Herald-Tribune
Speaker of the U.S. House Paul Ryan’s office on Tuesday released a not-so-cute play on ”’Twas the night before Christmas” on the eve of a conference committee’s meeting on the enormous tax bill.
In ”‘Twas the night before ‘Taxmas,’” Ryan touted the benefits of the bill but, given the House version’s effects on affordable housing nationwide, the speaker is better cast as the Grinch or Scrooge rather than as jolly old Saint Nick.
The House bill would eliminate Private Activity Bonds, which have been widely used by public agencies and private developers to expand the stock of affordable housing in our region and nationwide. The bonds, which are sold by qualified issuers and then packaged for purchase, are attractive to investors because the interest earned is tax-free; housing authorities and developers in the limited, affordable niche like the instruments’ lower borrowing costs.
Public-housing authorities and private developers generally agree that the PABs are needed to supplement a Low Income Housing Tax Credit program — one that offers a 4 percent credit — in order to make development of affordable housing feasible. For example, the second phase of the Janie’s Garden public-housing project, which has dramatically improved conditions in Sarasota, was financed by Private Activity Bonds and the 4 percent tax credit. (Rents are based on residents’ incomes.)
Eliminating this credit would have real-world impacts. For instance, financing for a Sarasota Housing Authority affordable-housing project in the Rosemary District could be in peril; the same goes for the proposed Venetian Walk complex in Venice, which the city promised to construct after the decrepit Grove Terrace apartments were demolished in 2009. Both projects have been approved for the tax credits by the Florida Housing Finance Corporation, so maintaining the PABs could mean the difference between affordable construction or no new units (or more costly ones).
The Venice City Council agreed Tuesday to apply for a 9 percent credit program that does not depend on the bonds for feasibility, but tight funding restricts the number of those credits issued; competition among applicants is fierce.
Fortunately, the Senate’s tax bill maintains the PABs. We hope that Florida Sens. Bill Nelson and Marco Rubio will work in bipartisan fashion to retain the bonds, and that Rep. Vern Buchanan — who has, to his credit, supported tax-credit programs — uses his influence to encourage House negotiators to protect the PABs when the Senate and House bills are reconciled.
The government does “lose” revenue based on the tax-free status of the bonds. And an argument can be made for tightening some of the rules related to other uses of the PABs.
But the benefits to low-income Americans and those on the lowest end of the moderate segment far outweigh the costs.
When the bonds and tax credits are used, private-sector developers do the construction on public-housing initiatives, generating economic activity and providing jobs. If developers were champing at the bit to provide affordable housing on their own, PABs and the credits would not be necessary. But the bonds and credits are vital and should be maintained to provide more, not less, affordable housing.
Article last accessed here on Dec. 15, 2017.