Cantwell Pushes Senate to Vote on Expanding Nation’s No. 1 Affordable Housing Program

08.01.24

Cantwell Pushes Senate to Vote on Expanding Nation's No. 1 Affordable Housing Program

Bill would expand the Low-Income Housing Tax Credit & allow WA to build nearly twice as many affordable homes per year under the credit, the biggest boost in 35 years; Cantwell fought to ensure her legislation making LIHTC improvements was included in bipartisan tax package

WASHINGTON, D.C. - Yesterday, U.S. Senator Maria Cantwell (D-WA) spoke on the Senate floor to advocate for an expansion of the Low-Income Housing Tax Credit (LIHTC) program and allow Washington state to nearly double the number of affordable homes built per year.

"It really is a shot in the arm at a time Americans know that the cost of their housing has gone up because we haven't built enough supply. As my colleagues know -- especially since the downturn of the financial crisis in 2008 -- that from big cities to actually small towns, the crunch of a lack of housing supply has meant an increase in cost. That means it hurts the economy overall," Sen. Cantwell said in her speech on the Senate floor. "Expanding supply works [...] A New York study found that for every 10% increase in housing supply, nearby rents decrease by 1%. And yet our colleagues don't want to build more supply?"

She continued: "And, LIHTC properties specifically, new data from Moody's Analytics found that these low-income housing projects, and the renters in the Seattle area, saved a remarkable $957 per month compared to the average rents in the region."

Today, the Senate voted on a broader tax package that included Sen. Cantwell's proposed LIHTC expansion. The package -- which would have required 60 votes to pass -- failed, with 48 ayes and 44 nos.

LIHTC is a federal program that supports the construction or renovation of affordable rental housing. The program partners federal resources with private investment to create housing that would otherwise be unprofitable and remain unbuilt. Since 1986, the Low-Income Housing Tax Credit has paid for 90% of the federally-funded affordable housing construction across the country, and has financed over 3.8 million affordable homes, including more than 100,000 in Washington state. The economic activity that the credit generated has supported nearly 170,000 jobs and generated more than $19 billion in wages.

The Tax Relief for American Families and Workers Act contains two provisions authored by Sen. Cantwell to improve the Low-Income Housing Tax Credit. These improvements would:

• Lower the requirement for bond funding from 50% of a project to 30% of a project for developers to receive the tax credit, marking the first reduction in the bond test in 35 years. According to the Washington State Housing Finance Commission, this will allow the state to issue millions more worth of bonds and build nearly twice as many units as expected -- an additional 1,500 units of housing financed in 2024.
• Restore a 12.5% tax incentive increase that originally expired in 2021. According to the Washington State Housing Finance Commission, this improvement will allow Washington state to fund 222 more affordable apartment units in 2024, and 600-650 units over three years. The increase will help the state allocate more funding for housing for the lowest income and most vulnerable people in Washington state, especially the homeless.

In January, the House of Representatives passed a bipartisan tax package that adopted the improvements to the LIHTC program proposed by Sen. Cantwell's bill. Her bill is cosponsored by nearly half of the entire Congress, with 34 cosponsors in the Senate and 230 cosponsors in the House, equally split between Democrats and Republicans in both chambers.

Video of yesterday's full floor speech is available HERE, audio HERE, and a transcript HERE. A full timeline of Sen. Cantwell's actions to boost the LIHTC program is HERE.

In February, Sen. Cantwell delivered remarks at Mother Teresa Haven, an affordable housing project in Spokane, calling on the Senate to pass the bipartisan tax package. The 48-unit affordable housing complex used the LIHTC program to cover 70% of the overall project cost. Following the press conference, Sen. Cantwell joined a tour of the apartments available at Mother Teresa Haven; video of that tour can be viewed HERE, and photos are available HERE. A transcript of her remarks is HERE.

In March, Sen. Cantwell joined a grand opening celebration for Laurel Forest Apartments, a 56-unit affordable housing project in downtown Bellingham. The nonprofit which built Laurel Forest used the LIHTC program to offset 58% of the cost of construction. Video of the event is available HERE; audio is HERE; photos are HERE; a transcript is HERE.

About LIHTC: A National Need

There is an affordable housing crisis in this country. The U.S. has a shortage of 3.85 million affordable rental homes. The scarcity of supply has only been exacerbated by the 2008 Great Recession and the COVID-19 pandemic.

The State of Washington only has 28 affordable and available rental units per 100 extremely low-income renter households. Other states with low supplies of affordable and available housing include Nevada (with only 17 available for every 100 extremely low-income renters); Oregon and Florida with 23 units per 100; and California and Arizona with 24 units per 100.

The absence of affordable housing has also led to skyrocketing rental rates. Rent payments have reached an all-time high, and half of all renters spend 30% or more of their total income on rent, while one-quarter spend more than 50% of their income on rent. This leaves many households one paycheck away from possible eviction and burdened by their housing costs.

Disproportionate Impacts

The housing crisis has hit the country's most vulnerable populations the hardest. BIPOC households are disproportionately affected by the affordable housing shortage because they are more likely to be renters, spend a significant portion of their income on housing, and may face economic inequalities created by previous discriminatory policies.

The LIHTC program is essential for lifting up traditionally underserved rural and minority families because often it's the only way these communities can build affordable housing. In some of the most underserved rural counties, LIHTC supports just over 40% of all multifamily housing built, three times the national average.

An Economic "Shot in the Arm"

Affordable housing is critical to continued economic development for the U.S. and the financial success of individual renters. Although inflation is down substantially, high housing costs are directly tied to increasing inflation. In June 2024, housing costs continued to rise, and were the biggest driver keeping inflation elevated, accounting for over two-thirds of the monthly all items increase. Increasing the affordable housing supply will decrease rents for households nationwide and lower inflation.

Studies have shown that expanding housing supply lowers rents. For example, a 2019 study by the D.C. Office of Revenue Analysis found that renters saved $177 per month, or $2,124 per year, after an average of 2,337 new units of housing were built per year in Washington, D.C. Conversely, the study found that had the new units not been built, average city apartment rents may have increased by 5.84%. A New York University study found that, for every 10% increase in housing supply, nearby rents decreased by 1%.

Moreover, research has shown the affordable housing shortage costs the U.S. economy nearly $2 trillion annually in lower wages and productivity. LIHTC can help by providing renters with a safe, stable, and affordable place to call home, which helps them perform better at school, hold a job, and be mentally and physically healthier. For example, their total Medicaid expenditures decrease by 12% and they made 18% fewer emergency department visits.

The LIHTC program also creates construction jobs. LIHTC-funded housing development annually supports approximately 95,000 jobs and $7.1 billion in wages and business income. Additionally, the program contributes $2.8 billion in federal, state, and local taxes, which helps local development.

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