COMMUNITY DEVELOPMENT AND HOUSING COMMITTEE

LOW-INCOME HOUSING TAX CREDIT VOLUME INCREASE
AND TAX-EXEMPT PRIVATE ACTIVITY BOND VOLUME CAP INCREASE

WHEREAS, the Low-Income Housing Tax Credit is the primary tool for producing rental housing across the country; and

WHEREAS, since 1987, more than $3 billion in housing tax credits have been allocated to help finance more than 900,000 multifamily housing units for lower-income persons; and

WHEREAS, it is estimated that in 1999 demand for housing tax credits outstripped supply by more than 3 to 1; and

WHEREAS, the Low-Income Housing Tax Credit has lost purchasing power due to remaining at the $1.25 per capita since it was enacted in 1986; and

WHEREAS thousands of units are being removed from the low rent public housing inventory annually because of their poor physical condition; and

WHEREAS, LIHTC should discourage the concentration of poor families in housing developments and instead promote the reviatalization of neighborhoods by providing mixed-income housing opportunities; and

WHEREAS, legislation has been introduced that would increase the tax credit volume cap from $1.25 per capita to $1.75 per capita, while indexing it for inflation; and

WHEREAS, this legislation has overwhelming support in both houses of Congress (HR 175 – 370 cosponsors; S 1017 – 78 cosponsors); and

WHEREAS, tax-exempt private activity bonds foster public-private partnerships in a variety of areas including housing and economic development; and

WHEREAS, the Tax Reform Act of 1986 imposed a unified statewide volume cap on tax-exempt private activity bonds, including Mortgage Revenue Bonds, "Small Issue" Industrial Development Bonds, multifamily housing bonds, student loan bonds, and certain exempt facilities; and

WHEREAS, the 1986 tax act set the statewide volume cap at the greater of $250 million per state or $75 per capita, with those amounts declining to $150 million per state or $50 per capita, based on an assumed "sunset" on the authority to issue Mortgage Revenue Bonds and Small Issue Industrial Bonds; and

WHEREAS, over the past decade the purchasing power of the volume cap has declined by an estimated 50% due to the cumulative effect of inflation, while demand has risen sharply; and

WHEREAS, legislation has been introduced to increase the cap to the greater of $250 million per state or $75 per capita and index it to inflation thereafter, and

WHEREAS, this legislation has overwhelming support in both houses of Congress (HR 864 – 374 cosponsors; S 459 – 78 cosponsors),

NOW, THEREFORE, BE IT RESOLVED that The U.S. Conference of Mayors supports legislation that would increase the low-income housing tax credit volume cap from $1.25 per capita to $1.75 per capita, while indexing it for inflation; and

BE IT FURTHER RESOLVED that allocating agencies should be encouraged to give preferences to mixed-income developments; and

BE IT FURTHER RESOLVED that each allocating agency set-aside ten percent of its LIHTC allocation for mixed-income developments used in replacing low rent public housing units that have been removed from the public housing inventory under HUD approved demolition criteria; and

BE IT FURTHER RESOLVED that The U.S. Conference of Mayors also supports legislation to increase the statewide tax-exempt private activity bond volume cap to the greater of $250 million.