Advocacy Center
CDFA is the voice of development finance on Capitol Hill and with the federal Administration, providing leadership on policy decisions that impact the industry. CDFA is a bipartisan organization that supports sound public policy and the leadership involved in making important decisions affecting development finance.
Each year CDFA produces a Policy Agenda and works with legislators and federal officials to advance these initiatives. Additionally, CDFA holds briefings, trainings, and advises legislative and federal stakeholders on numerous topics.
Want regular updates on legislative and federal affairs? CDFA publishes the highly popular
Legislative & Federal Affairs Update each month. This free newsletter features development finance news, resources, case studies, and the latest from Capitol Hill and the federal government.
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-Latest Developments
January 31, 2024 - U.S. House of Representatives Passes $79 Billion Bipartisan Package, Now Moves to U.S. Senate
On January 31, 2024, the U.S. House of Representatives passed
H.R. 7024 - The Tax Relief for American Families and Workers Act of 2024 with a vote of 357-70. The bill now moves to the U.S. Senate. The bill's provisions include the following:
Affordable Housing Provisions
- State Housing Credit Ceiling Increase for Low-Income Housing Credit: In calendar years 2018 through 2021, the 9% Low-Income Housing Tax Credit (LIHTC) ceiling was increased by 12.5%, allowing states to allocate more credits for affordable housing projects. This provision restores the 12.5% increase for calendar years 2023 through 2025 and is effective for taxable years beginning after December 31, 2022.
- Tax-Exempt Bond Financing Requirement: Under current law, to receive LIHTC a building must either receive a credit allocation from the state housing finance authority or be bond-financed. To be bond-financed, 50% or more of the aggregate basis of the building and land must be financed with bonds that are subject to a state's private activity bond volume cap. This provision lowers the bond-financing threshold to 30% for projects financed by bonds with an issue date before 2026. This section provides a transition rule for buildings that already have bonds issued by requiring that a building must have 5% or more of its aggregate basis financed by bonds with an issue date in 2024 or 2025.
This provision is effective for buildings placed in service after December 31, 2023. In the case of rehabilitation expenditures, which are treated as a separate new building by the IRS, the building is considered placed in service at the end of the rehabilitation expenditures period. The 30% requirement is applied to the aggregate basis of both the existing building and the rehabilitation expenditures.
This provision may ease oversubscription on private activity bond volume cap allocations that recently have been constrained due to increased housing costs and the amount required to be financed with bonds.
Other Provisions
- Calculation of Refundable Credit on a Per-Child Basis: Under current law, the maximum refundable child tax credit for a taxpayer is computed by multiplying that taxpayer's earned income (in excess of $2,500) by 15%. This provision modifies that calculation of the maximum refundable credit amount by providing that taxpayers first multiply their earned income (in excess of $2,500) by 15%, and then multiply that amount by the number of qualifying children. This policy would be effective for tax years 2023, 2024, and 2025.
- Deduction for Research and Experimental Expenditures: Current law provides that research or experimental costs paid or incurred in tax years beginning after December 31, 2021, are required to be deducted over a five-year period. Research or experimental costs that are attributable to research that is conducted outside of the United States are required to be deducted over a 15-year period.
- East Palestine Disaster Relief Payments: In general, gross income is defined as income from whatever source derived. This section treats East Palestine train derailment payments as qualified disaster relief payments as defined in IRC section 139(b). Thus, these payments are excluded from gross income and are subject to other present-law provisions applicable to qualified disaster relief payments.
East Palestine train derailment payments are any amount received by or on behalf of an individual as compensation for loss, damages, expenses, loss in real property value, closing costs with respect to real property, or inconvenience resulting from the East Palestine train derailment paid by a Federal, State, or local government agency, Norfolk Southern Railway, or any subsidiary, insurer, or agent of Norfolk Southern Railway or any related person. 8 “East Palestine train derailment” is defined as the derailment of a train in East Palestine, Ohio, on February 3, 2023. This section applies to amounts received on or after February 3, 2023.
Read the Full Technical Summary of the Bill
Development finance agencies are encouraged to let their voices be heard on Capitol Hill. To get engaged, contact
Mitchell Smith.
-CDFA Policy Agenda
Overview
CDFA is committed to fulfilling numerous development finance policy objectives in 2024, including the improvement of tax-exempt bonds, reinstatement of the brownfields redevelopment tax incentive, and continued support for critical federal financing programs. This agenda is borne out of CDFA’s 42 years as a national leader in the development finance industry and is crafted to address market-based access to capital challenges. CDFA is prepared to assist Congress with implementation of the following policy priorities:
- Priority 1: Reform Manufacturing and Agricultural Bonds - Passing the Modernizing Agricultural and Manufacturing Bonds Act will update the tax code's private activity bond rules for Industrial Development Bonds and Agricultural Bonds.
- Priority 2: Create Permanent Disaster Recovery Bonds - Create a permanent bond financing tool that can be accessed immediately after disaster strikes, and that can leverage private investment for longer-term redevelopment of essential infrastructure.
- Priority 3: Reinstate the Brownfields Redevelopment Tax Incentive - CDFA supports the passage of H.R. 6438 - The Brownfields Redevelopment Tax Incentive Reauthorization Act of 2023 - which would reinstate the brownfields redevelopment tax incentive to allow taxpayers to fully deduct the cleanup costs of contaminated property in the year the costs were incurred.
- Priority 4: Remove Water and Sewer Bonds from Private Activity Bond Volume Cap - CDFA supports the passage of H.R. 1407/S. 726 - The Financing Lead Out of Water (FLOW) Act - which provides bipartisan remedies to the prohibition of using private activity bonds to finance the costs of replacing privately owned portions of a lead service line in a public water system.
- Priority 5: State Small Business Credit Initiative Technical Fix - CDFA proposes a technical correction to extend program authorization to 2030 to ensure that all jurisdictions can fully execute their approved plans to strengthen and grow small businesses across the United States.
- Priority 6: Reinstate Contributions in Aid of Construction Under 26 U.S. Code Section 118 - CDFA supports the reinstatement of 26 U.S. Code Section 118, which would allow state and local governments to contribute abandoned property or provide grants on a tax-exempt basis to developers for projects that benefit the public.
- Priority 7: Bolster Economic Development Financing Tools - CDFA supports restoring local economies, preserving small businesses, investing in underserved communities, and protecting the environment.
View CDFA's Full Policy Agenda -Federal News
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