. Reforms to incentivize developers to prioritize extremely low-income households and to help build more affordable rental homes in rural and Tribal areas are not included in the legislation the Senate considered – a missed opportunity to address the underlying cause of the nation’s housing crisis.
“The Low-Income Housing Tax Credit is the nation’s primary source of financing for the construction and preservation of affordable rental housing, but on its own the tax credit is rarely used to build or preserve homes affordable to households with the greatest and clearest needs,” said NLIHC President and CEO Diane Yentel. “The majority of extremely low-income renters living in apartments financed with the Low-Income Housing Tax Credit who do not receive additional support through rental assistance are severely cost-burdened, paying more than half their limited income on rent. Despite living in federally financed ‘affordable housing’, these households are often one emergency or unexpected expense away from the risk of homelessness. Any expansion of LIHTC should include essential reforms to incentivize developers to prioritize extremely low-income households and to help build more affordable rental homes in rural and Tribal areas.”
Nationally, there is a shortage of more than 7.3 million homes affordable and available for renters with the lowest incomes – a shortage that worsened significantly during the pandemic. Without access to affordable housing options, more than 10 million of America’s lowest-income households, disproportionately people of color, pay at least half their income on rent and utilities. With so much money going to keep a roof over their heads, renters with the lowest incomes are forced to live precariously, always one unexpected expense – for a broken-down car or unreimbursed medical bill – away from housing instability, eviction, and, in the worst cases, homelessness. Yet Congress only provides housing assistance to one in four eligible households.
To fully address the affordable housing and homelessness crises, Congress must provide the significant, long-term investments needed to preserve and expand the housing stock affordable to people with the lowest incomes. Congress must also make rental assistance universally available, create a permanent emergency rental assistance program, and strengthen and enforce robust tenant protections.