[Congressional Record Volume 145, Number 68 (Wednesday, May 12, 1999)]
[Senate]
[Pages S5155-S5156]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MACK (for himself, Mr. Graham, Mr. Santorum, Mr. Sarbanes, 
        Mr. Chafee, Mr. Bryan, Mr. Murkowski, Mr. Breaux, Mr. Jeffords, 
        Mr. Kerrey, Mr. Coverdell, Mr. Robb, Mr. Craig, Mr. Conrad, Mr. 
        Shelby, Mr. Rockefeller, Mr. Allard, Mr. Dodd, Mr. Grams, Mr. 
        Johnson, Mr. Hagel, Mr. Schumer, Mr. Crapo, Mr. Lieberman, Mr. 
        Helms, Mr. Edwards, Mr. Abraham, Mrs. Lincoln, Mr. Sessions, 
        Mrs. Boxer, Mr. Hutchinson, Mrs. Feinstein, Mr. Lugar, Mr. 
        Wellstone, Ms. Snowe, Mr. Torricelli, Mr. Specter, Mr. Dorgan, 
        Mrs. Hutchison, Mr. Hollings, Mr. Thomas, Mr. Daschle, Mr. 
        Lautenberg, Mr. Kerry, and Mrs. Murray):
  S. 1017. A bill to amend the Internal Revenue Code of 1986 to 
increase the State ceiling on the low-income housing credit; to the 
Committee on Finance.


               Affordable Housing Opportunity Act of 1999

  Mr. MACK. Mr. President, I rise today to introduce the Affordable 
Housing Opportunity Act of 1999. My colleague from my home state, Bob 
Graham, my colleague from Pennsylvania, Senator Santorum, and 42 other 
members of the Senate join me as original cosponsors of this effort to 
make sure that the Low Income Housing Tax Credit is not undercut by the 
effects of inflation.
  The Low Income Housing Tax Credit is one federal housing program that 
works. It works to produce affordable rental housing by allowing states 
to distribute tax credits to those who invest in apartments for low 
income families. It works because it is decentralized, it is market-
oriented, and it relies on the private sector.
  The Low Income Housing Tax Credit works because it is based on sound 
economics. This is in stark contrast to the alternative government 
approach to the problem of a scarcity of privately owned, affordable 
housing units, the approach of rent control. Under rent

[[Page S5156]]

control, owners are restricted in the price they can charge for their 
apartments. Since this dramatically reduces the return on their 
investment in housing, potential owners of rental units take their 
money elsewhere. The result, confirmed in a study of rent control in 
California in the early 1990s, is that rent control actually reduces 
the number of rental units available for low income families.
  There is a better way. The Low Income Housing Tax Credit is that way. 
Under this program, tax credits are allocated by states and their 
localities to investors in low income housing. In return for agreeing 
to charge low rents for the units produced, the investors receive a tax 
credit that makes up for the financial risk of the investment. Instead 
of mandating low rents, the program provides an incentive for property 
owners to charge low rents.
  And, as Adam Smith would have predicted, this incentive does the job. 
Since 1987, state agencies have allocated over $3 billion in Housing 
Credits to help finance nearly one million apartments for low income 
families, including 70,000 apartments in 1997. In my own state of 
Florida, the Credit is responsible for helping finance over 52,000 
apartments for low income families, including 3,300 apartments in 1997. 
The demand for Housing Credits nationwide currently outstrips supply by 
more than three to one.
  Despite the success of the Housing Credit in meeting affordable 
rental housing needs, the apartments it helps finance can barely keep 
pace with the nearly 100,000 low cost apartments which are demolished, 
abandoned, or converted to market rents each year. This is because the 
credit has been set at an annual amount of $1.25 per resident of each 
state, since its creation in 1986. To make up for the loss in value of 
the credit due to inflation, we propose to increase this amount to 
$1.75 per resident and to index the amount for future inflation. It has 
been estimated that this will increase the stock of critically needed 
low income apartments by 27,000 each year.
  There has long existed in this body a dedication to affordable 
housing, an interest that knows no party lines. One of the major, early 
proponents of federally supported affordable housing was Senator Robert 
A. Taft of Ohio, known in his day as Mr. Republican, whose monument 
chimes regularly just a few hundred yards from here. With this strong, 
bipartisan pedigree, I have no hesitation in asking my colleagues on 
both sides of the aisle to join me to enact this proposal--which is 
similar to one contained in the President's budget and is supported by 
the nation's governors and mayors and the affordable housing 
community--to ensure the continued vitality of a program that works.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1017

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Affordable Housing 
     Opportunity Act of 1999''.

     SEC. 2. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING 
                   CREDIT.

       (a) In General.--Clause (i) of section 42(h)(3)(C) of the 
     Internal Revenue Code of 1986 (relating to State housing 
     credit ceiling) is amended by striking ``$1.25'' and 
     inserting ``$1.75''.
       (b) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of section 42(h) of such Code 
     (relating to housing credit dollar amount for agencies) is 
     amended by adding at the end the following new subparagraph:
       ``(H) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2000, the dollar amount contained in subparagraph (C)(i) 
     shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 1999' for `calendar year 1992' in subparagraph 
     (B) thereof.

       ``(ii) Rounding.--If any increase under clause (i) is not a 
     multiple of 5 cents, such increase shall be rounded to the 
     next lowest multiple of 5 cents.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 1999.

  Mr. GRAHAM. Mr. President, I rise today with my good friend and 
colleague, Senator Mack to introduce the Affordable Housing Opportunity 
Act of 1999. This legislation would raise the annual limit on state 
authority to allocate low-income housing tax credits from $1.25 to 
$1.75 per capita, and to index the cap to inflation.
  Since its creation in the Tax Reform Act of 1986, the low income 
housing tax credit program has been a tremendous success that has 
generated nearly a million units of housing for low and moderate income 
families. In my home state of Florida the tax credit has produced over 
52,000 affordable rental units, valued at over $2.2 billion, including 
3,300 apartments in 1997.
  This housing tax credit is a valuable incentive for developers to 
build and rehabilitate low-income housing. It encourages the 
construction and renovation of low income housing by reducing the tax 
liability placed on developers of affordable homes. The credit is based 
on the costs of development as well as the percentage of units devoted 
to low-income families.
  The low income housing tax credit not only helps developers but also 
benefits families. Those families that get up and go to work every day 
to earn their rent and mortgage payments, the low income housing tax 
credit provides families with an important stake in maintaining self-
sufficiency. By supporting this credit we make the American dream more 
available to all Americans.
  This credit has succeeded as a catalyst in bringing new sources of 
funding to low income housing development. This is particularly 
important at a time when decreasing appropriations for federally-
assisted housing and the elimination of other tax incentives for rental 
housing production have only grown. While this success is gratifying, 
we should not take for granted the continued growth of this program.
  Under the current formula used to fund this program, each state is 
located $1.25 multiplied by the State's population. Unlike other 
provisions of the Tax Code, this formula has not been adjusted since 
the credit was created in 1986. During the same period, inflation has 
eroded the credit's purchasing power by nearly 45 percent, as measured 
by the Consumer Price Index. This cap is strangling state capacity to 
meet the pressing low income housing needs.
  By increasing the cap on this credit to $1.75, we will free the 12 
year cap on housing credit from it current limitations, as requested by 
our Nation's governors, and we will liberate states' capacity to help 
millions of Americans who still have no decent, safe, affordable place 
to live.
  A brief look at the history of the housing credit provides ample 
evidence of why we need our legislation. Nationwide, demand for housing 
credits outstrips supply by a ratio of three to one. In 1998, states 
received applications requesting more than 1.2 billion in housing 
credits--far surpassing the $365 million in the credit authority 
available to allocate that year. This trend coupled with the fact that 
every year nearly 100,000 low cost apartments are demolished, 
abandoned, or converted to market rate use makes clear the need for 
this legislation. Increasing the cap as I propose would allow states to 
finance approximately 27,000 more critically needed low income 
apartments each year using the housing credit.
  In the last Congress, sixty seven Senators cosponsored this 
legislation, including nearly two-thirds of the Finance Committee, 
raising the low income housing tax credit to $1.75 and indexing it for 
inflation. Nearly 70 percent of the House Ways and Means Committee and 
a total of 299 House Members cosponsored legislation proposing the same 
increase.
  That indicates just how much support this program has in the 
Congress. Also, the Administration, the nation's governors and mayors, 
other state and local government groups, and the affordable housing 
community strongly support this increase. I am confident with all this 
support that this measure will finally pass this year. I urge all my 
colleagues to embrace this important legislation.
                                 ______