Imperiled tax credit could lead to improved health, report says

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Imperiled tax credit could lead to improved health, report says
Imperiled tax credit could lead to improved health, report says

“Evidence is building” that the Low-Income Housing Tax Credit has a positive effect on the health of residents of affordable housing, according to a new report released Wednesday by the Bipartisan Policy Center.

The report calls for more research into the connection just as Congress is considering a tax reform bill that would eliminate incentives that facilitate the production of affordable housing for seniors and others.

Since the LIHTC program was created in 1986, more than 3 million affordable rental homes have been developed serving an estimated 7 million low-income households, according to the center. In fact, the “vast majority” of new federally financed housing is created through the credit, according to the report.

“Investments in the [LIHTC] program show real promise for improving our nation's public health,” said Anand Parekh, M.D., MPH, the chief medical adviser at the BPC. “The evidence is growing that housing affordability, a neighborhood's environment and conditions within the home are important determinants of health. More research should be initiated to explore the specific ways in which tax-credit-funded projects can affect resident's health and the well-being of the communities in which they live.”

The authors call for collaborations among state and federal agencies — particularly between the Centers for Medicare & Medicaid Services, the Department of Housing and Urban Development and the Internal Revenue Service — to link health claims data with residents of LIHTC-funded properties. The BPC also urges states to conduct more health impact assessments of the LIHTC's competitive allocation process and incorporate the findings into state plans to maximize the credit's effect on community health.

“Since housing is a critical determinant of health and there is an acute shortage of affordable housing in the United States, expanding the Low-Income Housing Tax Credit is a laudable public health policy tool,” Parekh said.

The Tax Cuts and Jobs Act passed earlier this month by Republicans in the House of Representatives, however, would eliminate the tax exemption for multifamily housing bonds, the tax-exempt status of private activity bonds and the 4% Low-Income Housing Tax Credit.

“With fewer and fewer projects, prices will rise and will force Americans to age in place depending only on the help of friends and neighbors,” LeadingAge CEO Katie Smith Sloan said in a statement before the bill was passed.

These aspects of the House tax bill also drew responses from the American Health Care Association / National Center for Assisted Living and the National Low Income Housing Coalition.

“Private activity bonds are a critical form of tax-exempt financing which long-term care providers utilize to fund new construction, make infrastructure improvements [and] develop affordable housing and other projects,” AHCA/NCAL President and CEO Mark Parkinson said in a statement earlier this month. “Should this provision become law, it would severely threaten the ability of providers to make these investments in the future and would seriously damage operations for long-term care providers who deliver critical care for more than 1 million seniors and people with disabilities.”

NLIHC CEO Diane Yentel noted that the House bill preserves the 9% Low Income Housing Tax Credit program but “eliminates private activity bonds, and the 4% credit and fails to include any reforms to the housing credit to incentivize deeper targeting to make units affordable to the lowest-income families.”

Also, she said, the 4% housing credit essentially would be eliminated because it is only available with debt financing from tax-exempt private activity bonds. “This will have a severe impact on the construction and preservation of affordable homes throughout the country,” Yentel said. “Private activity bonds, and with them the 4% credit, are estimated to contribute to upwards of 60% of affordable homes built or preserved each year.”

All told, she said, the elimination of private activity bonds would mean the loss of more 80,000 affordable homes each year because they would not be constructed or rehabilitated.

The Senate is expected to vote on its version of tax reform this week. If it passes, then Senate and House leaders would need to reconcile their bills.

The BPC's Housing Commission previously recommended a 50% increase in funding for the LIHTC, and the center's Senior Health and Housing Task Force also recommended a substantial increase in federal support for the program.

Wednesday's report, noting the tax reform bills in Congress right now, said that “if corporations face lower overall tax burdens, the relative value of receiving the tax credit would be reduced and there would be less of an incentive to develop or make equity investments in affordable housing. As tax discussions continue in Congress, if a significant corporate rate reduction remains, legislative improvements to the LIHTC may be needed to maintain the production and preservation of LIHTC units at current levels.”

See the articles listed below under “Related Articles” for more information on research related to affordable housing and health.

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