Interview with Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition

The housing credit is our nation’s primary tool to finance and build affordable housing, creating over 3.7 million affordable homes nationally. It is a public-private partnership where the federal government provides annual tax credits to each state, allowing them to determine how to distribute those credits to areas of need, based on local conditions and priorities. Because it’s based on population, California is always a top recipient and has created over 426,000 affordable homes, which accounts for more than one in eight homes financed by the Housing Credit in the state.

We are very proud of that positive impact, which is also reflected in the support we have received from the California Congressional delegation, which is one of our biggest champions.

The developers who receive the awards get a 10-year stream of credits that they exchange with investors for upfront capital to build properties. Then they find low-income tenants to live there and the investor receives a stream of credits that can be recaptured any time in the first 15 years.

There’s a lot of private sector oversight to ensure the credits begin flowing and continue to flow as expected. And there’s an affordability period beyond that first 15 years enforced by the state. It’s a very clever model to improve the delivery of affordable housing.

These proposals to expand and strengthen the housing credit are absolutely bipartisan, with the current version of the Affordable Housing Credit Improvement Act garnering more bipartisan support than ever at a quicker pace. Even though the bill was only introduced about six months ago, more than 40% of Congress is listed as official co-sponsors. That certainly speaks to the need for affordable housing, and it’s been especially encouraging that the members who sign onto it feel good about being part of a solution, even with the current turmoil in the government.

Because it’s a well-vetted program, we emphasize that we’re just taking something that already works and adding more to it. We could start putting shovels in the ground right away.

While we definitely have bipartisan support, our main challenge is the lack of bills passing in general and since tax bills generally don’t move on their own, we’re waiting for a broader tax package to come together. Because the latter is affected by bigger dynamics, all we can do is continue to build up our bipartisan numbers so that when things start to move, it’s as easy as possible to include some of the proposals we’ve been working on.

Generally, there’s no major legislation that passes in an election year because they’re working on setting the new agenda. For that reason, 2024 is likely to be a slow year for any major tax bill. Now, the recent passage of the two-step continuing resolution is an interesting and unprecedented complexity that buys more time, with some deadlines at the end of the year, such as an FAA reauthorization, that could serve as vehicles for tax legislation. So now we have these two new deadlines in January and February to continue funding various federal agencies that could potentially serve as vehicles for tax.

However, yet another timing-related complication is that if you pass a tax bill too close to tax day, it’s a challenge for the IRS to incorporate it into the forms they provide to taxpayers. So while you never know where there could be an opportunity, the prevailing wisdom is that the window closes to make big tax changes after January.

Then looking farther ahead, there will be a tax bill in 2025 because numerous pieces of the Tax Cuts and Jobs Act are set to expire, and no party will let that happen. That means it will be easy to delay these proposals to that larger tax effort, which is why we really see these next couple of months as the time to leave no stone unturned. We can’t control whether Congress decides to do anything on tax, but we want to make sure we’re doing everything possible to try to get housing credit provisions in any bill.

Usually, any other increases in affordable housing production are going to come from the spending side, from increases in spending on HUD programs, which unfortunately is going to be pretty tough in the current environment. A continuing resolution to continue funding the government at current levels may be as close to a best-case scenario as possible. While normally continuing resolutions aren’t ideal as they don’t take into account growth and rising costs, the House has proposed substantial, painful cuts to a lot of housing programs. Because anything that passes has to go through the Senate, they’re not likely to accept the deep cuts that have been proposed, although we realize there still could be some pretty significant cuts in a conference.

Previously there had been talk of $150 billion in new spending on HUD programs, but with the politics the way they are this year, that’s just unfortunately not on the table. I do hope there’s another time when public opinion and politics align so we can talk about these or other programs that will really make a bigger dent in the need. But today it’s mostly about playing defense.

The best thing advocates can do—and something Eden is exceptional at—is getting members of Congress and local elected officials out to see affordable housing properties firsthand. It really makes the difference between members of Congress who might casually support a program or be neutral towards it, compared to those who are actual champions—who pick up the phone and call leadership.

Those members who are willing to make those calls are the ones who’ve met the residents, the nurses and firefighters who live there; they’ve seen how affordable housing has transformed communities and maybe has even defied their perception of what affordable housing was.

Then we need to continue checking back in with those advocates, like Senator Alex Padilla and California Congressmen Jimmy Panetta, Mike Thompson, Linda Sanchez, Judy Chu and others who are going to be in the room when a tax bill comes together. I don’t believe they need convincing anymore, which is great, but they need to stand up and say, “We can’t let another year go by without doing something on affordable housing.”

Because even with one of the most popular bills in Congress, we still need members of Congress who realize they only get to identify one or two priorities for a tax bill and they make affordable housing one of them. It’s not just about putting your name on the line, but being willing to actually fight to include affordable housing amid the rough climate of getting something all the way through to the President’s desk.

We know that we won’t get everything we want, given the reality of legislating, but we do think we have a very serious shot at some key priorities that would still get us more than a million affordable homes added to the pipeline over the next 10 years than otherwise possible.