With Republicans poised to rewrite the tax code, local governments have been trying to figure out how to brace for the potentially devastating fallout. In San Jose, that meant a proposal to fast-track a senior apartment project in case the final tax measure eliminated tax-exempt affordable housing bonds.
San Jose housing officials are asking the City Council this week to expedite bond approval for a 63-unit, low-income senior housing complex. The city’s Housing Department placed the item on the agenda because congressional Republicans initially planned to nix the low-income tax credit, which makes it financially feasible for private developers to fund affordable housing.
Affordable housing advocates breathed a sigh of relief when Republicans spared the low-income housing tax credit in the reconciled version of their tax bill, which comes to a final vote this week before likely heading to the president’s desk.
Regardless, San Jose will decide whether to sign off on the sped-up timeline for senior apartments on Leigh Avenue, which would allow the state to issue bonds to the developers—First Community Housing—in time for them to claim a 4-percent tax credit for financing this coming year.
Though interest on low-income housing bonds will apparently remain tax-free under the latest iteration of the GOP tax plan, other components could still undermine Silicon Valley’s efforts to curb rising housing costs and end homelessness.
If Republicans lower the corporate tax rate from 35 to 21 percent, for example, the tax credits offered for building affordable housing would become less valuable, which would discourage investment in the type of projects San Jose needs to prevent displacement.
A few other changes to tax credits and bonds could carve away even more resources for affordable housing. The federal government is proposing to eliminate “advance refundings,” which would make it harder for cities and counties to refinance their bonds to get lower interest rates. The final tax measure also cuts tax credits for rehabilitating historic buildings.
By adding about $1.5 trillion in debt over a decade, the GOP tax plan will also require significant cuts to programs that will limit future affordable housing investment through the U.S. Department of Housing and Urban Development, according to news reports.
In 2018, that could potentially translate to a $220 million cut to the Housing Trust Fund, which doles out state grants to build and preserve low-income rental housing, the New York Times reports.
“While the preservation of Low Income Housing Tax Credits and Private Activity Bonds avoids an immediate devastating impact on affordable housing, this bill will exacerbate our country’s already yawning income inequality and will harm efforts to end homelessness and housing poverty,” the National Low Income Housing Coalition wrote in a statement on Friday. “An estimated 64 percent of the bill’s benefits go to the top 1 percent of earners, at a cost to the country of over $1 trillion. At a time when we should be increasing investments in solutions to the housing crisis impacting low income people across the country, the increased deficits created by these tax cuts puts the national Housing Trust Fund and other vital housing and community development programs at risk of deep spending cuts down the line.”
More from the San Jose City Council agenda for December 19, 2017:
- Vice Mayor Magdalena Carrasco wants San Jose to adopt a “Women’s Bill of Rights,” which would tackle gender-based inequities at City Hall.
- Team San Jose was credited with drawing 1.36 million people to the Convention Center and local cultural facilities, as well as booking 187,000 future hotel room nights. As a result, they met all nine of their performance measures and will receive a $200,000 bonus.
- A new sign ordinance could be coming to San Jose as the city tries to rally up more advertising dollars. Will downtown become a mini version of Times Square? No. But the broad expansion of digital signage looks like a real possibility.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260