A bipartisan group of policymakers – including Senators Todd Young (R-IN) and Ron Wyden (D-OR) and Representatives Joe Neguse (D-CO), Don Beyer (D-VA), and Jackie Walorski (R-IN) – introduced bipartisan, bicameral legislation to help preserve housing developments financed by the Low Income Housing Tax Credit (Housing Credit) by reforming the “qualified contract” process.
Currently, Housing Credit properties are subject to a 30-year affordability period, but federal law also allows property owners to request a qualified contract that allows them to convert properties to market rate after just 15 years. When a property owner requests a qualified contract, the state allocating agency has one year to find a qualified buyer to purchase the property and maintain it as affordable for the duration of the “extended-use” period (from 15 to 30 years). The purchase price for a qualified contract is set by statute, but because the purchase price is typically greater than the property’s market value, some property owners have used the qualified contract process as a loophole to shorten the affordability requirements. If no buyer is found, the property owner can convert the property to market-rate apartments.
As of 2017, approximately 50,000 affordable rental homes have already been lost nationwide, and in that year alone property owners served notice to state allocating agencies that they wanted to begin the qualified contract process on additional properties comprising approximately 18,000 affordable homes.
The “Save Affordable Housing Act” would help prevent the premature loss of affordable homes and ensure Housing Credit properties remain affordable for at least 30 years, as Congress intended. If enacted, the bill would repeal the qualified contract option for future housing developments financed with the Housing Credit. The bill corrects the statutory purchase price for existing Housing Credit properties, making it based on a property’s fair market value. The bill also provides an alternative to qualified contracts for “troubled properties” for which owners need to renegotiate their extended-use agreements to maintain the properties’ financial feasibility.
NLIHC supports the Save Affordable Housing Act as an important reform to the Housing Credit program.
Read Senator Young’s press release at: https://tinyurl.com/y22vnerm
Read the bill text at: https://tinyurl.com/y6xajj4v