The U.S. Congress is currently considering the “Accelerated Supply of Affordable Production [ASAP] Housing Act” (the “Act”), legislation to address the nationwide affordable housing shortage and surrounding real estate market.
The proposal, introduced on September 25, 2024, by Congressman Ritchie Torres (NY-15), seeks to increase resources available for affordable housing projects by exempting certain affordable housing from the federal volume cap limiting the issuance for tax-exempt Private Activity Bonds. The exemption on the cap, which is different for each state and based on population, would apply for 10 years.
Key Provisions of the ASAP Housing Act
If passed, the Act will amend the Internal Revenue Code of 1986 to establish an exemption to the volume cap for certain bonds that finance the preservation, improvement or development of affordable rental housing buildings. This would provide financial incentives and unlock more funding for developers and communities focused on creating and preserving critical affordable housing options.
By coordinating with the low-income housing tax credits (“LIHTC”), the bill ensures a streamlined process for financing affordable rental housing that will remain accessible to low-income households for a sustained period.
Key Provisions of the legislation include:
- Volume Cap Exemption:
• Establishes an exception to the volume cap on Private Activity Bonds under Section 146(g) of the Internal Revenue Code for bonds issued to finance 100% affordable rental housing for low-income households.
• Applies to bonds issued between 2025 and 2034. - Coordination with LIHTC:
• Amends Section 42(h)(4)(A)(i) of the Internal Revenue Code to ensure these bonds can be used in coordination with the LIHTC program. - Effective Date:
• The provisions of the bill apply to bonds issued after December 31, 2024.
Currently, Private Activity Bonds are limited by a volume cap set by the federal government based on the population of each state. The volume cap is the maximum amount of tax-exempt Private Activity Bonds that can be issued in a state during a calendar year. The Act would allow the financing of projects where 100% of the units are for affordable housing without affecting each state’s volume cap.
Eligibility Criteria for the ASAP Housing Act
To be eligible for the volume cap exemption, the bonds must be used to finance the construction, preservation or improvement of an affordable rental housing building in which 100% of the units are used for affordable low-income households. The units would be available to households earning up to 80% of the area median income.
Opportunities for Developers and Investors
This Act presents a substantial opportunity for developers and investors to address affordable housing shortages while revitalizing vacant or underutilized commercial properties. By creating 100% affordable housing projects to take advantage of the tax credits, stakeholders can reduce their tax burden and enhance project feasibility.
Harris Beach’s Affordable Housing team is monitoring this development and related matters. For further details on how this proposed legislation might impact your projects, or if you have questions for our housing lawyers, please reach out to attorney Michael A. Discenza at (212) 912-3605 and mdiscenza@harrisbeachmurtha.com; attorney Melanie C. Marotto at (716) 200-5230 and mmarotto@harrisbeachmurtha.com; attorney Charles (Chip) W. Russell at (585) 419-8635 and crussell@harrisbeachmurtha.com; attorney Tyler W. Stark at (585) 419-8961 and tstark@harrisbeachmurtha.com; or the Harris Beach attorney with whom you most frequently work.
This alert does not purport to be a substitute for advice of counsel on specific matters.
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