Echoing U.S. Sen. Mary L. Landrieuís, D-La., concerns about the one-year extension of the Gulf Opportunity (GO) Zone Low-Income Housing Tax Credit placed-in-service date that Congress passed last week, the New York Times today published the editorial found below.
In connection with the debate on the bill, Sen. Landrieu was successful last week in receiving a commitment on the Senate floor from Senate Finance Committee Chairman, Max Baucus, D-Mont., and Sen. John Kyl, R-Ariz., the chief Republican negotiator of the tax deal, to include a two-year extension in new tax legislation at the earliest possible time in the 112th Congress. The Tax Relief, Unemployment Insurance Authorization and Job Creation Act of 2010, which passed the Senate last week, only extended the placed-in-service date from January 1, 2011 to January 1, 2012.
A two-year extension, which has been endorsed by Treasury Secretary, Timothy Geithner, Housing and Urban Development Secretary, Shaun Donovan, the New Orleans Times-Picayune and previous editorials from the New York Times, passed the Senate in March of this year as part of the Tax Extenders bill.
Housing for Hurricane Victims
New York Times Editorial
The recession has made it impossible for Louisiana and other gulf states to replace thousands of affordable housing units swept away five years ago by Hurricanes Katrina and Rita. Congress tried to fix this problem last week with a one-year extension of a tax-credit program that encourages companies to invest in affordable housing as a way of offsetting tax liabilities.
But one year does not allow enough time for weather and construction delays; investors have already made it abundantly clear that they will avoid the program unless Congress gives them at least 18 months to get the deals signed, the buildings erected and tenants installed. This should be an urgent priority for the next Congress.
Nearly all the affordable rental housing in this country is built through the low-income tax-credit program. After the two storms, Congress allotted Louisiana, Mississippi and Alabama more than $300 million in credits under a program requiring that projects be ready for occupancy by the end of this year.
The credits sold briskly while the economy was booming. But demand dropped off steeply during the recession when businesses had progressively smaller tax liabilities. The market picked up again with the recovery, except in the Gulf of Mexico region, where investors worried they could lose money by buying into projects that would miss the ready-for occupancy deadline.
Last spring, Senator Mary Landrieu, a Democrat of Louisiana, introduced an amendment extending the occupancy date by two years. Congress dragged its feet up until last week when lawmakers demanded that the extension be cut back to one year.
This will help a handful of projects that are already in progress. But it will do nothing for the 70 or so projects scattered around the gulf states that are still searching for investors. The next Congress will need to quickly extend the tax credits by another year.