Don’t Wait on Congress: How States Can Better Use PABs To Increase the Supply of Affordable Rental Housing

Rather than wait on Congress, states should act now to increase the supply of affordable rental housing by optimizing how they use their private activity bonds (PABs) cap.

While pushing Congress to expand affordable housing tax provisions (such as an increasing 9% low-income housing tax credits [LIHTCs], reducing the financed-by test for PAB-financed housing and allowing more basis boosts) in this year’s widely anticipated extension of the Tax Cuts and Jobs Act, developers, bond cap allocating agencies and others should act now to generate more PAB-financed affordable housing.

The dollar volume of the aggregate national PAB cap used for affordable rental housing more than tripled from 2015 through 2021, surpassing $10 billion in 2016 and reaching $21 billion in 2021 before retreating to $17.9 billion in 2022 (the most recent year for which such information is available from the Council of Development Finance Agencies [CDFA])...

Low Income Housing Tax Credits