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File #: 2017-2152    Version: 1
Type: Will of Council Status: Adopted
File created: 11/20/2017 In control: City Council
On agenda: 11/20/2017 Final action: 11/20/2017
Enactment date: 11/20/2017 Enactment #: 692
Effective date: 11/20/2017    
Title: NOW THEREFOR BE IT RESOLVED that the Council of the City of Pittsburgh opposes the Tax Cuts and Jobs Act in its current form because of the adverse effects it will have on affordable housing, and calls on the House on the Representatives to amend the bill; and BE IT FURTHER RESOLVED that the Council of the City of Pittsburgh calls on the United States Senate to oppose this legislation in its current form.
Sponsors: Corey O'Connor, All Members
Indexes: PROCLAMATION - MR. O'CONNOR
Body
WHEREAS, the United States House of Representatives passed legislation containing major changes to the American tax code on Thursday, November 16, including close to $1.5 trillion in tax cuts, which will result in major changes to the housing market; and

WHEREAS, a major component of this legislation, dubbed the Tax Cuts and Jobs Act, is a drastic slashing of the corporate tax rate from 35 to 20 percent, which will decrease the amount of equity developers will be able to raise for projects making use of the Low-Income Housing Tax Credit (LIHTC), which incentivizes private investment in affordable housing developments; and

WHEREAS, although the House of Representatives' legislation retains the LIHTC tax code structure, it disallows the use of tax-exempt, private activity bonds, which are major components of almost 60 percent of LIHTC developments; and

WHEREAS, the LIHTC's four-percent tax credit can only be utilized if 50 percent or more of the project is funded through private activity bonds, and therefore, the Tax Cuts and Jobs Act's elimination of private activity bonds will have deleterious effects on the four-percent tax credit; and

WHEREAS, created as part of the Tax Reform Act of 1986, the LIHTC is a vital part of almost all new, major affordable housing construction projects in the country, with the U.S. Department of Housing and Urban Development estimating that the LIHTC produced 2,402,484 low-income housing units between 1986 and 2016; and

WHEREAS, the LIHTC is structured so that the Internal Revenue Service allocates LIHTCs to states on a per-capita basis, with states' housing finance agencies' determining which affordable housing project applicants are the most deserving, and the agencies' then transferring the LIHTCs to investors, such as banks, who then raise the necessary equity for the projects; and

WHEREAS, the LIHTC is widely seen as successful initiative, as it allows developers to finance projects while avoiding a large debt burden,...

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