D.C. mayor responds to GOP tax bill with historic housing construction bond offering
Mayor Muriel Bowser announced today that the District of Columbia Housing Finance Agency will issue up to $500 million in private activity bonds to finance affordable housing. The action is a direct response to Congress’s tax reform legislation, which was passed Friday night in the Senate.
“The Tax Cuts and Jobs Act proposes the elimination of critical affordable housing tools, and those are private activity bonds,” Bowser said at a press conference in front of an apartment building for senior citizens in Northeast. The building is in need of redevelopment that depends on this funding mechanism. “The first step we’re taking when it comes to protecting our vital investments in affordable housing is to preserve the District’s ability to use this private activity bond authority.”
The bonds are exempt from federal taxes. According to Bowser, in addition to affordable rental housing, they are used to finance affordable homeownership programs and nonprofits.
Christopher Donald of the D.C. Housing Finance Agency explained how the bonds will work. “We will sell those bonds to investors today,” he said. “Then in the future, when they are needed, they will convert into public debt.”
If all of the bonds are purchased by investors, they will fund 4,000 units of affordable housing, according to Donald. This is the largest bond offering ever administered by the Housing Finance Agency and will proceed regardless of the final tax bill that is sent to the White House.
Negotiations to reconcile the House and Senate versions of the bill are in progress.
“While we call on Congress to go back to the drawing board on this bill, we are not going to wait to see what happens with affordable housing,” Bowser said.
The D.C. Housing Finance Agency has issued 1.3 billion dollars in private activity bonds since fiscal year 2010, bringing nearly $2 billion of development to the city and helping to fund 9,000 units of affordable housing, according to Bowser.
D.C. Councilmember Anita Bonds, who chairs the Committee on Housing and Neighborhood Revitalization, applauded the new effort. “While the proposed Congressional legislation would greatly reduce the District’s ability to produce and preserve affordable housing, my faith that we will continue to deliver the right results for our residents in need has not wavered,” Bonds said in a press release. “Despite the roadblocks ahead, we are committed to creating innovative solutions and will meet every challenge head on.”
D.C. Councilmember Kenyan McDuffie of Ward 5 emphasized that the tax reform is not in line with the stated values of local government and lauded the city for responding. “Right here in the District of Columbia we have put our money where our mouths are,” he said.