[Congressional Record Volume 141, Number 148 (Thursday, September 21, 1995)]
[Senate]
[Pages S14098-S14099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            READY, FIRE, AIM

 Mr. D'AMATO. Mr. President, I rise today in support of the 
Affordable Housing Tax Credit [the Credit], which is the Federal 
Government's principal and most successful rental housing program. The 
Credit Program, however, is under attack and is threatened with 
termination. As part of budget reconciliation, the Ways and Means 
Committee has proposed to sunset the Credit at the end of 1997 pending 
a GAO review of the management of the program. Crafted this way and if 
accepted by the Senate, the proposal would greatly reduce private 
equity attracted to affordable housing through 1997, and if terminated 
after 1997, would halt the development or rehabilitation of affordable 
rental housing.
  In essence, Ways and Means is adopting a ``Ready, Fire, Aim 
Strategy.'' The committee proposes to eliminate the program before 
determining there is a problem. No hearings have been held and no study 
has been conducted. Shoot first and ask question later.
  Mr. President, I have written the chairman of the Finance committee, 
Senator Roth, urging that the Committee not consider the Ways and Means 
proposal to sunset the Credit. Oversight of any Federal program is 
always appropriate, and the Credit should not be exempt. But a mandated 
sunset before review is just a budget gimmick to pick up revenues in 
the out years. Congress can always change the program if mismanagement 
is found, but only after hearings. Termination without review will 
drastically slow the flow of private capital to projects currently 
being planned. Action before study is rash. Budgetary needs should not 
dictate housing policy.
  The Credit has enjoyed widespread bi-partisan support. Indeed, the 
program was originally sponsored by former Senator Mitchell and my 
colleague from New York, Congressman Rangel, as part of the Tax Reform 
Act of 1986, and signed into law by President Reagan. In the Bush 
administration, Secretary of HUD, Jack Kemp, was the chief advocate of 
the Credit on behalf of the administration.
  Under current law, the Credit is limited to $1.25 per capita per 
State and administered by the States on behalf of the Federal 
Government. Eligible affordable housing units are provided a Federal 
tax credit each year for 10 years, though the units must remain 
affordable for at least 15 years--many States require 30 or more years 
of affordability. Investors provide equity to projects in exchange for 
the credits to facilitate the development of affordable units.
  Based on the Nation's population of approximately 260 million, States 
are able to allocate approximately $325 million of credits from their 
1995 per capita volume limitation. Although the credits are utilized 
each year for 10 years by investors, those investors provide equity 
upfront during the development process. At today's market pricing, the 
roughly $325 million of volume cap credits available in 1995 will 
result in approximately $1.85 billion of private capital invested in 
affordable rental housing.
  This private equity translates into rental housing for families in 
need of affordable housing. According to the National Council of State 
Housing Agencies [NCSHA], since 1986 the Credit has assisted in the 
development of over 700,000 units rental housing. In 1994 alone, 
according to NCSHA, the Credit produced 114,000 new or rehabilitated 
units, spurred construction activity leading to 98,000 jobs, $3.1 
billion of wages, and $1.5 billion in tax revenues.
  According to the New York State Housing Finance Agency and the 
Division of Housing and Community Renewal, in 1994, over 6,100 units of 
rental housing were made possible because of the Credit in my home 
State. The production of these units resulted, directly, in an 
estimated $520 million of housing investment in the State. Of the 6,100 
units, over 4,700 were for low-income families. Also, in 1994, New York 
participated in a national redistribution of unused credits from the 
prior year. As a result, $9 million in additional credits were 
allocated leading to $90 million of new housing production activity and 
1,200 units of rental housing. The corresponding benefits to New York 
State's economy translated to gainful employment and badly needed 
stimulation of our business community.
  This is why I have been contacted by my Governor, George Pataki, his 
commissioner of housing, Joseph Holland, and his housing finance agency 
president, Stephen Hunt, to oppose any curtailment of the Credit 
Program until careful study has determined a need for change. 
Additionally the City of New York has urged me to stand up to the House 
Ways and Means Committee's proposal. Without the Credit my State, and 
its biggest city, would be deprived of its most important rental 
housing production program.
  The Credit was only made permanent in 1993. Prior to that the program 
would sunset and Congress would have to enact legislation to extend its 
authority. Since the permanent extension in 1993, the market has been 
flooded with equity; principally from major corporations otherwise not 
involved in affordable housing. the value of credits in the marketplace 
has dramatically increased as these companies compete for scarce 
credits awarded by States. The Ways and Means action will put a chill 
on this market driving down the amount of equity available for housing 
in 1996 and 1997. There is no assurance that the program would be 
extended after 1997. As a result, private equity available for 
affordable housing will dramatically drop because of political 
uncertainty and looming termination. This is unwarranted since no 
hearings or studies have shown problems with the Credit Program.
  As chairman of the Banking Committee, with jurisdiction over housing 
and HUD, I am keenly aware of the dramatic decline in Federal 
appropriations for housing programs. Mr. President, I am also very 
sensitive to the difficulties with HUD managing large Federal spending 
programs to support affordable rental housing. I have talked at length 
with Secretary Cisneros about his HUD reinvention blueprint based on 
less regulation and bureaucracy. Federal spending programs managed by 
HUD are slow moving and filled with red tape. On the other hand, 

[[Page S 14099]]
the Credit is allocated promptly and is not dominated by Byzantine 
Federal regulations and paperwork. If anything, Congress should and 
will move beyond the Secretary's blueprint. But we should not terminate 
a program and slow the flow of capital derived from the Credit, until 
hearings have determined a need for change.
  Mr. President, I urge rejection of the proposed Ways and Means 
Committee action to sunset the Credit. As a member of the Finance 
Committee I will work assiduously to protect this important 
program.

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