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[12/03/1997 – 03/30/1998] [Quality Housing or LIHTC]
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[12/03/1997 – 03/30/1998] [Quality Housing or LIHTC]
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Presidential Electronic Mail from the Automated Records Management System (ARMS)
Automated Records Management System (ARMS) Email from the Office of Policy Development (OPD) Bucket
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Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. email
Jonathan Orzag to SCHOLZK%DOM13.DOPO7 Subject: Some
03/30/1998
b(6)
Stuff. [partial] (1 page)
COLLECTION:
Clinton Presidential Records
Automated Records Management System [Email]
OPD ([Quality Housing or LIHTC])
OA/Box Number: 250000
FOLDER TITLE:
[12/03/1997 - 03/30/1998]
2014-0224-F
ab1492
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - 15 U.S.C. 552(b)]
P1 National Security Classified Information |(a)(1) of the PRA|
b(1) National security classified information |(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office ((a)(2) of the PRA
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA|
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute |(b)(3) of the FOIA]
financial information |(a)(4) of the PRAJ
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRAJ
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy |(b)(6) of the FOIA]
personal privacy |(a)(6) of the PRA
b(7) Release would disclose information compiled for law enforcement
purposes |(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions |(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
h(9) Release would disclose geological or geophysical information
2201(3).
concerning wells |(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 3-DEC-1997 12:49:31.00
SUBJECT: Update on Low-Income Housing Tax Credit
TO: Bruce N. Reed ( CN=Bruce N. Reed/OU=OPD/O=EOP [ OPD 1)
READ:UNKNOWN
CC: Jose Cerda III ( CN=Jose Cerda III/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
CC: Elena Kagan ( CN=Elena Kagan/OU=OPD/O=EOP [ OPD D
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
12/03/97 12:48 PM
Jonathan Orszag
12/03/97 12:32:00 PM
Record Type: Record
To:
cc: Paul J. Weinstein Jr.
Subject: Update on Low-Income Housing Tax Credit
Message Creation Date was at 3-DEC-1997 12:32:00
Paul Weinstein and I have been working to get an expansion of the
low-income
housing tax credit back in play for the budget. And it seems as though
we've
been somewhat successful. Treasury is working on the options and we think
we
may have found the funding for it.
Here's the deal on the funding for the expanded credit.
FHA reforms we included in last year's budget -- specifically, lifting the
loan
limit -- raise $220 million per year or $! : billion over five years.
These
savings are on the mandatory side.
OMB needs $150 million per year of this money to pay for ne mandatory
EZ/EC
program.
The other $70 million per year -- $350 million over five years -- could be
used
for the low-income housing credit expansion.
Here's the deal on the credit proposal:
The arguement for the expansion is essentially as follows: the cost to
build
low-income housing has increased over the last four years, but the program
has
not grown with the cost. Four years ago, the number of requests for the
LIHTC
versus the number of allocations was 2 to 1. Today, this ratio is 3 to 1.
Some form of a low-income housing credit expansion will probably happen
this
year. Senator D'Amato has a bill to do this -- costing $1.5 to $2.0
billion
over five years. (It raises the credit from $1.25 to $1.75 in one step
and
then locks the credit level into the rate of inflation.) As you are
probably
aware, LISC is lobbying hard for this increase.
As you know, the Administration is seen as the champion of the LIHTC
because we
permanently extended in 1993. If Congress increases it this year, without
a
push from us, we could lose ownership of this proposal. Therefore, Paul
and I
believe it is important for us to have some kind of expansion of the LIHTC
--
even if the expansion is small. Karl Scholz generally agrees with this
assessment of the landscape.
The cost of a LIHTC expansion is very sensitive to the timing and size of
the
expansion. We believe it will be possible for us to have a proposal that
achieves the same goals of the D'Amato bill, but does it in a much less
costly
manner (hopefully in the $350 million over five years range). For
example, if
the credit expanded by $.10 each year -- from $1.25 this year to $1.35
next
year, etc. -- up to $1.75 in 2003. Treasury should be getting back to us
either late today or early tomorrow about these options.
Paul and I will continue to work with Deich, Minarik, Scholz, Barr, and
HUD to
get these options refined and into a memo that can be sent to the
President on
Friday night.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME: 3-DEC-1997 13:03:36.00
SUBJECT: Re: Low Income Housing Tax Credit
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Paul:
FYI: It's Karl Scholz
Clinton Presidential Records
Automated Records Management System
[EMAIL] and Tape Restoration Project [Email]
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies a responsive email, already made available
within another collection.
Collection: 2015-1120-F
Bucket: OPD
Creation Date: 1997-12-04
Subject: From LISC
Creator: Paul J. Weinstein Jr. CN=Paul J. Weinstein
Jr./OU=OPD/O=EOP @ EOP [ OPD ]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 4-DEC-1997 19:52:50.00
SUBJECT: Re: Allocatable Tax Credits
TO: Thomas A. Kalil ( CN=Thomas A. Kalil/OU=OPD/O=EOP@EOP [ OPD
READ:UNKNOWN
TEXT:
There has been discussion of the possibility of doing some R&D (or
similar) things we cannot fit on the spending side through "allocable tax
credits." In the simplest form, research agencies could have a
competition just as now, but could give the winner a certificate good for
a tax credit instead of a check. Current-law examples include the
low-income housing tax credit, and private-activity bonds. This doesn't
work as smoothly if the winner is a not-for-profit or a firm that for
whatever reason (e.g., it's new) has no tax liability. Treasury doesn't
like the idea very much, but we might have few options, given that the
discretionary spending caps are very tight.
Does this answer your question?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Thomas A. Kalil CN=Thomas A. Kalil/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 4-DEC-1997 20:10:59.00
SUBJECT: Re: Allocatable Tax Credits
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Joseph J. Minarik
12/04/97 07:52:46 PM
Record Type: Record
To: Thomas A. Kalil/OPD/EOP
cc:
Subject: Re: Allocatable Tax Credits
There has been discussion of the possibility of doing some R&D (or
similar) things we cannot fit on the spending side through "allocable tax
credits." In the simplest form, research agencies could have a
competition just as now, but could give the winner a certificate good for
a tax credit instead of a check. Current-law examples include the
low-income housing tax credit, and private-activity bonds. This doesn't
work as smoothly if the winner is a not-for-profit or a firm that for
whatever reason (e.g., it's new) has no tax liability. Treasury doesn't
like the idea very much, but we might have few options, given that the
discretionary spending caps are very tight.
Does this answer your question?
Yes. You could solve one of the problems you raised by giving credits
to companies that sponsor university-based R&D.
One of the models that we are exploring in industries that are growing
much faster than the gov't (e.g. high-tech industries with growth rates of
30-50 percent) is cost-sharing university-based R&D. For each dollar
we put in -- they put in 2-3 for research that is 5-10 years out.
The advantages of this are:
*
universities are more likely to do longer-term research
that is not appropriable
* university researchers publish - leading to wider
dissemination of results
*
"tech transfer" occurs when professors and students leave
the university
The gov't involvement in this prevents the companies from
driving the university research to a short-term focus
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 4-DEC-1997 21:50:21.00
SUBJECT: LIHTC Options Memo
TO: Jose Cerda III ( CN=Jose Cerda III/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: Elena Kagan ( CN=Elena Kagan/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
CC: Russell W. Horwitz ( CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Rough Draft.
ATTACHMENT
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D30]MAIL43949773H.316 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
I
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details some options to increase the cap on the LIHTC and to index it in
future years for inflation. This initiative, along with proposals to raise the number of incremental
vouchers, expand home ownership, and strengthen the Fair Lending Law would build on the housing
successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based on
the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a major
federal resource for affordable housing, producing about 110,000 low-income rental units per year. In
10 years, the LIHTC has helped create more than 900,000 units of rental housing nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped relative
to the population of the nation, its ability to serve its public policy mission is being eroded each year
by inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds the grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan
support in Congress and across the nation among state and local officials. Senators D'Amato and
Graham have introduced legislation (S. 1252) that would provide for a significant increase in the
annual volume cap. Groups such as the Low-Income Housing Support Coalition (LISC) support this
legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute and
index the LIHTC to the Consumer Price Index. This would insure that the credit does not experience
any additional future decline in value from inflation. However this proposal would not make up any
of the lost value of the credit since 1986.
2. Raise the LIHTC Cap by $350 to $600 million and index for Infiation -- This is a moderate-cost
[Automated Records Management System Hex-Dump Conversation]
approach that would partially offset the real loss of the credit value since 1986. It would raise the
credit from its current value of $1.25 per capital to $1.38 to $1.50 per capita. This proposal would
cost $350 to $600 million over five years.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of the
LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2 billion
over five years.
Recommendation
The Domestic Policy Council (DPC) and the National Economic Council (NEC) recommend
option 2. This proposal would provide for a modest increase in the LIHTC and index it for inflation,
while insuring that the efficiency effects from relatively tight caps remain.
[Automated Records Management System Hex-Dump Conversation]
Clinton Presidential Records
Automated Records Management System
[EMAIL] and Tape Restoration Project [Email]
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies a responsive email, already made available
within another collection.
Collection: 2009-1006-F (Elena Kagan)
Bucket: OPD
Creation Date: 1997-12-05
Subject:
Final LIHTC Memo
Creator: Paul J. Weinstein Jr. CN=Paul J. Weinstein
Jr./OU=OPD/O=EOP [OPD]
Clinton Presidential Records
Automated Records Management System
[EMAIL] and Tape Restoration Project [Email]
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies a responsive email, already made available
within another collection.
Collection: 2009-1006-F (Elena Kagan)
Bucket: WHO
Creation Date: 1997-12-05
Subject: LIHTC Draft
Creator: Paul J. Weinstein Jr. CN=Paul J. Weinstein
Jr./OU=OPD/O=EOP [ OPD ]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME: 5-DEC-1997 13:31:26.00
SUBJECT: Treasury
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD ))
READ:UNKNOWN
TEXT:
Paul:
I just spoke with Karl. He thinks the memo is very fair. He will provide
some comments as soon as possible to you. I asked for more specific
revenue estimates and he is going to try to provide them by the close of
business.
One edit: In the header for OPTION 2. It should probably read "Raise the
LIHTC Cap -- Cost: $350 million to $600 million." Right now, it is
confusing, because it reads as though we are raising the cap from $350 to
$600 million.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 5-DEC-1997 16:18:00.00
SUBJECT: Re: Memos to POTUS
TO: Russell W. Horwitz ( CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Forwarded by Jonathan A. Kaplan/OPD/EOP on 12/05/97
04:25 PM
Jonathan Orszag
12/05/97 04:01:03 PM
Record Type: Record
To: Jonathan A. Kaplan/OPD/EOP
cc:
Subject: Re: Memos to POTUS
Add Low-Income Housing Tax Credit -- the memo is done. Been circulated to
staff. Gene will review tonight.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME: 5-DEC-1997 13:20:36.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
You mean $330 million range per year, not 3.3 billion
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 12:02:24.00
SUBJECT: Improved LIHTC Version. Comments still needed asap.
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [ OMB 1)
READ:UNKNOWN
TO: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D54JMAIL40454483V.3161 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
1
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details several options to increase the cap on the LIHTC and to
potentially index to the rate of inflation in future years. This initiative, along with proposals to
raise the number of incremental vouchers, expand homeownership, and strengthen the Fair
Lending Law would build on the housing successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based
on the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a
major federal resource for affordable housing, producing about 110,000 low-income rental units
per year. In 10 years, the LIHTC has helped create more than 900,000 units of rental housing
nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped
relative to the population, its ability to serve its public policy mission is being eroded by
inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%; if the cap
had been indexed in 1986, the current credit would be more than $1.75 per capita.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan support in
Congress and across the nation among state and local officials. Senators D'Amato and Graham
have introduced legislation (S. 1252) that would provide for a significant increase in the annual
volume cap. Groups such as the Local Initiatives Support Corporation (LISC) are strong
supporters of this legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute
and index the LIHTC to the Consumer Price Index. This would insure that the credit does not
experience any additional future decline in value from inflation. However, this proposal would
not make up any of the lost value of the credit since 1986.
[Automated Records Management System Hex-Dump Conversation]
2. Raise the LIHTC Cap by $350 million to $600 million -- This is a moderate-cost approach that
would partially offset the real loss of the credit value since 1986. For roughly $350 million over
five years, we could increase the credit from its current value of $1.25 to $1.38 per capita. A
more expensive, but still moderate approach, would be to increase the credit to $1.50 per capita,
which would cost approximately $600 million over five years. We could also add indexation to
one of these increases, but this (a) would increase the costs and (b) Tax Policy at Treasury
believes that this would recreate the inefficiency problems the program suffered through several
years ago.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of
the LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2
billion over five years.
Recommendation
Tax Policy at Treasury raises several concerns with any raise in the cap on the LIHTC
(e.g., there are more efficient ways to increase low-income housing than using the tax code and
having tight caps increase the efficiency of the program since projects must compete vigorously
for the credit). While their argument is true, the LIHTC is the only option that is on the table that
will help build more affordable housing for people with low incomes. Moreover, LISC,
Enterprise Foundation, and the other community development groups view the LIHTC as yours,
since you were the one who permanently extended it. If Congress acts this year to increase the
cap -- which is likely -- and we do not have a proposal on the table, you may lose the LIHTC as
one of your lasting legacies.
The DPC and NEC recommend that you chose option 2. Option 2 would provide a
modest increase in the LIHTC, while ensuring that the efficiency effects from relatively tight
caps remain. The DPC and NEC believe that option 1 -- while ensuring that the credit is no
longer eroded by inflation -- is too small and Tax Policy believes that as the caps are increased
over time, the efficiency of the program would decrease. Option 3 -- at a cost of $1.5-$2.0
billion -- is just not feasible in the current constraints of the budget.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 10:43:31.00
SUBJECT: LIHTC Memo
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
CC: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP @ EOP [ OMB ]
READ:UNKNOWN
TEXT:
This is very rough. If you or Michael have any edits please let me know
by 12:45. Treasury and HUD are reviewing.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 5-DEC-1997 13:53:30.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP@EOP [ OPD )
READ:UNKNOWN
CC: francis S. redburn ( CN=francis S. redburn/OU=omb/O=eop@eop [ OMB ])
READ:UNKNOWN
CC: jonathan orszag ( CN=jonathan orszag/OU=opd/O=eop@eop [ OPD
READ:UNKNOWN
CC: michael deich ( CN=michael deich/OU=omb/O=eop@eop [ OMB 1)
READ:UNKNOWN
TEXT:
OK, OK, I screwed up. Please ignore the last version of the e-mail I sent
you, and take the following in its stead:
If it were up to me, I would conclude that this is not ready to go to the
President. For example, there are references to Treasury in the memo, but
there is no Treasury recommendation. Are they OK with the revenue
estimates? Might we not formulate a housing option that would be more
cost-efficient, given that Treasury is cited as doubting the efficiency of
this provision?
If we send the President a memo like this in isolation, and he expresses
some interest, does that mean that we are committed to putting scarce
money here -- even if there are other options not yet raised that he would
like better?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 10:19:29.00
SUBJECT: Re: Presidential Initiative Followup
TO: Mary L. Smith ( CN=Mary L. Smith/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TEXT:
Take out the Low-Income Housing Tax Credit. That was made permanent in
1993 as part of OBRA. It is not an executive action.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 5-DEC-1997 12:15:59.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP@EOP [ OPD ])
READ:UNKNOWN
CC: joseph j. minarik ( CN=joseph j. minarik/OU=omb/O=eop@eop [ OMB D
READ:UNKNOWN
CC: jonathan orszag ( CN=jonathan orszag/OU=opd/O=eop@eop [ OPD D
READ:UNKNOWN
CC: michael deich ( CN=michael deich/OU=omb/O=eop@eop [ OMB ])
READ:UNKNOWN
TEXT:
I'll fax you a couple of things that might round out the picture and
suggest options for reform. One is a LISC analysis of the credit's use
and efficiency (as you know, LISC is a major conduit for the LIHTC). The
other is an old (1994) memo to the OMB Director from me and others that
doesn't represent anyone's current views but may suggest some ideas and
things to be concerned about.
I'll shortly have a copy of a critical piece on the Credit that appeared
in TAX NOTES. Once I've read it, if it looks useful, I'll send it too.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 11:51:36.00
SUBJECT: LIHTC
TO: WEINSTEIN_P (WEINSTEIN_P @ A1 @ CD @ LNGTWY [ UNKNOWN ]) (OPD)
READ:UNKNOWN
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D44JMAIL44783483H.316td ASCII,
The following is a HEX DUMP:
END ATTACHMENT 1
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details several options to increase the cap on the LIHTC and to
potentially index to the rate of inflation in future years. This initiative, along with proposals to
raise the number of incremental vouchers, expand homeownership, and strengthen the Fair
Lending Law would build on the housing successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based
on the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a
major federal resource for affordable housing, producing about 110,000 low-income rental units
per year. In 10 years, the LIHTC has helped create more than 900,000 units of rental housing
nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped
relative to the population, its ability to serve its public policy mission is being eroded by
inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%; if the cap
had been indexed in 1986, the current credit would be more than $1.75 per capita.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan support in
Congress and across the nation among state and local officials. Senators D'Amato and Graham
have introduced legislation (S. 1252) that would provide for a significant increase in the annual
volume cap. Groups such as the Local Initiatives Support Corporation (LISC) are strong
supporters of this legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute
and index the LIHTC to the Consumer Price Index. This would insure that the credit does not
experience any additional future decline in value from inflation. However, this proposal would
not make up any of the lost value of the credit since 1986.
[Automated Records Management System Hex-Dump Conversation]
2. Raise the LIHTC Cap by $350 million to $600 million -- This is a moderate-cost approach that
would partially offset the real loss of the credit value since 1986. For roughly $350 million over
five years, we could increase the credit from its current value of $1.25 to $1.38 per capita. A
more expensive, but still moderate approach, would be to increase the credit to $1.50 per capita,
which would cost approximately $600 million over five years. We could also add indexation to
one of these increases, but this (a) would increase the costs and (b) Tax Policy at Treasury
believes that this would recreate the inefficiency problems the program suffered through several
years ago.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of
the LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2
billion over five years.
Recommendation
Tax Policy at Treasury raises several concerns with any raise in the cap on the LIHTC
(e.g., there are more efficient ways to increase low-income housing than using the tax code and
having tight caps increase the efficiency of the program since projects must compete vigorously
for the credit). While their argument is true, the LIHTC is the only option that is on the table that
will help build more affordable housing for people with low incomes. Moreover, LISC,
Enterprise Foundation, and the other community development groups view the LIHTC as yours,
since you were the one who permanently extended it. If Congress acts this year to increase the
cap -- which is likely -- and we do not have a proposal on the table, you may lose the LIHTC as
one of your lasting legacies.
The DPC and NEC recommend that you chose option 2. Option 2 would provide a
modest increase in the LIHTC, while ensuring that the efficiency effects from relatively tight
caps remain. The DPC and NEC believe that option 1 -- while ensuring that the credit is no
longer eroded by inflation -- is too small and Tax Policy believes that as the caps are increased
over time, the efficiency of the program would decrease. Option 3 -- at a cost of $1.5-$2.0
billion -- is just not feasible in the current constraints of the budget.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 16:01:09.00
SUBJECT: Re: Memos to POTUS
TO: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Add Low-Income Housing Tax Credit -- the memo is done. Been circulated to
staff. Gene will review tonight.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP [ OMB 1)
CREATION DATE/TIME: 5-DEC-1997 13:44:41.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP@EOP [ OPD ])
READ:UNKNOWN
CC: francis S. redburn ( CN=francis S. redburn/OU=omb/O=eop@eop [ OMB ])
READ:UNKNOWN
CC: jonathan orszag ( CN=jonathan orszag/OU=opd/O=eop@eop [ OPD ])
READ:UNKNOWN
CC: michael deich ( CN=michael deich/OU=omb/O=eop@eop [ OMB ])
READ:UNKNOWN
Randolph M. Lyon ( CN=Randolph M. Lyon/OU=OMB/O=EOP@EOP [ OMB )
READ:UNKNOWN
TEXT:
If it were up to me, I would conclude that this is ready to go to the
President. For example, there are references to Treasury in the memo, but
there is no Treasury recommendation. Are they OK with the revenue
estimates? Might we not formulate a housing option that would be more
cost-efficient, given that Treasury is cited as doubting the efficiency of
this provision?
If we send the President a memo like this in isolation, and he expresses
some interest, does that mean that we are committed to putting scarce
money here -- even if there are other options not yet raised that he would
like better?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME: 5-DEC-1997 08:29:29.00
SUBJECT: Re: Allocatable Tax Credits
TO: Thomas A. Kalil (CN=Thomas A. Kalil/OU=OPD/O=EOP@EOP [ OPD ])
READ:UNKNOWN
TEXT:
We're hip, and that is one part of the routine. I think there is some
concern about forcing universities and other non-profits who are doing
research on their own to go out and find a taxable sponsor; I don't know
how frequently such situations would arise, though. DoE has been charged
with trying to assess the magnitude of the potential problem.
Thomas A. Kalil
12/04/97 08:10:53 PM
Record Type: Record
To: Joseph J. Minarik/OMB/EOP@EOP
cc:
bcc:
Subject: Re: Allocatable Tax Credits
Joseph J. Minarik
12/04/97 07:52:46 PM
Record Type: Record
To: Thomas A. Kalil/OPD/EOP
cc:
Subject: Re: Allocatable Tax Credits
There has been discussion of the possibility of doing some R&D (or
similar) things we cannot fit on the spending side through "allocable tax
credits." In the simplest form, research agencies could have a
competition just as now, but could give the winner a certificate good for
a tax credit instead of a check. Current-law examples include the
low-income housing tax credit, and private-activity bonds. This doesn't
work as smoothly if the winner is a not-for-profit or a firm that for
whatever reason (e.g., it's new) has no tax liability. Treasury doesn't
like the idea very much, but we might have few options, given that the
discretionary spending caps are very tight.
Does this answer your question?
Yes. You could solve one of the problems you raised by giving credits
to companies that sponsor university-based R&D.
One of the models that we are exploring in industries that are growing
much faster than the gov't (e.g. high-tech industries with growth rates of
30-50 percent) is cost-sharing university-based R&D. For each dollar
we put in -- they put in 2-3 for research that is 5-10 years out.
The advantages of this are:
*
universities are more likely to do longer-term research
that is not appropriable
*
university researchers publish - leading to wider
dissemination of results
*
"tech transfer" occurs when professors and students leave
the university
The gov't involvement in this prevents the companies from
driving the university research to a short-term focus
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 10:44:09.00
SUBJECT: LIHTC Memo
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
CC: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
TEXT:
Sorry I didn't attach. Here it is.
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D76JMAIL47989383E.316 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT 1
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details some options to increase the cap on the LIHTC and to index it in
future years for inflation. This initiative, along with proposals to raise the number of incremental
vouchers, expand home ownership, and strengthen the Fair Lending Law would build on the housing
successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based on
the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a major
federal resource for affordable housing, producing about 110,000 low-income rental units per year. In
10 years, the LIHTC has helped create more than 900,000 units of rental housing nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped relative
to the population of the nation, its ability to serve its public policy mission is being eroded each year
by inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds the grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan
support in Congress and across the nation among state and local officials. Senators D'Amato and
Graham have introduced legislation (S. 1252) that would provide for a significant increase in the
annual volume cap. Groups such as the Low-Income Housing Support Coalition (LISC) support this
legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute and
index the LIHTC to the Consumer Price Index. This would insure that the credit does not experience
any additional future decline in value from inflation. However, this proposal would not make up any
of the lost value of the credit since 1986.
2. Raise the LIHTC Cap by $350 to $600 million and Index for Inflation This is a moderate-cost
[Automated Records Management System Hex-Dump Conversation]
approach that would partially offset the real loss of the credit value since 1986. It would raise the
credit from its current value of $1.25 per capital to $1.38 to $1.50 per capita. This proposal would
cost $350 to $600 million over five years.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of the
LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2 billion
over five years.
Recommendation
The Domestic Policy Council (DPC) and the National Economic Council (NEC) recommend
option 2. This proposal would provide for a modest increase in the LIHTC and index it for inflation,
while insuring that the efficiency effects from relatively tight caps remain.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 5-DEC-1997 13:15:24.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
what do you make of this.
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
12/05/97 01:15 PM
FRANCIS S.
REDBURN
12/05/97 12:59:24 PM
Record Type: Record
To: Paul J. Weinstein Jr./OPD/EOP
cc: See the distribution list at the bottom of this message
Subject: Re: Improved LIHTC Version. Comments still needed asap.
Thought you might find this commentary useful.
Forwarded by Francis S. Redburn/OMB/EOP on 12/05/97
12:58 PM
Randolph M. Lyon
12/05/97 12:45:53 PM
Record Type: Record
To: Francis S. Redburn/OMB/EOP@EOP
cc: Joseph J. Minarik/OMB/EOP@EOP, Justine F. Rodriguez/OMB/EOP@EOP
Subject: Re: Improved LIHTC Version. Comments still needed asap.
Thanks for the copy of the draft. My reaction is that the recommendation
to expand the LIHTC is not sufficiently staffed at this time to go to the
President -- particularly as Treasury disagrees with the recommendation.
Moreover, given OMB reservations at least at the staff level, it is not
clear where OMB would come out on this issue. I think you are right to
alert the DPC to the work we did a couple years ago on ways to improve the
credit. I don't understand whether there is a genuine need to get this
memo to the President in the next day 0: so.
We are trying to fax you the article from Tax Notes on the credit. It
turns out that it deals with some fairly technical issues of nonprofit
agency involvement in the syndications.
Finally, on a technical level, I find the memo inadequate. The reference
to expanding the credit for $350 million to $600 million "over 5 years" is
not transparent. Specifically, the existing credit costs $3.3 to $3.5
billion per ;year. A 20% increase in the per capita cap would increase
costs by over $600 million per year. Also, the memo provides no sense of
how cost-effective (or ineffective) the credit is, relative to
alternatives.
Message Copied
To:
Randolph M. Lyon/OMB/EOP
Michael Deich/OMB/EOP
Alan B. Rhinesmith/OMB/EOP
Theodore Wartell/OMB/EOP
Patricia E. Romani/OMB/EOP
Alexandra Gianinno/OMB/EOP
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP [ OMB 1)
CREATION DATE/TIME: 5-DEC-1997 12:59:06.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP@EOP [ OPD )
READ:UNKNOWN
CC: Alexandra Gianinno ( CN=Alexandra Gianinno/OU=OMB/O=EOP@EOP [ OMB 1)
READ:UNKNOWN
CC: Theodore Wartell ( CN=Theodore Wartell/OU=OMB/O=EOP@EOP [ OMB )
READ:UNKNOWN
CC: Michael Deich ( CN=Michael Deich/OU=OMB/O=EOP@EOP[ OMB )
READ:UNKNOWN
CC: Patricia E. Romani ( CN=Patricia E. Romani/OU=OMB/O=EOP@EOP [ OMB D
READ:UNKNOWN
CC: Alan B. Rhinesmith (CN=Alan B. Rhinesmith/OU=OMB/O=EOP@EOP. [ OMB D
READ:UNKNOWN
CC: Randolph M. Lyon ( CN=Randolph M. Lyon/OU=OMB/O=EOP@EOP [ OMB 1)
READ:UNKNOWN
TEXT:
Thought you might find this commentary useful.
Forwarded by Francis S. Redburn/OMB/EOP on 12/05/97
12:58 PM
Randolph M. Lyon
12/05/97 12:45:53 PM
Record Type: Record
To: Francis S. Redburn/OMB/EOP@EOP
cc: Joseph J. Minarik/OMB/EOP@EOP, Justine F. Rodriguez/OMB/EOP@EOP
Subject: Re: Improved LIHTC Version. Comments still needed asap.
Thanks for the copy of the draft. My reaction is that the recommendation
to expand the LIHTC is not sufficiently staffed at this time to go to the
President -- particularly as Treasury disagrees with the recommendation.
Moreover, given OMB reservations at least at the staff level, it is not
clear where OMB would come out on this issue. I think you are right to
alert the DPC to the work we did a couple years ago on ways to improve the
credit. I don't understand whether there is a genuine need to get this
memo to the President in the next day or so.
We are trying to fax you the article from Tax Notes on the credit. It
turns out that it deals with some fairly technical issues of nonprofit
agency involvement in the syndications.
Finally, on a technical level, I find the memo inadequate. The reference
to expanding the credit for $350 million to $600 million "over 5 years" is
not transparent. Specifically, the existing credit costs $3.3 to $3.5
billion per ;year. A 20% increase in the per capita cap would increase
costs by over $600 million per year. Also, the memo provides no sense of
how cost-effective (or ineffective) the credit is, relative to
alternatives.
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details some options to increase the cap on the LIHTC and to index it in
future years for inflation. This initiative, along with proposals to raise the number of incremental
vouchers, expand home ownership, and strengthen the Fair Lending Law would build on the housing
successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based on
the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a major
federal resource for affordable housing, producing about 110,000 low-income rental units per year. In
10 years, the LIHTC has helped create more than 900,000 units of rental housing nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped relative
to the population of the nation, its ability to serve its public policy mission is being eroded each year
by inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds the grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan
support in Congress and across the nation among state and local officials. Senators D'Amato and
Graham have introduced legislation (S. 1252) that would provide for a significant increase in the
annual volume cap. Groups such as the Low-Income Housing Support Coalition (LISC) support this
legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute and
index the LIHTC to the Consumer Price Index. This would insure that the credit does not experience
any additional future decline in value from inflation. However, this proposal would not make up any
of the lost value of the credit since 1986.
2. Raise the LIHTC Cap by $350 to $600 million and Index for Inflation -- This is a moderate-cost
[Automated Records Management System Flex- Dump Conversation]
approach that would partially offset the real loss of the credit value since 1986. It would raise the
credit from its current value of $1.25 per capital to $1.38 to $1.50 per capita. This proposal would
cost $350 to $600 million over five years.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of the
LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2 billion
over five years.
Recommendation
The Domestic Policy Council (DPC) and the National Economic Council (NEC) recommend
option 2. This proposal would provide for a modest increase in the LIHTC and index it for inflation,
while insuring that the efficiency effects from relatively tight caps remain.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 10:42:25.00
SUBJECT: LIHTC Memo
TO: Mary L. Smith ( CN=Mary L. Smith/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D22]MAIL47379383C.316to ASCII,
The following is a HEX DUMP:
END ATTACHMENT I
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details some options to increase the cap on the LIHTC and to index it in
future years for inflation. This initiative, along with proposals to raise the number of incremental
vouchers, expand home ownership, and strengthen the Fair Lending Law would build on the housing
successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based on
the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a major
federal resource for affordable housing, producing about 110,000 low-income rental units per year. In
10 years, the LIHTC has helped create more than 900,000 units of rental housing nationwide.
However, because the amount of the LIHTC that can be allocated each year is capped relative
to the population of the nation, its ability to serve its public policy mission is being eroded each year
by inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds the grounds that it is a form of "corporate welfare," the credit currently enjoys bipartisan
support in Congress and across the nation among state and local officials. Senators D'Amato and
Graham have introduced legislation (S. 1252) that would provide for a significant increase in the
annual volume cap. Groups such as the Low-Income Housing Support Coalition (LISC) support this
legislation.
Options
1. Index LIHTC for Inflation -- An inexpensive option would be to change the LIHTC statute and
index the LIHTC to the Consumer Price Index. This would insure that the credit does not experience
any additional future decline in value from inflation. However, this proposal would not make up any
of the lost value of the credit since 1986.
2. Raise the LIHTC Cap by $350 to $600 million and Index for Inflation -- This is a moderate-cost
[Automated Records Management System Hex-Dump Conversation)
approach that would partially offset the real loss of the credit value since 1986. It would raise the
credit from its current value of $1.25 per capital to $1.38 to $1.50 per capita. This proposal would
cost $350 to $600 million over five years.
3. Support S. 1252 (D'Amato-Graham) -- This proposal would increase the annual volume cap of the
LIHTC to $1.75 per capita and index it for future years. This proposal would cost $1.5 to $2 billion
over five years.
Recommendation
The Domestic Policy Council (DPC) and the National Economic Council (NEC) recommend
option 2. This proposal would provide for a modest increase in the LIHTC and index it for inflation,
while insuring that the efficiency effects from relatively tight caps remain.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag (CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 5-DEC-1997 14:02:33.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [ OMB ])
READ:UNKNOWN
CC: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Treasury is reviewing the memo now. It seems as though there may be some
internal disagreement between tax policy and Michael Barr. They will
provide their recommendation before the memo goes to the President. They
are also reviewing the revenue estimates and will comment on those for the
final draft.
As for the efficiency issue, I think we all will tend to agree that there
are more efficient means of building affordable low-income housing.
However, none of those options are available to us. The LIHTC is the only
means we have right now to achieve the ends.
As for the President's interest, the expansion of the LIHTC will compete
with child care, education, etc. for scarce resources. The President will
like all of the proposals. It will just come down to which ones he likes
best.
Joseph J. Minarik
12/05/97 01:53:25 PM
Record Type: Record
To: Paul J. Weinstein Jr./OPD/EOP
cc: michael deich/omb/eop, francis S. redburn/omb/eop, jonathan
orszag/opd/eop
Subject: Re: Improved LIHTC Version. Comments still needed asap.
OK, OK, I screwed up. Please ignore the last version of the e-mail I sent
you, and take the following in its stead:
If it were up to me, I would conclude that this is not ready to go to the
President. For example, there are references to Treasury in the memo, but
there is no Treasury recommendation. Are they OK with the revenue
estimates? Might we not formulate a housing option that would be more
cost-efficient, given that Treasury is cited as doubting the efficiency of
this provision?
If we send the President a memo like this in isolation, and he expresses
some interest, does that mean that we are committed to putting scarce
money here -- even if there are other options not yet raised that he would
like better?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 5-DEC-1997 19:51:28.00
SUBJECT: Final LIHTC Memo
TO: Mary L. Smith ( CN=Mary L. Smith/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TO: Thomas L. Freedman ( CN=Thomas L. Freedman/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
12/05/97 07:51 PM
Paul J. Weinstein Jr.
12/05/97 07:42:05 PM
Record Type: Record
To: Elena Kagan/OPD/EOP
cc: See the distribution list at the bottom of this message
Subject: Final LIHTC Memo
This is it. Treasury has given us some more finalized numbers. HUD has
reviewed and supports expanding the credit. OMB has seen but isn't taking
a position. While Tax Policy at Treasury has some reservations (as they
always do), Treasury itself has not taken a position. They are divided.
Michael Barr supports the expanding the credit.
Message Copied
To:
Russell W. Horwitz/OPD/EOP
Jonathan Orszag/OPD/EOP
Emil E. Parker/OPD/EOP
Jose Cerda III/OPD/EOP
Bruce N. Reed/OPD/EOP
Laura Emmett/WHO/EOP
ATTACHMENT 1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D58]MAIL489827832.316 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT I
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details several options to increase the cap on the LIHTC and to
potentially index it to the rate of inflation in future years. This initiative, along with proposals to
raise the number of incremental vouchers, expand homeownership, and strengthen the Fair
Lending Law would build on the housing successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based
on the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a
major federal resource for affordable housing, producing 90,000-100,000 low-income rental units
per year.
However, because the amount of the LIHTC that can be allocated each year is capped
relative to the population, its ability to serve its public policy mission is being eroded by
inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%; if the cap
had been indexed in 1986, the current credit would be more than $1.75 per capita.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds that it is a form of "corporate welfare" and your repeated vetos of efforts to sunset the
LIHTC, the credit currently enjoys bipartisan support in Congress and across the nation among
state and local officials. Senators D'Amato and Graham have introduced legislation (S. 1252)
that would provide for a significant increase in the annual volume cap. Groups such as the Local
Initiatives Support Corporation (LISC) are strong supporters of this legislation.
Options
1. Index LIHTC for Inflation -- Cost: $175 Million Over Five Years -- An inexpensive option
would be to change the LIHTC statute and index the LIHTC to the Consumer Price Index. This
would insure that the credit does not experience any additional future decline in value from
inflation. However, this proposal would not make up any of the lost value of the credit since
1986. This would cost roughly $175 million over five years.
[Automated Records Management System Hex-Dump Conversation
2. Raise the LIHTC Cap -- Cost: $359 Million to $600 Million Over Five Years -- This is a
moderate-cost approach that would partially offset the real loss of the credit value since 1986.
For $359 million over five years, we could increase the credit from its current value of $1.25 to
$1.37 per capita. A more expensive, but still moderate approach, would be to increase the credit
to $1.50 per capita. which would cost approximately $600 million over five years according to
preliminary Treasury estimates. We could also add indexation to one of these increases, but this
would increase the costs. Tax Policy at Treasury notes that indexation would raise the cap
substantially in the outyears which would recreate the inefficiency problems the program suffered
through several years ago.
3. Support S. 1252 (D'Amato-Graham) -- Cost: $1.6 Billion Over Five Years -- This proposal
would increase the annual volume cap of the LIHTC to $1.75 per capita and index it for future
years. This proposal would cost $1.6 billion over five years.
Recommendation
Tax Policy at Treasury raises several concerns with any raise in the cap on the LIHTC
(e.g., there are more efficient ways to increase low-income housing than using the tax code and
having tight caps increases the efficiency of the program since projects must compete vigorously
for the credit). While their argument has some merit, the LIHTC has proven to be an
increasingly efficient tool and remains the only politically feasible option available to help build
more affordable housing for people with low incomes. Moreover, LISC, Enterprise Foundation,
and the other community development groups view the LIHTC as yours, since you were the one
who permanently extended it. If Congress acts this year to increase the cap -- which is likely --
and we do not have a proposal on the table, you may lose the LIHTC as one of your lasting
legacies.
The DPC and NEC recommend that you chose option 2. Option 2 would provide a
modest increase in the LIHTC, while ensuring that the efficiency effects from relatively tight
caps remain. The DPC and NEC believe that option 1 -- while ensuring that the credit is no
longer eroded by inflation -- is too small and Tax Policy believes that as the caps are increased
over time, the efficiency of the program would decrease. Option 3 -- at a cost of $1.6 billion --
may not feasible in the current constraints of the budget.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 5-DEC-1997 14:35:36.00
SUBJECT: Re: Improved LIHTC Version. Comments still needed asap.
TO: Joseph J. Minarik ( CN=Joseph J. Minarik/OU=OMB/O=EOP @ EOP [OMB])
READ:UNKNOWN
TEXT:
Treasury Tax Policy is getting us some better cost estimates. The
expanded LIHTC does fit into a broader housing initiative, so the
President won't see this in isolation. For example, he might choose to do
more on vouchers. I will get you final version with Treasury edits.
Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP [ OPD ]
)
CREATION DATE/TIME: 5-DEC-1997 17:26:55.00
SUBJECT: Timeframe for Initiatives
TO: Russell W. Horwitz ( CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
Russ:
Here is some info for the memo and binder you're doing for Gene.
Cleared and ready Friday for Gene's review before submission:
child labor
mentoring
low income housing tax credit
Possibly cleared and ready Friday (if not, Saturday) for Gene's review:
hispanic ed
school construction
Cleared and ready Saturday for Gene's review:
teacher training in technology
higher education access campaign
UI
Cleared and ready Saturday/Sunday for Gene's review:
learning on demand
Cleared and ready Sunday for Gene's review:
pensions
Others/unclear:
health care
climate change
housing
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Mary L. Smith (CN=Mary L. Smith/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:16-DEC-1997 19:00:50.00
SUBJECT: Final LIHTC Memo -- Paul's Memo
TO: Thomas L. Freedman ( CN=Thomas L. Freedman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TEXT:
Forwarded by Mary L. Smith/OPD/EOP on 12/16/97
07:00 PM
Paul J. Weinstein Jr.
12/05/97 07:51:21 PM
Record Type: Record
To: Thomas L. Freedman/OPD/EOP, Mary L. Smith/OPD/EOP
cc:
Subject: Final LIHTC Memo
Forwarded by Paul J. Weinstein J../OPD/EOP on
12/05/97 07:51 PM
Paul J. Weinstein Jr.
12/05/97 07:42:05 PM
Record Type: Record
To: Elena Kagan/OPD/EOP
cc: See the distribution list at the bottom of this message
Subject: Final LIHTC Memo
This is it. Treasury has given us some more finalized numbers. HUD has
reviewed and supports expanding the credit. OMB has seen but isn't taking
a position. While Tax Policy at Treasury has some reservations (as they
always do), Treasury itself has not taken a position. They are divided.
Michael Barr supports the expanding the credit.
Message Copied
To:
Russell W. Horwitz/OPD/EOP
Jonathan Orszag/OPD/EOP
Emil E. Parker/OPD/EOP
Jose Cerda III/OPD/EOP
Bruce N. Reed/OPD/EOP
Laura Emmett/WHO/EOP
ATTACHMENT
1
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D44JMAIL443096949.316 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
1
December 5, 1997
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
SUBJECT:
Expanding the Low-Income Housing Tax Credit (LIHTC)
Overview
This memorandum details several options to increase the cap on the LIHTC and to
potentially index it to the rate of inflation in future years. This initiative, along with proposals to
raise the number of incremental vouchers, expand homeownership, and strengthen the Fair
Lending Law would build on the housing successes of your first four years.
Affordable Housing and the Low-Income Housing Tax Credit
Enacted as part of the Tax Reform Act of 1986, and made permanent by you in 1993, the
LIHTC offers corporate and individual investors a credit against their federal income taxes based
on the cost of acquiring, rehabilitating, or constructing low-income housing. The tax credit is a
major federal resource for affordable housing, producing 90,000-100,000 low-income rental units
per year.
However, because the amount of the LIHTC that can be allocated each year is capped
relative to the population, its ability to serve its public policy mission is being eroded by
inflation. The amount of the LIHTC that states may allocate each year is $1.25 times the state's
population. Since 1986, the purchasing power of the LIHTC has eroded by about 45%; if the cap
had been indexed in 1986, the current credit would be more than $1.75 per capita.
After several years of attacks from conservative Republicans to repeal the credit on the
grounds that it is a form of "corporate welfare" and your repeated vetos of efforts to sunset the
LIHTC, the credit currently enjoys bipartisan support in Congress and across the nation among
state and local officials. Senators D'Amato and Graham have introduced legislation (S. 1252)
that would provide for a significant increase in the annual volume cap. Groups such as the Local
Initiatives Support Corporation (LISC) are strong supporters of this legislation.
Options
1. Index LIHTC for Inflation Cost: $175 Million Over Five Years -- An inexpensive option
would be to change the LIHTC statute and index the LIHTC to the Consumer Price Index. This
would insure that the credit does not experience any additional future decline in value from
inflation. However, this proposal would not make up any of the lost value of the credit since
1986. This would cost roughly $175 million over five years.
[Automated Records Management System Hex-Dump Conversation
2. Raise the LIHTC Cap -- Cost: $359 Million to $600 Million Over Five Years -- This is a
moderate-cost approach that would partially offset the real loss of the credit value since 1986.
For $359 million over five years, we could increase the credit from its current value of $1.25 to
$1.37 per capita. A more expensive, but still moderate approach, would be to increase the credit
to $1.50 per capita. which would cost approximately $600 million over five years according to
preliminary Treasury estimates. We could also add indexation to one of these increases, but this
would increase the costs. Tax Policy at Treasury notes that indexation would raise the cap
substantially in the outyears which would recreate the inefficiency problems the program suffered
through several years ago.
3. Support S. 1252 D'Amato-Graham) -- Cost: $1.6 Billion Over Five Years -- This proposal
would increase the annual volume cap of the LIHTC to $1.75 per capita and index it for future
years. This proposal would cost $1.6 billion over five years.
Recommendation
Tax Policy at Treasury raises several concerns with any raise in the cap on the LIHTC
(e.g., there are more efficient ways to increase low-income housing than using the tax code and
having tight caps increases the efficiency of the program since projects must compete vigorously
for the credit). While their argument has some merit, the LIHTC has proven to be an
increasingly efficient tool and remains the only politically feasible option available to help build
more affordable housing for people with low incomes. Moreover, LISC, Enterprise Foundation,
and the other community development groups view the LIHTC as yours, since you were the one
who permanently extended it. If Congress acts this year to increase the cap -- which is likely --
and we do not have a proposal on the table, you may lose the LIHTC as one of your lasting
legacies.
The DPC and NEC recommend that you chose option 2. Option 2 would provide a
modest increase in the LIHTC, while ensuring that the efficiency effects from relatively tight
caps remain. The DPC and NEC believe that option 1 -- while ensuring that the credit is no
longer eroded by inflation -- is too small and Tax Policy believes that as the caps are increased
over time, the efficiency of the program would decrease. Option 3 -- at a cost of $1.6 billion --
may not feasible in the current constraints of the budget.
[Automated Records Management System Hex Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:22-DEC-1997 09:09:21.00
SUBJECT: Budget Items
TO: Charles R. Marr (CN=Charles R. Marr/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Here's a list of the budget items that Gene will want to review:
NADBank: Is the $37 million in one year or is it spread out over four
years?
Homeownership Zones: How do we find the $25 million for this? (Working
with Deich)
UI Reform: Gene has two options and it looks as though Frank/Jack are
waiting for Gene to make a decision. Sec. Herman and Dep. Sec. Higgins
support option #2, as does Barbara Chow and Larry M.:
Extended Benefits and Alternative Base Period: $90-$120 Million Over Five
Years in Mandatory Spending.
Use Enhanced Reed Act Distribution to Pay for UI Underfunding, Extended
Benefits, and Alternative Base Period: No Cost But Some States May Choose
to Raise Taxes By About $4 Per Year for Each Worker.
Low-Income Housing Tax Credit: Should it be indexed to inflation or not?
If we do not index, it saves approximately $100-$130 million over five
years.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP [ UNKNOWN ])
CREATION DATE/TIME: 6-JAN-1998 16:43:06.00
SUBJECT: Re: Low Income Housing Tax Credit Event
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
You are totally on key today; except the date is January 13th, Tuesday.
We will do an event in the afternoon around 3:30 pm. I am the staff
contact for OVP and have been in discussions with LISC and Jon Orzag from
Sperling's staff. LISC has identified several potential sites that I am
vetting with political and press. If you want more information let me
know.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 6-JAN-1998 17:10:58.00
SUBJECT: Re: Low Income Housing Tax Credit Event
TO: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP @ OVP [ UNKNOWN 1)
READ:UNKNOWN
TEXT:
Actually, I want to be involved as much as the NEC, since John and I got
this in the budget together and DPC has jurisdiction. I would like to see
all paper and the VP's speech. In addition, please invite me to any
meetings you have on this as well as Christa Robinson, she is our
communications/events staffer. Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP [ UNKNOWN ])
CREATION DATE/TIME: 7-JAN-1998 08:28:51.00
SUBJECT: Re: Low Income Housing Tax Credit Event
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: Christa Robinson ( CN=Christa Robinson/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Paul and Christa,
The Chicago trip meeting is today at 2:30 in room 279. I have recieved
information from LISC on potential sites and would like for us to come up
with a reccomendation. I think it would be helpful if we could sit down
before the trip meeting to decide how you want to roll out this policy.
Paul, can we meet at your place at 2:00 pm?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD])
CREATION DATE/TIME: 7-JAN-1998 09:24:50.00
SUBJECT: Re: Low Income Housing Tax Credit Event
TO: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP @ OVP [ UNKNOWN ])
READ:UNKNOWN
TEXT:
Sure.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME: 8-JAN-1998 23:52:27.00
SUBJECT: Chicago Event
TO: Eli G. Attie CN=Eli G. Attie/O=OVP @ OVP [ UNKNOWN
READ:UNKNOWN
TEXT:
Eli:
What do you need me to do for the Chicago event? I assume that you want
some paper on the low-income housing tax credit specifically and what we
are doing in the budget. We also have some paper from the POTUS New York
event in December on our Community Empowerment agenda. Since that's been
cleared already, I assume that could be helpful (not only to you or
whoever is writing the speech, but to the traveling press).
Since this is one of the biggest parts of our housing agenda, you should
probably bring someone who can answer questions about the credit (on
background) at the event. Paul Weinstein or myself could do it. But
Michael Barr (at Treasury) would probably be the best: he knows a ton
about our community empowerment agenda and played an important role in
getting the expansion in the credit through Treasury -- he actually
convinced Rubin and Summers to be "neutral" on increasing it, which is
pretty incredible.
We should also talk about a press strategy for this one. This is not just
a local story. This is a national one. There is no reason that we
shouldn't try to push this out as much as possible. I am at your
service. And since Gene is a big fan -- and the one who actually got the
expansion of the credit in the budget -- I am sure that he will help as
much as possible in getting this play.
Jon
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Christa Robinson (CN=Christa Robinson/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 8-JAN-1998 12:49:29.00
SUBJECT: POTUS NYC Event
TO: Michelle Crisci ( CN=Michelle Crisci/OU=WHO/O=EOP @ EOP [ WHO ])
READ:UNKNOWN
TEXT:
It would be great to get Rahm's feedback on this if possible.
Forwarded by Christa Robinson/OPD/EOP on 01/08/98
12:49 PM
Christa Robinson
01/08/98 11:59:07 AM
Record Type: Record
To: Ann F. Lewis/WHO/EOP, Ruby Shamir/WHO/EOP, Stacie Spector/WHO/EOP
cc:
Subject: POTUS NYC Event
Here are the specific ideas NEC is looking at for the POTUS NYC trip on
the 15th. (Gene hasn't reviewed yet.) It would be great to have a meeting
to discuss which ideas make the most sense.
One question that has come up is whether the VP should not make the
low-income housing tax credit announcement in Chicago on the 14th so that
the President can do it on the 15th. Please let me know what you think,
so that we can find something else for the VP if necessary.
Forwarded by Christa Robinson/OPD/EOP on 01/08/98
11:53 AM
Paul J. Weinstein Jr.
01/08/98 11:18:00 AM
Record Type: Record
To: Christa Robinson
cc:
Subject: POTUS NYC Event
Message Creation Date was at 8-JAN-1998 11:18:00
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
01/08/98
11:18 AM
Jonathan Orszag
01/08/98 11:09:00 AM
Record Type: Record
To: Paul J. Weinstein Jr.
cc:
Subject: POTUS NYC Event
Message Creation Date was at 8-JAN-1998 11:09:00
Gene asked me to come up with some ideas for the event. Here's what I
have:
1. Announce $1.5 Billion Increase in HUD Budget.
2. Low-Income Housing Tax Credit (VP is planned to do this in Chicago on
1/13)
3. 50,000 Welfare-to-Work Housing Vouchers
4. Housing Mobility Plan (Three components: (1) Expand Regional
Opportunity
Counseling program to help low-income families find housing in lower
poverty
areas; (2) Eliminate Obstacles to and Provide Incentives for Portability
by
establishing /!&portability clearinghouse /!8; providing PHAs bonus based
on the
number of Section 8 participants moving to lower-poverty areas; and
encouraging
PHAs to request /!&exception rents /!8 (above the fair market rent); (3)
Allowing
Section 8 Vouchers to be used for homeownership (part of our Public
Housing
Reform Bill).)
5. Homeownership Initiative:
- $25 Million for Homeownership Zones
- /!&Play-by-the-Rules /!8 Homeownership Initiative (A homeownership
proposal
to
provide assistance to 10,000 families who have track record of paying rent
on
time but have some impediment to buying their own home.)
- Homeownership Opportunity Fund (Loan guarantee program to allow state
and
local governments to leverage current HOME funds with private-sector
investments to fund large scale, affordable housing developments in
distressed
communities.)
6. Increased Funds for HOME and CDBG (There are $50 million increases in
the
budgets of both HOME and CDBG -- two programs that provide housing
assistance
to local communities.)
7. Fair Lending/Fair Housing
- Promoting Fair Lending (This proposal -- still be finalized -- would
include: (1) an examination of the impact of credit scoring and risk-based
pricing on the availability of credit/capital to lower-income and minority
individuals; (2) issuance of guidance by banking regulators on certain key
credit scoring issues and, possibly, on risk-based pricing; (3) a
Presidential
call to obtain more data on reasons for home mortgage loan denials; and
(4)
collection of race and income data as part of the Equal Credit Opportunity
Act/CRA small business and small farm lending report requirement.)
- Fair Housing (Budget includes about $52 million for fair housing
enforcement
so that we ensure that HUD meets the President /!,s pledge to double Fair
Housing
Enforcement actions, and we can put in place a new system of Metropolitan
Area
Testing to root out the vestiges of housing discrimination.)
8. Reannounce Homeless Assistance Budget (On Dec. 24, we released the
homeless
assistance budget. The President could reannounce that there is a
40-percent
increase in this part of the budget.)
9. CRA (One of the Administration /!,s greatest accomplishments that has
gotten
very little recognition is CRA. The President could highlight the
enormous
impact CRA has had on Wall Street investing in community development.)
10. Education Opportunity Centers (Budget includes $10 million for Rep.
Waters
proposal to expand the Neighborhood Network program which currently places
computer learning centers in privately-owned assisted housing
developments.)
11. Round II of Empowerment Zones (Announce plan for Round II of
Empowerment
Zones -- VP still needs to make decision. Also announce $150 million per
year
or $1.5 billion over ten years in EZ funding.)
12. CDFI Increase (Reannounce 50% increase in CDFI fund -- we have already
announced it at S. Bronx event in December and with Worker/Community
Adjustment
package in November.)
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME: 8-JAN-1998 11:09:45.00
SUBJECT: POTUS NYC Event
TO: WEINSTEIN P (WEINSTEIN_P @ A1 @ CD @ LNGTWY UNKNOWN (OPD)
READ:UNKNOWN
TO: Christa Robinson ( CN=Christa Robinson/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
TO: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TO: Jake Siewert (CN=Jake Siewert/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Gene asked me to come up with some ideas for the event. Here's what I
have:
1.
Announce $1.5 Billion Increase in HUD Budget.
2.
Low-Income Housing Tax Credit (VP is planned to do this in Chicago on
1/13)
3.
50,000 Welfare-to-Work Housing Vouchers
4. Housing Mobility Plan (Three components: (1) Expand Regional
Opportunity Counseling program to help low-income families find housing in
lower poverty areas; (2) Eliminate Obstacles to and Provide Incentives for
Portability by establishing &portability clearinghouse 8; providing PHAs
bonus based on the number of Section 8 participants moving to
lower-poverty areas; and encouraging PHAs to request &exception rents 8
(above the fair market rent); (3) Allowing Section 8 Vouchers to be used
for homeownership (part of our Public Housing Reform Bill).)
5.
Homeownership Initiative:
-
$25 Million for Homeownership Zones
-
&Play-by-the-Rules 8 Homeownership Initiative (A homeownership
proposal to provide assistance to 10,000 families who have track record of
paying rent on time but have some impediment to buying their own home.)
-
Homeownership Opportunity Fund (Loan guarantee program to allow state
and local governments to leverage current HOME funds with private-sector
investments to fund large scale, affordable housing developments in
distressed communities.)
6.
Increased Funds for HOME and CDBG (There are $50 million increases in
the budgets of both HOME and CDBG -- two programs that provide housing
assistance to local communities.)
7.
Fair Lending/Fair Housing
-
Promoting Fair Lending (This proposal -- still be finalized -- would
include: (1) an examination of the impact of credit scoring and risk-based
pricing on the availability of credit/capital to lower-income and minority
individuals; (2) issuance of guidance by banking regulators on certain key
credit scoring issues and, possibly, on risk-based pricing; (3) a
Presidential call to obtain more data on reasons for home mortgage loan
denials; and (4) collection of race and income data as part of the Equal
Credit Opportunity Act/CRA small business and small farm lending report
requirement.)
-
Fair Housing (Budget includes about $52 million for fair housing
enforcement so that we ensure that HUD meets the President ,S pledge to
double Fair Housing Enforcement actions, and we can put in place a new
system of Metropolitan Area Testing to root out the vestiges of housing
discrimination.)
8.
Reannounce Homeless Assistance Budget (On Dec. 24, we released the
homeless assistance budget. The President could reannounce that there is
a 40-percent increase in this part of the budget.)
9. CRA (One of the Administration ,S greatest accomplishments that has
gotten very little recognition is CRA. The President could highlight the
enormous impact CRA has had on Wall Street investing in community
development.)
10. Education Opportunity Centers (Budget includes $10 million for Rep.
Waters proposal to expand the Neighborhood Network program which currently
places computer learning centers in privately-owned assisted housing
developments.)
11. Round II of Empowerment Zones (Announce plan for Round II of
Empowerment Zones -- VP still needs to make decision. Also announce $150
million per year or $1.5 billion over ten years in EZ funding.)
12. CDFI Increase (Reannounce 50% increase in CDFI fund -- we have already
announced it at S. Bronx event in December and with Worker/Community
Adjustment package in November.)
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME: 8-JAN-1998 11:18:40.00
SUBJECT: Michael Barr and Treasury
TO: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP @ OVP [ UNKNOWN ])
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Michael Barr called me yesterday complaining about not being invited to
your meeting on the LIHTC, which is their baby. They need to be involved,
without them, this doesn't happen.
Please make certain they are included in everything. Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jake Siewert ( CN=Jake Siewert/OU=OPD/O=EOP [ OPD])
CREATION DATE/TIME: 8-JAN-1998 18:59:37.00
SUBJECT: Re: POTUS NYC Event
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
I don't like #1 -- the HUD increase. It just sounds like we are building
a bigger bureaucracy.
I like the LIHTC expansion, and Kaplan thought that Bruce liked it as
well. It's a good follow-up to the Charlotte Street event.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Christa Robinson (CN=Christa Robinson/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 8-JAN-1998 11:59:08.00
SUBJECT: POTUS NYC Event
TO: Ruby Shamir CN=Ruby Shamir/OU=WHO/O=EOP @ EOP [ WHO ])
READ:UNKNOWN
TO: Stacie Spector ( CN=Stacie Spector/OU=WHO/O=EOP @ EOP [ WHO D
READ:UNKNOWN
TO: Ann F. Lewis (CN=Ann F. Lewis/OU=WHO/O=EOP @ EOP [ WHO ])
READ:UNKNOWN
TEXT:
Here are the specific ideas NEC is looking at for the POTUS NYC trip on
the 15th. (Gene hasn't reviewed yet.) It would be great to have a meeting
to discuss which ideas make the most sense.
One question that has come up is whether the VP should not make the
low-income housing tax credit announcement in Chicago on the 14th so that
the President can do it on the 15th. Please let me know what you think,
so that we can find comething else for the VP if necessary.
Forwarded by Christa Robinson/OPD/EOP on 01/08/98
11:53 AM
Paul J. Weinstein Jr.
01/08/98 11:18:00 AM
Record Type: Record
To: Christa Robinson
cc:
Subject: POTUS NYC Event
Message Creation Date was at 8-JAN-1998 11:18:00
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
01/08/98
11:18 AM
Jonathan Orszag
01/08/98 11:09:00 AM
Record Type: Record
To: Paul J. Weinstein Jr.
cc:
Subject: POTUS NYC Event
Message Creation Date was at 8-JAN-1998 11:09:00
Gene asked me to come up with some ideas for the event. Here's what I
have:
1. Announce $1.5 Billion Increase in HUD Budget.
2. Low-Income Housing Tax Credit (VP is planned to do this in Chicago on
1/13)
3. 50,000 Welfare-to-Work Housing Vouchers
4. Housing Mobility Plan (Three components: (1) Expand Regional
Opportunity
Counseling program to help low-income families find housing in lower
poverty
areas; (2) Eliminate Obstacles to and Provide Incentives for Portability
by
establishing /!&portability clearinghouse /!8; providing PHAs bonus based
on the
number of Section 8 participants moving to lower-poverty areas; and
encouraging
PHAs to request /!&exception rents /!8 (above the fair market rent); (3)
Allowing
Section 8 Vouchers to be used for homeownership (part of our Public
Housing
Reform Bill).)
5. Homeownership Initiative:
- $25 Million for Homeownership Zones
- /!&Play-by-the-Rules /!8 Homeownership Initiative (A homeownership
proposal
to
provide assistance to 10,000 families who have track record of paying rent
on
time but have some impediment to buying their own home.)
- Homeownership Opportunity Fund (Loan guarantee program to allow state
and
local governments to leverage current HOME funds with private-sector
investments to fund large scale, affordable housing developments in
distressed
communities.)
6. Increased Funds for HOME and CDBG (There are $50 million increases in
the
budgets of both HOME and CDBG -- two programs that provide housing
assistance
to local communities.)
7. Fair Lending/Fair Housing
- Promoting Fair Lending (This proposal -- still be finalized -- would
include: (1) an examination of the impact of credit scoring and risk-based
pricing on the availability of credit/capital to lower-income and minority
individuals; (2) issuance of guidance by banking regulators on certain key
credit scoring issues and, possibly, on risk-based pricing; (3) a
Presidential
call to obtain more data on reasons for home mortgage loan denials; and
(4)
collection of race and income data as part of the Equal Credit Opportunity
Act/CRA small business and small farm lending report requirement.)
- Fair Housing (Budget includes about $52 million for fair housing
enforcement
so that we ensure that HUD meets the President /!,s pledge to double Fair
Housing
Enforcement actions, and we can put in place a new system of Metropolitan
Area
Testing to root out the vestiges of housing discrimination.)
8. Reannounce Homeless Assistance Budget (On Dec. 24, we released the
homeless
assistance budget. The President could reannounce that there is a
40-percent
increase in this part of the budget.)
9. CRA (One of the Administration /!,s greatest accomplishments that has
gotten
very little recognition is CRA. The President could highlight the
enormous
impact CRA has had on Wall Street investing in community development.)
10. Education Opportunity Centers (Budget includes $10 million for Rep.
Waters
proposal to expand the Neighborhood Network program which currently places
computer learning centers in privately-owned assisted housing
developments.)
11. Round II of Empowerment Zones (Announce plan for Round II of
Empowerment
Zones -- VP still needs to make decision. Also announce $150 million per
year
or $1.5 billion over ten years in EZ funding.)
12. CDFI Increase (Reannounce 50% increase in CDFI fund -- we have already
announced it at S. Bronx event in December and with Worker/Community
Adjustment
package in November.)
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 8-JAN-1998 11:08:43.00
SUBJECT: LIHTC
TO: Christa Robinson ( Christa Robinson @ EOP @ LNGTWY [ OPD 1)
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
CC: Jake Siewert (CN=Jake Siewert/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
Did you talk to Ann Lewis about this. We are getting lots of pressure
from VP's office regarding a decision. I have not yet talked to Bruce
yet. Gene hasn't made a decision yet either.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 8-JAN-1998 11:19:00.00
SUBJECT: POTUS NYC Event
TO: Christa Robinson (Christa Robinson @ EOP @ LNGTWY [ OPD )
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
01/08/98 11:18 AM
Jonathan Orszag
01/08/98 11:09:00 AM
Record Type: Record
To: Paul J. Weinstein Jr.
cc:
Subject: POTUS NYC Event
Message Creation Date was at 8-JAN-1998 : : :09:00
Gene asked me to come up with some ideas for the event. Here's what I
have:
1. Announce $1.5 Billion Increase in HUD Budget.
2. Low-Income Housing Tax Credit (VP is planned to do this in Chicago on
1/13)
3. 50,000 Welfare-to-Work Housing Vouchers
4. Housing Mobility Plan (Three components: (1) Expand Regional
Opportunity
Counseling program to help low-income families find housing in lower
poverty
areas; (2) Eliminate Obstacles to and Provide Incentives for Portability
by
establishing !&portability clearinghouse !8; providing PHAs bonus based
on the
number of Section 8 participants moving to lower-poverty areas; and
encouraging
PHAs to request !&exception rents !8 (above the fair market rent); (3)
Allowing
Section 8 Vouchers to be used for homeownership (part of our Public
Housing
Reform Bill).)
5. Homeownership Initiative:
- $25 Million for Homeownership Zones
-
&Play-by-the-Rules !8 Homeownership Initiative (A homeownership
proposal to
provide assistance to 10,000 families who have track record of paying rent
on
time but have some impediment to buying their own home.)
- Homeownership Opportunity Fund (Loan guarantee program to allow state
and
local governments to leverage current HOME funds with private-sector
investments to fund large scale, affordable housing developments in
distressed
communities.)
6. Increased Funds for HOME and CDBG (There are $50 million increases in
the
budgets of both HOME and CDBG -- two programs that provide housing
assistance
to local communities.)
7. Fair Lending/Fair Housing
- Promoting Fair Lending (This proposal -- still be finalized -- would
include: (1) an examination of the impact of credit scoring and risk-based
pricing on the availability of credit/capital to lower-income and minority
individuals; (2) issuance of guidance by banking regulators on certain key
credit scoring issues and, possibly, on risk-based pricing; (3) a
Presidential
call to obtain more data on reasons for home mortgage loan denials; and
(4)
collection of race and income data as part of the Equal Credit Opportunity
Act/CRA small business and small farm lending report requirement.)
- Fair Housing (Budget includes about $52 million for fair housing
enforcement
so that we ensure that HUD meets the President !,s pledge to double Fair
Housing
Enforcement actions, and we can put in place a new system of Metropolitan
Area
Testing to root out the vestiges of housing discrimination.)
8. Reannounce Homeless Assistance Budget (On Dec. 24, we released the
homeless
assistance budget. The President could reannounce that there is a
40-percent
increase in this part of the budget.)
9. CRA (One of the Administration !,s greatest accomplishments that has
gotten
very little recognition is CRA. The President could highlight the
enormous
impact CRA has had on Wall Street investing in community development.)
10. Education Opportunity Centers (Budget includes $10 million for Rep.
Waters
proposal to expand the Neighborhood Network program which currently places
computer learning centers in privately-owned assisted housing
developments.)
11. Round II of Empowerment Zones (Announce plan for Round II of
Empowerment
Zones -- VP still needs to make decision. Also announce $150 million per
year
or $1.5 billion over ten years in EZ funding.)
12. CDFI Increase (Reannounce 50% increase in CDFI fund -- we have already
announced it at S. Bronx event in December and with Worker/Community
Adjustment
package in November.)
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Francis S. Redburn ( CN=Francis S. Redburn/OU=OMB/O=EOP [ OMB 1)
CREATION DATE/TIME: 9-JAN-1998 11:39:47.00
SUBJECT: Appropriations Language for ROC
TO: Emil E. Parker ( CN=Emil E. Parker/OU=OPD/O=EOP@EOP OPD )
READ:UNKNOWN
CC: [email protected]([email protected]@INETJUNKNOWN_ ])
READ:UNKNOWN
CC: Katherine L. Meredith (CN=Katherine L. Meredith/OU=OMB/O=EOP@EOP [ OMB ])
READ:UNKNOWN
CC: Joslyn G. Mack (CN=Joslyn G. Mack/OU=OMB/O=EOP@EOP [ OMB 1)
READ:UNKNOWN
CC: [email protected]([email protected]@INETLUNKNOWN]
READ:UNKNOWN
CC: James F. Jordan ( CN=James F. Jordan/OU=OMB/O=EOP@EOP [ OMB D
READ:UNKNOWN
TEXT:
After talking with Paul and hearing his arguments for including
the $20M for ROC in appropriations language, we have agreed to make this
change and add the language. Jim and Katherine, please make sure that
this is reflected in the next pass.
Emil, Joslyn asked me to tell you that the revenue estimates for
LIHTC are preliminary. We don't have Treasury's final estimates.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Ricardo M. Gonzales ( CN=Ricardo M. Gonzales/O=OVP [ UNKNOWN 1)
CREATION DATE/TIME:12-JAN-1998 11:41:12.00
SUBJECT: Re: Member notification on Low-Income Housing Tax Credit announcment
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
Do you have staff contact names for any of these Members?
Jonathan Orszag @ EOP
01/12/98 10:05:45 AM
Record Type: Record
To: Ricardo M. Gonzales/OVP
cc:
Subject: Member notification on Low-Income Housing Tax Credit
announcment
On the Low-Income Housing Tax Credit, here the biggest supporters:
HOUSE:
Dems:
Rangel (someone should call his office today and tell them we are doing an
announcement tomorrow... he's a big supporter of the credit)
Kennelly
Cardin
Becerra
Coyne
Tanner
Republicans:
Nancy Johnson
Weller
Houghton
Ensign
Lazio (I can do this one)
Metcalf
English
SENATE:
Dems:
Graham (I can do this one)
Sarbanes
Moynihan
Daschle
Republicans:
D'Amato
Chaffee
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:12-JAN-1998 17:08:55.00
SUBJECT: LIHTC Paper
TO: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP @ OVP [ UNKNOWN])
READ:UNKNOWN
TEXT:
ATTACHMENT I
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D53]MAIL47473611K.026 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT 1
EXPANDING THE Low-INCOME HOUSING TAX CREDIT:
HELPING DEVELOP MORE AFFORDABLE RENTAL HOUSING IN URBAN AND RURAL COMMUNITIES
January 13, 1998
Today, Vice-President Gore Will Announce That the Administration's FY99 Budget Includes A
Major Expansion of the Low-Income Housing Tax Credit Which Will Help Spur The Private-
Sector to Develop More Affordable Rental Housing for Low-Income Americans. President
Clinton and Vice-President Gore's proposal to expand the Low-Income Housing
Tax Credit (LIHTC) builds on their successful support to make the credit
permanent in 1993, and is a key part of their agenda to empower
communities, encourage the development of more affordable housing, and help
provide the spark of private enterprise to distressed areas.
Increasing the Cap on the LIHTC from $1.25 Per Capita to $1.75 Per Capita. Since the
creation of the LIHTC in 1986, each state has been provided $1.25 per capita of housing tax
credits to allocate to developers of affordable housing. Even though building costs have
increased nearly 40 percent in the last decade, the amount of the credit has not been adjusted for
inflation. President Clinton and Vice-President Gore will propose to increase the cap on the
LIHTC from $1.25 per capita to $1.75 per capita - restoring the value of the credit to its 1986
level. This proposal will cost $1.6 billion over five years and is fully paid for in the Clinton-
Gore Administration's FY99 budget.
This Expansion Will Help Develop An Additional 150,000-180,000 Affordable Housing
Units Over the Next Five Years. Estimates suggest that the LIHTC currently helps develop
75,000-90,000 affordable housing units each year. The President and Vice President's proposal
to increase the cap by 40 percent will mean an additional 150,000-180,000 quality rental
housing units for low-income American families during the next five years.
The Low-Income Housing Tax Credit Works. Until the LIHTC was made permanent by
President Clinton and Vice-President Gore in 1993, it was not working efficiently. With
Congress extending the credit for only short periods of time - the credit was set to expire in
1989, then 1990, then 1991, and then 1992 - investors were not always willing to put money
down for a long-term chance on low-income housing. Now, with the credit permanent, it is
nearly fully utilized: in 1996, 97 percent of the available credits were allocated - the
remaining were either carried over to 1997 or reallocated among the states.
Washington Post, October 19, 1995: "The program's goal is to produce rental housing for poor people,
and by almost any measure it has been wildly successful."
Chicago Sun-Times, December 21, 1997: "The [Low-Income Housing] tax credit is one of the few
Washington success stories. It helps construct new housing for low-income tenants as a public-private
partnership it is exactly the kind of program Americans should be demanding of the federal
government."
Expanding the LIHTC Is Necessary To Meet the Demand for the Credit and the Demand
for Affordable Housing. While state housing agencies had $392 million worth of tax credits
to allocate, developers requested more than $1.1 billion in credits in 1996 ---- that means that
demand for the credits exceed supply by nearly 3 times. With such excess demand, an
expanded LIHTC is needed and competition will remain fierce for the additional credits.
[Automated Records Management System Hex-Dump Conversation]
Moreover, there are an estimated 5 million American families living in inadequate housing.
Expanding the LIHTC - along the rest of the Clinton-Gore Administration's agenda to
empower communities - helps to address the housing needs of American families.
The LIHTC Helps Low-Income Americans. The LIHTC must help low-income American
families: developers have a choice of having either at least 20 percent of their renters have
incomes below 50 percent of the area median income or at least 40 percent with incomes below
60 percent of the area median income. According to GAO, about 75 percent of tax credit
households met HUD's definition of "very-low income" - that is, their incomes were below
50 percent of the area's median income. Indeed, GAO estimated that the average housing credit
renter earns only $13,300 per year - that's, on average, 37 percent of the area median income.
The tax credit helps to lower the cost of rent: the average monthly rent was about $450 for
these households.
HOW DOES THE LOW-INCOME HOUSING TAX CREDIT WORK?
The Credit Is Administered By The States. The Low-Income Housing Tax Credit
functions similarly to a block grant to State housing agencies. Currently, each state is
permitted to allocate a certain amount of tax credits annually based on its population ($1.25
of credits per capita). Each state devises its own allocation plans, reflecting its own housing
needs. In nearly all states, demand for the credits far exceeds their supply, thus creating the
environment where project sponsors compete against one another to receive them Each state
chooses the projects that most efficiently serve low-income households.
How Are Projects Financed? A developer usually finances a low-income housing project
in part by using a private mortgage, in part using equity paid into the project from investors
who receive the tax credit, and in part from other sources including local and state
governments. Developers "sell" the tax credits to private investors -- often organized into
partnerships by syndicators such as Local Initiatives Support Coalition (LISC) and Enterprise
Foundation - who use the credits to offset their income tax liability. In return for the
credits, the private investors provide capital financing for the projects, filling the gap
between the development costs and the non-tax credit financing. The equity paid into a
project is less than the sum of the tax credits, providing the investors with a rate of return
over 10 years.
Using the Tax Credits. The maximum annual credits that states may award is about 9
percent of development costs for new construction (or substantial rehabilitation) or
approximately 4 percent for building acquisition and rehabilitation and federally subsidized
construction. These credits are provided annually for 10 years. Since a dollar saved
tomorrow is not as valuable as a dollar saved today, this amounts to 70 percent of the
development costs of new rental housing and 30 percent of housing receiving other subsidies
or rehabilitation of existing housing in present value terms. Each year about $300 million
worth of new credits are available. Since the credits are provided for 10 years, the aggregate
annual cost of annual credits to the Federal government is currently about $3 billion.
Ensuring Compliance. The LIHTC is a performance-based incentive, because investors can
claim the credit only if the housing is built on schedule. Moreover, once housing units have
been built, state agencies are responsible for monitoring the projects for compliance with
Federal requirements concerning household income, rents, and project habitability.
[Automated Records Management System Hex-Dump Conversation]
Noncompliance with these requirements may result in tax credit recapture or the denial of
previously issued or used credits. A GAO study found a good record of compliance.
[Automated Records Management System Hex Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:13-JAN-1998 18:56:37.00
SUBJECT: Low-Income Housing Tax Credit
TO: Matthew J. Bianco ( CN=Matthew J.Bianco/O=OVP@ OVP[UNKNOWN]).
READ:UNKNOWN
TEXT:
Can you get the fact sheets to Daschle and Gephardt?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:13-JAN-1998 18:54:01.00
SUBJECT: Low-Income Housing Tax Credit
TO: Janet Murguia ( CN=Janet Murguia/OU=WHO/O=EOP @ EOP [ WHO ])
READ:UNKNOWN
TEXT:
ATTACHMENT
I
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT:[ATTACH.D36JMAIL47534721U.026 to ASCII,
The following is a HEX DUMP:
END ATTACHMENT
I
EXPANDING THE LOW-INCOME HOUSING TAX CREDIT:
HELPING DEVELOP MORE AFFORDABLE RENTAL HOUSING IN URBAN AND RURAL COMMUNITIES
January 13, 1998
Today, Vice-President Gore Will Announce That the Administration's FY99 Budget Includes A
Major Expansion of the Low-Income Housing Tax Credit Which Will Help Spur The Private-
Sector to Develop More Affordable Rental Housing for Low-Income Americans. President
Clinton and Vice-President Gore's proposal to expand the Low-Income Housing
Tax Credit (LIHTC) builds on their successful support to make the credit
permanent in 1993, and is a key part of their agenda to empower
communities, encourage the development of more affordable housing, and help
provide the spark of private enterprise to distressed areas.
Increasing the Cap on the LIHTC from $1.25 Per Capita to $1.75 Per Capita. Since the
creation of the LIHTC in 1986, each state has been provided $1.25 per capita of housing tax
credits to allocate to developers of affordable housing. Even though building costs have
increased nearly 40 percent in the last decade, the amount of the credit has not been adjusted for
inflation. President Clinton and Vice-President Gore will propose to increase the cap on the
LIHTC from $1.25 per capita to $1.75 per capita - restoring the value of the credit to its 1986
level. This proposal will cost $1.6 billion over five years and is fully paid for in the Clinton-
Gore Administration's FY99 budget.
This Expansion Will Help Develop An Additional 150,000-180,000 Affordable Housing
Units Over the Next Five Years. Estimates suggest that the LIHTC currently helps develop
75,000-90,000 affordable housing units each year. The President and Vice President's proposal
to increase the cap by 40 percent will mean an additional 150,000-180,000 quality rental
housing units for low-income American families during the next five years.
The Low-Income Housing Tax Credit Works. Until the LIHTC was made permanent by
President Clinton and Vice-President Gore in 1993, it was not working efficiently. With
Congress extending the credit for only short periods of time - the credit was set to expire in
1989, then 1990, then 1991, and then 1992 - investors were not always willing to put money
down for a long-term chance on low-income housing. Now, with the credit permanent, it is
nearly fully utilized: in 1996, 97 percent of the available credits were allocated - the
remaining were either carried over to 1997 or reallocated among the states.
Washington Post, October 19, 1995: "The program's goal is to produce rental housing for poor people,
and by almost any measure it has been wildly successful."
Chicago Sun-Times, December 21, 1997: "The [Low-Income Housing] tax credit is one of the few
Washington success stories. It helps construct new housing for low-income tenants as a public-private
partnership. it is exactly the kind of program Americans should be demanding of the federal
government."
Expanding the LIHTC Is Necessary To Meet the Demand for the Credit and the Demand
for Affordable Housing. While state housing agencies had $392 million worth of tax credits
to allocate, developers requested more than $1.1 billion in credits in 1996 - that means that
demand for the credits exceed supply by nearly 3 times. With such excess demand, an
expanded LIHTC is needed and competition will remain fierce for the additional credits.
[Automated Records Management System Hex-Dump Conversation]
Moreover, there are an estimated 5 million American families living in inadequate housing.
Expanding the LIHTC - along the rest of the Clinton-Gore Administration's agenda to
empower communities - helps to address the housing needs of American families.
The LIHTC Helps Low-Income Americans. The LIHTC must help low-income American
families: developers have a choice of having either at least 20 percent of their renters have
incomes below 50 percent of the area median income or at least 40 percent with incomes below
60 percent of the area median income. According to GAO, about 75 percent of tax credit
households met HUD's definition of "very-low income" - that is, their incomes were below
50 percent of the area's median income. Indeed, GAO estimated that the average housing credit
renter earns only $13,300 per year - that's, on average, 37 percent of the area median income.
The tax credit helps to lower the cost of rent: the average monthly rent was about $450 for
these households.
HOW DOES THE LOW-INCOME HOUSING TAX CREDIT WORK?
The Credit Is Administered By The States. The Low-Income Housing Tax Credit
functions similarly to a block grant to State housing agencies. Currently, each state is
permitted to allocate a certain amount of tax credits annually based on its population ($1.25
of credits per capita). Each state devises its own allocation plans, reflecting its own housing
needs. In nearly all states, demand for the credits far exceeds their supply, thus creating the
environment where project sponsors compete against one another to receive them. Each state
chooses the projects that most efficiently serve low-income households.
How Are Projects Financed? A developer usually finances a low-income housing project
in part by using a private mortgage, in part using equity paid into the project from investors
who receive the tax credit, and in part from other sources including local and state
governments. Developers "sell" the tax credits to private investors - often organized into
partnerships by syndicators such as Local Initiatives Support Coalition (LISC) and Enterprise
Foundation - who use the credits to offset their income tax liability. In return for the
credits, the private investors provide capital financing for the projects, filling the gap
between the development costs and the non-tax credit financing. The equity paid into a
project is less than the sum of the tax credits, providing the investors with a rate of return
over 10 years.
Using the Tax Credits. The maximum annual credits that states may award is about 9
percent of development costs for new construction (or substantial rehabilitation) or
approximately 4 percent for building acquisition and rehabilitation and federally subsidized
construction. These credits are provided annually for 10 years. Since a dollar saved
tomorrow is not as valuable as a dollar saved today, this amounts to 70 percent of the
development costs of new rental housing and 30 percent of housing receiving other subsidies
or rehabilitation of existing housing in present value terms. Each year about $300 million
worth of new credits are available. Since the credits are provided for 10 years, the aggregate
annual cost of annual credits to the Federal government is currentiy about $3 billion.
Ensuring Compliance. The LIHTC is a performance-based incentive, because investors can
claim the credit only if the housing is built on schedule. Moreover, once housing units have
been built, state agencies are responsible for monitoring the projects for compliance with
Federal requirements concerning household income, rents, and project habitability.
[Automated Records Management System Hex- Dump Conversation]
Noncompliance with these requirements may result in tax credit recapture or the denial of
previously issued or used credits. A GAO study found a good record of compliance.
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Matthew J. Bianco ( CN=Matthew J. Bianco/O=OVP [ UNKNOWN D
CREATION DATE/TIME:14-JAN-1998 09:28:23.00
SUBJECT: Re: Low-Income Housing Tax Credit
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
They should have gotten them, but I will fax them again
no problem!
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:15-JAN-1998 08:38:38.00
SUBJECT: LIHTC
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TO: michael.barr ( michael.barr @ treas.sprint.com @ inet [ UNKNOWN ])
READ:UNKNOWN
TEXT:
Hope you both saw the Post editorial supporting the expansion in the
LIHTC. While they said that they thought there were better means to
achieve the ends (read: spending programs), this one was a "good idea" and
had a chance of getting through Congress.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Bruce N. Reed ( CN=Bruce N. Reed/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:15-JAN-1998 10:23:30.00
SUBJECT: Re: LIHTC
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
good work
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jennifer L. Klein ( CN=Jennifer L. Klein/OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:15-JAN-1998 11:42:33.00
SUBJECT:
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Any news on the Low-Income Housing Tax Credit? Are we doing it?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP [ UNKNOWN 1)
CREATION DATE/TIME:15-JAN-1998 13:01:12.00
SUBJECT: LIHTC
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
I would like to follow-up with USCM, League of Cities and the NGA. What
paper can I send them on the LIHTC.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:15-JAN-1998 09:32:11.00
SUBJECT: LIHTC
TO: Jose Cerda III ( CN=Jose Cerda III/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TO: Bruce N. Reed ( CN=Bruce N. Reed/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
01/15/98 09:30 AM
Jonathan Orszag
01/15/98 08:38:30 AM
Record Type: Record
To: michael.barr @ treas.sprint.com @ inet, Paul J. Weinstein Jr./OPD/EUP
cc:
Subject: LIHTC
Hope you both saw the Post editorial supporting the expansion in the
LIHTC. While they said that they thought there were better means to
achieve the ends (read: spending programs), this one was a "good idea" and
had a chance of getting through Congress.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME:16-JAN-1998 14:32:52.00
SUBJECT: For Weekly Report
TO: Russell W. Horwitz ( CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TEXT:
Vice President's Low-Income Housing Tax Credit Announcement in Chicago:
On Tuesday, the Vice President announced that the budget includes a
40-percent expansion of the low-income housing tax credit. We worked
closely with the Vice President's office to put this event together. The
press coverage was positive, although it was not extensive: the USA Today
and the Wall Street Journalran favorable articles, but the other major
papers did not run stories. And the Washington Post ran an editorial
supporting the expansion, saying that the proposal was a "good idea."
Initial reactions from the Hill suggest that our proposal will have strong
bipartisan support. Rep. Lazio (R-NY) made positive comments in the USA
Today and the offices we spoke with -- from Rep. Rangel's to Sen.
D'Amato's -- were all very supportive. The groups -- especially LISC,
Enterprise Foundation, and the National Council of State Housing Agencies
-- were all excited about our proposal. Moreover, Mayc. Daley cited the
Vice President's commitment to America's cities on issues such as the
low-income housing tax credit and brownfields as his reasons for endorsing
him for the 2000 election.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jennifer L. Klein ( CN=Jennifer L. Klein/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME:20-JAN-1998 12:19:45.00
SUBJECT: Re: Child Care and the LIHTC
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: Elena Kagan ( CN=Elena Kagan/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
That is also what I've heard. Orzag seems optimistic that this will get
done.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD 1)
CREATION DATE/TIME:20-JAN-1998 11:25:18.00
SUBJECT: Re: Response to Child Care/Low-Income Housing Tax Credit Questions
TO: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:20-JAN-1998 11:24:48.00
SUBJECT: Response to Child Care/Low-Income Housing Tax Credit Questions
TO: Elena Kagan ( CN=Elena Kagan/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
CC: Jennifer L. Klein ( CN=Jennifer L. Klein/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
You asked me about the status of the
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:20-JAN-1998 13:04:13.00
SUBJECT: Re: Child Care and the LIHTC
TO: Jennifer L. Klein ( CN=Jennifer L. Klein/OU=OPD/O=EOP @ EOP [OPD])
READ:UNKNOWN
TEXT:
Yeah, I think so.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:23-JAN-1998 18:55:02.00
SUBJECT: Re: SOTU background paragraphs
TO: Emil E. Parker ( CN=Emil E. Parker/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Thanks. We should do one on the LIHTC as well. I will draft.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD D
CREATION DATE/TIME:23-JAN-1998 17:26:04.00
SUBJECT: SOTU
TO: Michael.Barr ( Michael.Barr @ Treas.Sprint.Com @ inet [ UNKNOWN D
READ:UNKNOWN
CC: Elizabeth J. Potter ( CN=Elizabeth J. Potter/O=OVP @ OVP [ UNKNOWN ])
READ:UNKNOWN
CC: Jim Kohlenberger (CN=Jim Kohlenberger/O=OVP @ OVP [ UNKNOWN ])
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Right now there is no paragraph on Empowerment. This is what I submitted
to Waldman last week:
"Last month I visited the South Bronx and saw 3 neigborhood transformed
from despair to hope. The South Bronx is a testament to the
private-public partnerships that are rebuilding are distressed communities
throughout America. Today, I am calling on Congress to build on these
partnerships by expanding the Low-Income Housing Tax Credit, providing
flexible grant funds for the Round II Empowerment Zones, increasing the
budget for the Community Development Financial Institutions Fund (CDFI),
and increasing the funds for programs that open the door to homeownership
for all Americans."
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Peter R. Orszag CN=Peter R. Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 1-FEB-1998 12:38:04.00
SUBJECT: Budget
TO: Peter A. Weissman ( CN=Peter A. Weissman/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
TO: Gene B. Sperling ( CN=Gene B. Sperling/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TEXT:
Please show to Gene.
Forwarded by Peter R. Orszag/OPD/EOP on 02/01/98
12:40 PM
KARL.SCHOLZ @ MS01.DO.treas.sprint.com
02/01/98 08:56:00 AM
Record Type: Record
To: Peter R. Orszag
cc:
Subject: Budget
Date: 02/01/1998 10:56 am (Sunday)
From: John Karl Scholz
To: EX.MAIL."[email protected]",cohena
CC: lubickd, talismanj
Subject: Budget
Amazing news you guys brought me last night. I can't believe this
happened.
Having said that, there appears to be little scope for help on the tax
side. One generic comment, if we were to make up much of the out-year
shortfall on the tax side -- we'd be increasingly vulnerable to the charge
that we're raising taxes. We already raise almost $3 billion more than we
cut in the second five years. I think we need to be very careful about
pushing that imbalance further.
Child care is the major tax initiative. It is out of the question (I
assume)
to sunset child care proposals that we have made.
The only costly environmental initiative in the second five years is
cars.
We have already announced the phaseout schedule for the new car
credit.
School construction only allows new bonds to be issued in the first two
years, so there's no way to shave that. Similarly, we can't go lower on
the low-income housing tax credit.since we already aren't indexing the
$1.75.
The only place where some out-year saving might materialize on the tax
budget is with the Puerto Rico credit. It costs $935 million in 2006,
$1.66
billion in 2007 and $1.74 in 2008 (because the existing credit phases
out). There are ways to trim the out-year cost of the credit, but doing SO
will be highly controversial within some quarters of the White House and
with some on the Hill. It also makes us more vulnerable to the "tax
increase" charge. Please let us know if we need to pursue this.
Karl
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1
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD
CREATION DATE/TIME: 3-FEB-1998 15:04:00.00
SUBJECT: Several Issues
TO: Michael.Barr (Michael.Barr @ Treas.Sprint.Com @ inet [ UNKNOWN
READ:UNKNOWN
CC: Jose Cerda III ( CN=Jose Cerda III/OU=OPD/O=EOP [ OPD
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
TEXT:
1. Child Care/LIHTC proposal -- What is the status of the proposal to
promote the availability of child care facilities in low-income
neighborhoods that has been floated to the DPC and the NEC? As you know,
this proposal would amend the Low Income Housing Tax Credit (LIHTC) Law to
permit the tax credit to subsidize common areas within a housing credit
property even if that area is made available to individuals who do not
reside within the property. The provision could be limited to make sure
that the basic purpose of the Housing Credit program would not be under
mined. In addition, the proposal would be budget neutral.
I am getting a lot of pressure from the First Lady's Office and from B.
Reed regarding this idea. Tax Policy's initial reaction was very
negative. They implied that changing this rule would open up a floodgate
of other types of facilities that the LIHTC could subsidize in common
areas within a housing credit property. I do not understand this
analysis, since we are proposing that only child care facilities be
eligible.
Do I need to talk to Karl S. about this. I would like to resolve this
issue in the next couple of weeks.
2. CDFI Reauthorization -- When do we plan to drop a bill? Let us know
so we can see if there is any interest in this issue on the President's or
Vice President's behalf. I think the VP might want to do an event.
By the way, I hope you were pleased with the State of the Union. It
included CDFI and LIHTC.
3. Tradeable Welfare Tax Credits -- Bruce R. wants to know what Treasury
thinks of making the welfare tax credits tradeable. He would like an
opinion from your office and Tax Policy as soon as possible. Nothing too
long, a page or so would be fine.
As you know, there is currently a tax credit available to businesses when
they hire a person off welfare.
The idea of making these tax credits tradeable would permit the business
doing the hiring to trade its tax credit to other entities, often called
intermediaries or service providers, that do the actual locating and
training of the welfare recipients. Often, these intermediaries are
not-for-profits.
This is how it would work: A business could give its credit to an
intermediary after 6 months if the employee was still working at the
company (in other words, demonstrating some type of retention). The
premise would be to increase the incentives for small businesses to hire
welfare recipients because they would not have to train someone and it
would give the business the ability to increase the amount it would pay
the intermediary for the finding and training of new employees.
4. CRA and Regulation B -- Last Friday, Gene Sperling and others met with
the Greenlining Coalition. The Coalition told Gene that in separate
meetings with Rubin, Greenspan, and Levitt, they were led to believe that
Treasury and the Federal Reserve would be interested in ways to expand CRA
to other sectors of the financial service industry (investment banks,
insurance companies, mortgage lenders, etc.). They also suggested that
the Treasury Secretary indicated some support for reviewing Reg B. Gene's
meeting with this group did not go well, it was very combative, but we are
supposed to get back to them in two weeks.
Please respond to the following:
a) Did the Secretary indicate and interest in expanding CRA? What
do you know about Greenspan and Levitt's position on this
issue?
b) It was my understanding that your fair lending working group rejected
taking on
Reg. B. Is that correct? If you did reject that proposal,
what was your rationale?
If you did not address Reg B., what do you think of reviewing
it. Does Treasury
support Gene Ludwig's position and
why?
I know this is a lot of material, but we do want to know where the
Department is positioned on these matters before we consider moving
forward.
Thanks.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Emil E. Parker (CN=Emil E. Parker/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME: 2-MAR-1998 18:48:42.00
SUBJECT: March 4 Community empowerment board meeting
TO: Gene B. Sperling ( CN=Gene B. Sperling/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: Jonathan A. Kaplan (CN=Jonathan A. Kaplan/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: Peter A. Weissman ( CN=Peter A. Weissman/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: Russell W. Horwitz (CN=Russell W. Horwitz/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Apparently Secretaries Cuomo and Glickman are to provide data on the
performance of the first-round empowerment zones. V ou are slated to
present an overview of the Administration's FY 1999 community empowerment
agenda (I believe the CEB staff is looking for a bit of a pep talk here).
You could take the opportunity to brief Cabinet members on the relevant FY
1999 budget proposals, since many may be unfamiliar with the items outside
their agencies, while also urging them to go all out during the
appropriations process to secure the necessary funding. Finally, you
could acknowledge that much more effort is needed in this area, and note
that the NEC and DPC are definitely in the market for additional
empowerment proposals. Below is draft paper for the talk; above is a
longer memo on FY 99 budget empowerment/urban/housing initiatives.
DRAFT
Community Empowerment Board talk
Empowerment zones represent one of the cornerstones of the
Administration ,S community empowerment agenda. The FY 1999 budget
includes a range of other initiatives designed to promote economic
opportunity in our nation ,S most disadvantaged areas, as well as
proposals that would make affordable rental housing and homeownership more
accessible for low and moderate-income households.
FY 1999 budget initiatives
Flexible funding for second-round empowerment zones. The
Administration ,S FY 1999 budget provides $170 million for ten years (a
total of $1.7 billion) in mandatory funding for second-round urban and
rural EZs--$100 million per urban zone and $40 million per rural zone.
Higher cap on the low-income housing tax credit. The Administration ,S
budget calls for increasing the per capita cap on the credit from $1.25 to
$1.75 (40 percent) at a cost of $1.6 billion over five years, which should
create an additional 150,000-180,000 affordable housing units.
50,000 welfare-to-work housing vouchers. The FY 1999 budget includes
$283 million for 50,000 new vouchers exclusively for people who need
housing assistance to make the transition from welfare to employment.
Expansion of the Economic Development Initiative (EDI). The
Administration ,S FY 1999 budget requests $400 million for EDI, to
leverage private sector funding for job-creating projects. EDI funds
allow communities to make greater use of HUD ,S Section 108 loan guarantee
program. Under Section 108, HUD guarantees notes held by communities. In
return for the HUD guarantees, communities are required to pledge their
future CDBG funds as collateral for the Section 108 loans, making some
reluctant to access the 108 program. EDI funds can be used to write down i
nterest rates or reduce project costs, thereby making more projects
feasible and reducing the risk of a community ,S defaulting on a Section
108-backed loan.
The Administration plans to use EDI and Section 108 guarantees together to
stimulate creation of a true secondary market in economic development
loans, by standardizing the underwriting criteria for Section 108-backed
project loans and by pooling these loans. This would build on such
secondary market activity already underway.
CDFI Expansion. The Administration is requesting a $45 million increase
in CDFI funding (from $80 million to $125 million). The increased funding
also would be used in part to accelerate development of a secondary market
for CDFI loans.
$20 million for Regional Opportunity Counseling. Under this program,
public housing authorities partner with nonprofits to provide counseling
to Section 8 certificate and voucher holders, to ensure that they are
aware of the full range of housing options. This program also entails
recruiting landlords to accept Section 8 families. The Administration is
again requesting $20 million for regional opportunity counseling.
Incentive to Reduce Poverty Concentrations of Housing Certificate and
Voucher Families. The FY 1999 budget includes language giving the
Secretary of HUD the option to provide bonuses to PHAs for increases in
the number of Section 8 voucher and certificate holders moving to
lover-poverty areas.
&Play-by-the-Rules 8 Homeownership Proposal. The FY 1999 budget for the
Neighborhood Reinvestment Corporation includes $25 million for a new
initiative that would make the dream of homeownership more accessible to
families who have a good rental history but are currently underserved by
the housing sales market.
Homeownership Zones. The FY 1999 budget includes $25 million for
Homeownership Zones. The funding would be used by communities to reclaim
abandoned and distressed neighborhoods through the creation of large-scale
developments of owner-occupied single-family homes.
Home Loan Guarantee Program. This $11 million initiative would allow
States and localities to use HOME funds as collateral to leverage private
loans for large-scale affordable housing developments in distressed
communities.
Expand Youthbuild from $35 to $45 million. This program provides high
school dropouts age 16-24 with general academic and job skills training,
as well as apprenticeships constructing and rehabilitating affordable
housing.
Access to Jobs and Training. As part of the National Economic Crossroads
Transportation Efficiency Act (NEXTEA) proposal, the Administration seeks
to strengthen the vital connection between transportation and employment
by proposing an Access to Jobs and Training Initiative. The budget
provides $100 million to assist States, local governments, and non-profits
in planning and implementing new transportation services such as van pools
to link welfare recipients and other economically disadvantaged persons to
jobs.
Regional Connections. This initiative, which would be a set-aside within
CDBG, would provide funding to metropolitan areas in which a distressed
central city and more affluent suburbs together craft regional development
strategies. It could complement efforts by the President ,S Council on
Sustainable Development to help regional coalitions in many metropolitan
areas manage growth and address other issues requiring regional
cooperation.
Next steps
Your efforts are absolutely essential if we are to obtain from Congress
the dollars needed to make these initiatives a reality. You are the
front-line troops in this campaign; we all need to coordinate our
legislative efforts in order to secure as much of our FY 1999 empowerment
agenda as possible.
While each of these initiatives would represent a positive step, there is
still much to be done. The national child poverty rate and income
inequality, although declining or stable, remain unacceptably high.
Central cities, for example, continue to lag far behind the suburbs in job
growth, with much higher poverty rates and, even more disturbing,
concentrations of poverty that resist revitalization efforts.
During the coming year, the NEC and DPC will be aggressively seeking
agency proposals for further actions the Administration can take,
including non-legislative steps, to address the economic and social needs
of disadvantaged communities. We are currently especially interested in
proposals in the following areas:
1.
Methods of effectively urging nonbank financial institutions
(e.g., mutual funds, insurance and finance companies) to increase their
investment in low-income communities. We want to persuade these
institutions to act in a manner consistent with the underlying principles,
but not the particular provisions, of the Community Reinvestment Act
(which is limited to banks and thrifts).
2.
Broad-based incentives for commercial development. The
Administration ,S FY 1999 budget included tax incentives targeted to the
second-round empowerment zones, as well as an expansion of the low-income
housing tax credit. The budget did not include a commercial development
tax incentive as widely available as the LIHTC. We would like to explore
options along these lines.
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The following is a HEX DUMP:
END ATTACHMENT
1
DRAFT
MEMORANDUM FOR THE PRESIDENT
FROM:
BRUCE REED
GENE SPERLING
RE:
Major New Urban/Economic Empowerment Proposals
in the FY 1999 Budget
Below is a compilation of the major new economic empowerment, urban and housing initiatives
in the FY 1999 budget. Please let us know if you have any questions or comments.
ECONOMIC EMPOWERMENT
Flexible funding for second-round empowerment zones. The Administration's FY 1999 budget
provides $150 million for ten years in mandatory funding for second-round urban EZs. This
level of funding (a total of $1.5 billion over ten years) would provide each of the 15 second-
round urban zones with the same level of grant support--$100 million--as the first round zones.
The dollars could be used for a wide range of activities, including economic development and
housing projects, project-based rental assistance, job training and other social services. The
budget also includes similar flexible funding ($20 million per year for ten years) for the five
second-round rural zones--a total of $40 million per rural zone.
Although the Administration, in the FY 1998 budget, requested $100 million in discretionary
flexible funding for second-round urban zones, the 1998 Appropriations bill included only $5
million in EZ planning funds, with no guarantee of program funding for FY 1999.
Most of those involved in the Empowerment Zones program believe that communities need
access to a substantial pool of flexible funding in order to design and implement strategic plans
tailored to their particular economic conditions and needs.
50,000 welfare-to-work housing vouchers. The FY 1999 budget includes $283 million for
50,000 new vouchers exclusively for people who need housing assistance to make the transition
from welfare to employment.
This would be a new program, distinct from the existing Section 8 tenant-based program. These
welfare-to-work vouchers would be distributed on a competitive rather than a formula basis to
public housing agencies that had devised a plan, in consultation with the local welfare agency
and Welfare-to-Work grantee, for using the vouchers to further the goals of welfare reform (e.g.
to help welfare recipients take or retain jobs, or allow them to move to areas where jobs can be
found). Local agencies would have great flexibility to design and operate the welfare-to-work
[Automated Records Management System Hex-Dump Conversation]
voucher program within broad national guidelines, to encourage maximum local creativity and
innovation. This initiative should produce valuable evidence about the most effective methods
of using housing assistance to promote employment among the disadvantaged.
An additional 50,000 new vouchers for priority populations. The budget also includes 50,000
new housing vouchers largely targeted to especially needy populations, including homeless
persons with disabilities and families in need of housing assistance to remain together (e.g., to
prevent or end a foster care placement).
Expansion of the Economic Development Initiative (EDI). The Administration's FY 1999
budget requests $400 million for EDI, to leverage private sector funding for job-creating projects.
In 1998 Congress funded EDI at $138 million, including $100 million for Congressionally
earmarked projects. EDI funds allow communities to make greater use of HUD's Section 108
loan guarantee program. Under Section 108, HUD guarantees notes held by communities. In
return for the HUD guarantees, communities are required to pledge their future CDBG funds as
collateral for the Section 108 loans, making some reluctant to access the 108 program. EDI
funds can be used to write down interest rates or reduce project costs, thereby making more
projects feasible and reducing the risk of a community's defaulting on a Section 108-backed
loan.
The Administration plans to use EDI and Section 108 guarantees together to stimulate creation of
a true secondary market in economic development loans, by standardizing the underwriting
criteria for Section 108-backed project loans and by pooling these loans. This would build on
such secondary market activity already underway.
CDFI Expansion. The Administration is requesting a $45 million increase in CDFI funding
(from $80 million to $125 million), which would allow the CDFI Fund to provide additional
financial assistance to the growing CDFI field and to expand a training and technical assistance
initiative. The increased funding also would be used in part to accelerate development of a
secondary market for CDFI loans, complementing the EDI-funded effort.
Increased Economic Adjustment Assistance. The FY 1999 budget provides the Department
of Commerce's Economic Development Administration (EDA) an additional $50 million
annually for its Economic Adjustment Assistance grant program, to, among other purposes,
create a new Office of Community Adjustment Assistance. This office will serve as the
Federal government's first point of contact with communities adversely impacted by trade
agreements and/or major plant closings and will coordinate rapid assistance from a host of
federal agencies. The office will ensure that communities are aware of all Federal resources
available to them and that the Federal government responds to their needs in a rational and
coordinated way. The increased funding also provides for additional planning and
implementation grants to allow affected communities to begin the process of economic recovery
and growth.
Expanded Youthbuild. This program provides high school dropouts age 16-24 with general
[Automated Records Management System Hex-Dump Conversation]
academic and job skills training, as well as apprenticeships constructing and rehabilitating
affordable housing. The 1998 Appropriations bill included $35 million for Youthbuild, as a set-
aside within the Community Development Block Grant (CDBG) program. The FY 1999 budget
requests $45 million in separate funding for Youthbuild (i.e., outside CDBG).
Access to Jobs and Training. As part of the National Economic Crossroads Transportation
Efficiency Act (NEXTEA) proposal, the Administration seeks to strengthen the vital connection
between transportation and employment by proposing an Access to Jobs and Training Initiative.
The budget provides $100 million to assist States, local governments, and non-profits in planning
and implementing new transportation services such as van pools to link welfare recipients and
other economically disadvantaged persons to jobs.
Regional Connections. This initiative, which would be a set-aside within CDBG, would provide
funding to metropolitan areas in which a distressed central city and more affluent suburbs
together craft regional development strategies. It could complement efforts by the President's
Council on Sustainable Development to help regional coalitions in many metropolitan areas
manage growth and address other issues requiring regional cooperation.
EXPANDING THE SUPPLY OF AFFORDABLE RENTAL HOUSING
Higher cap on the low-income housing tax credit. The IRS allocates annually to each State an
amount of low-income housing tax credits equal to $1.25 per resident; the nationwide cap is
accordingly $1.25 per capita. This limit has not been adjusted since the credit was created in
1986; the purchasing power of the credit has declined by about 45 percent since that date. The
Administration's budget calls for increasing the limit to $1.75 per capita, at a cost of $1.6 billion
over five years.
MORE DIVERSE HOUSING OPPORTUNITIES
Regional Opportunity Counseling. Under this program, public housing authorities partner with
nonprofits to provide counseling to Section 8 certificate and voucher holders, to ensure that they
are aware of the full range of housing options. Studies have found that when Section 8 families
are ready to move, they tend to search for housing in areas with which they are familiar.
Unfortunately, these areas tend to be similar, and in close physical proximity, to their original
high-poverty neighborhoods. This program also entails recruiting landlords to accept Section 8
families.
HUD allocated $36.7 million for the 16 regional opportunity counseling sites in FY 1996, and the
Administration requested an additional $20 million for FY 1998 (as a set-aside in the Section 8
tenant-based account) to expand the program to additional sites. The FY 1998 VA-HUD
Appropriations Act did not, however, include this set-aside. The Administration is again
requesting $20 million for regional opportunity counseling; this additional ROC funding should
be a priority in the FY 1999 VA-HUD appropriations process.
3
[Automated Records Management System Hex-Dump Conversation]
Incentive to Reduce Poverty Concentrations of Housing Certificate and Voucher Families. The
FY 1999 budget includes language giving the Secretary of HUD the option to provide bonuses to
PHAs for increases in the number of Section 8 voucher and certificate holders moving to lower-
poverty areas. This portability bonus would encourage PHAs to undertake additional outreach
efforts to landlords in low-poverty areas to identify more housing options for voucher and
certificate holders. The bonus would apply to moves both within and outside the PHA's service
area.
"Play-by-the-Rules" Homeownership Proposal. The FY 1999 budget for the Neighborhood
Reinvestment Corporation includes $25 million for a new initiative that would make the dream
of homeownership more accessible to families who have a good rental history but are currently
underserved by the housing sales market. Under this initiative, 10,000 lower-income and
often minority families who are currently renting would be provided with homeownership
counseling, training, and flexible assistance for downpayment or closing costs, second
mortgage loans for debt reduction, or rehabilitation loans.
Homeownership Zones. The FY 1999 budget includes $25 million for Homeownership Zones.
The funding would be used by communities to reclaim abandoned and distressed neighborhoods
through the creation of large-scale developments of owner-occupied single-family homes.
Funds cound be used for property acquisition, housing construction, housing
rehabilitation, demolition, site preparation, homeownership counseling,
relocation, housing marketing, activities to further fair housing, and other
activities essential to homeownership.
Home Loan Guarantee Program. This $11 million initiative would allow States and localities
to use HOME funds as collateral to leverage private loans for large-scale affordable housing
developments in distressed communities. Under this program, HUD would guarantee private
loans of up to five times the jurisdiction's most recent HOME allocation.
Higher FHA loan limits. Increasing the loan limits would enable FHA to play a more
significant role in the middle-income housing market, as well as generating revenues needed for
other components of the Administration's homeownership agenda.
FAIR HOUSING
Fair housing testing initiative. Paired testing, in which otherwise identical white and minority
testers (e.g., same income, type of job, job experience) approach realtors or landlords, is a
particularly effective method of detecting housing discrimination. This new HUD initiative
would fund paired testing, in the sales and rental markets, by non-profit fair housing
organizations in 20 metropolitan areas. These tests would be followed by examination,
4
[Automated Records Management System Hex-Dump Conversation]
dissemination and discussion of the results. At a modest cost of $10 million, this effort would
detect and deter housing discrimination while also producing invaluable evidence about the
extent of such discrimination.
The Fair Housing Council of Greater Washington, with the help of HUD grant funding, recently
conducted paired tests in the Washington area.
The Council found that whites receive preferential treatment in the rental and purchase of
housing between 33 and 47 percent of the time.
White testers were quoted lower rents for the same apartments, shown more apartments
or houses, and taken off waiting lists before minority testers who applied earlier. In other
words, African Americans and Hispanics face discrimination (e.g., questions about
income and credit histories not posed to whites) in one-third to half of their interactions in
the Washington area rental and sales markets.
These disturbing results, however, led to rapid action. Montgomery County, for example,
pledged $400,000 for a two-year initiative to perform its own tests of the market to identify
landlords and real estate agents who use discriminatory practices. This initiative should have a
similar impact in other metropolitan areas.
Enhanced enforcement funding. In addition to the $10 million for the testing initiative, the FY
1999 budget includes a $12 million- increase in flexible funding for HUD's Fair Housing
Initiatives program (FHIP) and Fair Housing Assistance Program (FHAP). This funding supports
Secretary Cuomo's "One America" initiative, including his pledge to, in the second term, double
the number of enforcement actions taken by HUD with regard to housing discrimination
complaints (relative to the number for the first term).
ASSISTING DISADVANTAGED URBAN POPULATIONS
Increased funding for the homeless. The FY 1999 budget proposes $1.150 billion for
homeless-related assistance, an increase of $327 million over the FY 1998 level, for 125,000 new
transitional beds, with services, and 60,000 permanent beds, also linked to services. The $1.150
billion also includes funding for 34,000 new housing vouchers to enable homeless persons who
otherwise would remain in emergency or transitional facilities or on the streets to find long-term
housing linked to appropriate services.
Lead Hazard Reduction Program/Healthy Homes Initiative. The Administration is requesting
$25 million for a "Healthy Homes Initiative." This will supplement HUD's Lead-Based Paint
Hazard Control Grant Program, currently funded at $50 million, which provides grants to States
and local governments for abatement of home-based lead hazards and education and training on
lead hazard reduction. The "Healthy Homes" funding would allow HUD to develop new
methods of controlling multiple housing-related environmentai diseases and hazards that threaten
the health of children in cities.
5
[Automated Records Management System Hex-Dump Conversation]
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. ( CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD
CREATION DATE/TIME: 9-MAR-1998 16:48:44.00
SUBJECT: memo to Treasury and others on community revitalization tax credit
TO: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
03/09/98 04:48 PM
Emil E. Parker
03/09/98 03:27:57 PM
Record Type: Record
To: Paul J. Weinstein Jr./OPD/EOP
cc:
Subject: memo to Treasury and others on community revitalization tax credit
I plan to send out the memo below later today. Any objections?
TO:
MICHAEL BARR
KARL SCHOLZ
JACQUIE LAWING
PAUL LEONARD
JULIAN POTTER
FROM: EMIL PARKER
PAUL WEINSTEIN
CC:
CECILIA ROUSE
SARAH ROSEN
Gene believes strongly that we can and should do more to promote
investment in low-income communities, especially inner-city areas; Bruce
shares this view. Accordingly, the DPC and NEC will be holding small
meetings to consider particular approaches to achieving this end (in
addition to the larger community empowerment group gatherings).
The Local Initiatives Support Corporation has proposed a community
revitalization tax credit (CRTC), modeled after the low income housing tax
credit but applying to commercial or industrial activity in disadvantaged
areas. The credit would generally be limited to building construction,
rehabilitation and acquisition expenses. The CRTC legislation has been
introduced by Rep. English in the House and Sen. Hutchison in the Senate,
with bipartisan co-sponsors in each chamber.
The proposal enjoys support from the U.S. Conference of Mayors (especially
Mayor Rendell) and the American Association of Enterprise Zones, among
others. While the proposal itself may be seriously flawed, it can serve
as the basis for discussion of broad-based methods to, through the tax
system, enhance incentives for investment in distressed neighborhoods.
A description of the community revitalization tax credit is attached. Gay
Joshlyn from our office will be calling to set up a meeting later this
week.
Questions for discussion
Should a community revitalization tax credit be limited to land
acquisition and building construction, rehabilitation and acquisition
expenses, or should the eligible costs also include spending on, e.g.,
equipment and furniture?
Are start-up costs the (or at least a) major obstacle to new business
formation in low-income communities?
Should a community revitalization tax credit be modeled after the
low-income housing tax credit -- i.e., a limited amount of credits
allocated to States, which in turn distribute them to promising business
projects in low-income areas -- or should the credit be generally
available to firms in those areas? Should it be generally available
(i.e., not allocated by States), but only to firms in low-income areas
that also meet specified criteria?
Is there a need for a syndication component, given that these credits,
even if allocated by State agencies, would be directed to for-profit
concerns? Would a syndication component allow firms to obtain up-front
capital not otherwise available?
What about recapture provisions, particularly in the case of an up-front
credit? Would the owner be required to maintain the enterprise in the
low-income area for a minimum period? What if the business fails? Would
the owner be obligated to repay a portion of an up-front tax credit
taken?
Can the geographical targeting be made sufficiently tight to adequately
address substitution concerns?
Would the credit be in addition to any applicable deductions?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Andrea Kane ( CN=Andrea Kane/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME: 9-MAR-1998 14:12:06.00
SUBJECT: Re: Meeting with Karl and company on syndication, etc. of the welfare-to-work tax credit
TO: Emil E. Parker (CN=Emil E. Parker/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: Diana Fortuna ( CN=Diana Fortuna/OU=OPD/O=EOP [ OPD ])
READ:UNKNOWN
CC: Mary L. Smith ( CN=Mary L. Smith/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: WEINSTEIN P WEINSTEIN_P @ A1 @ CD @ VAXGTWY [ UNKNOWN ]) (OPD)
READ:UNKNOWN
CC: Thomas L. Freedman ( CN=Thomas L. Freedman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: Cynthia A. Rice ( CN=Cynthia A. Rice/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TEXT:
Emil, I can make it. Is this the next rendition of the discussion on
tradeable tax credits that Paul, Mary and others had been trying to get
Treasury's input on for a while?
Emil E. Parker
03/09/98 02:01:06 PM
Record Type: Record
To: Cynthia A. Rice/OPD/EOP, Andrea Kane/OPD/EOP
cc:
Subject: Meeting with Karl and company on syndication, etc. of the
welfare-to-work tax credit
Karl Scholz has scheduled a meeting for this Thursday at 10:00 a.m. in his
office (room 1326 of main Treasury) to discuss methods of making the
welfare-to-work tax credit available to not-for-profit entities; e.g.,
through a syndication mechanism similar to that of the low-income housing
tax credit. Can you two attend?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Emil E. Parker ( CN=Emil E. Parker/OU=OPD/O=EOP [OPD])
CREATION DATE/TIME: 9-MAR-1998 14:01:15.00
SUBJECT: Meeting with Karl and company on syndication, etc. of the welfare-to-work tax credit
TO: Andrea Kane ( CN=Andrea Kane/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TO: Cynthia A. Rice ( CN=Cynthia A. Rice/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
Karl Scholz has scheduled a meeting for this Thursday at 10:00 a.m. in his
office (room 1326 of main Treasury) to discuss methods of making the
welfare-to-work tax credit available to not-for-profit entities; e.g.,
through a syndication mechanism similar to that of the low-income housing
tax credit. Can you two attend?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 9-MAR-1998 16:48:34.00
SUBJECT: memo to Treasury and others on community revitalization tax credit
TO: Emil E. Parker (CN=Emil E. Parker/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TEXT:
Forwarded by Paul J. Weinstein Jr./OPD/EOP on
03/09/98 04:48 PM
Emil E. Parker
03/09/98 03:27:57 PM
Record Type: Record
To: Paul J. Weinstein Jr./OPD/EOP
cc:
Subject: memo to Treasury and others on community revitalization tax credit
I plan to send out the memo below later today. Any objections?
TO:
MICHAEL BARR
KARL SCHOLZ
JACQUIE LAWING
PAUL LEONARD
JULIAN POTTER
FROM: EMIL PARKER
PAUL WEINSTEIN
CC:
CECILIA ROUSE
SARAH ROSEN
Gene believes strongly that we can and should do more to promote
investment in low-income communities, especially inner-city areas; Bruce
shares this view. Accordingly, the DPC and NEC will be holding small
meetings to consider particular approaches to achieving this end (in
addition to the larger community empowerment group gatherings).
The Local Initiatives Support Corporation has proposed a community
revitalization tax credit (CRTC), modeled after the low income housing tax
credit but applying to commercial or industrial activity in disadvantaged
areas. The credit would generally be limited to building construction,
rehabilitation and acquisition expenses. The CRTC legislation has been
introduced by Rep. English in the House and Sen. Hutchison in the Senate,
with bipartisan co-sponsors in each chamber.
The proposal enjoys support from the U.S. Conference of Mayors (especially
Mayor Rendell) and the American Association of Enterprise Zones, among
others. While the proposal itself may be seriously flawed, it can serve
as the basis for discussion of broad-based methods to, through the tax
system, enhance incentives for investment in distressed neighborhoods.
A description of the community revitalization tax credit is attached. Gay
Joshlyn from our office will be calling to set up a meeting later this
week.
Questions for discussion
Should a community revitalization tax credit be limited to land
acquisition and building construction, rehabilitation and acquisition
expenses, or should the eligible costs also include spending on, e.g.,
equipment and furniture?
Are start-up costs the (or at least a) major obstacle to new business
formation in low-income communities?
Should a community revitalization tax credit be modeled after the
low-income housing tax credit -- i.e., a limited amount of credits
allocated to States, which in turn distribute them to promising business
projects in low-income areas -- or should the credit be generally
available to firms in those areas? Should it be generally available
(i.e., not allocated by States), but only to firms in low-income areas
that also meet specified criteria?
Is there a need for a syndication component, given that these credits,
even if allocated by State agencies, would be directed to for-profit
concerns? Would a syndication component allow firms to obtain up-front
capital not otherwise available?
What about recapture provisions, particularly in the case of an up-front
credit? Would the owner be required to maintain the enterprise in the
low-income area for a minimum period? What if the business fails? Would
the owner be obligated to repay a portion of an up-front tax credit
taken?
Can the geographical targeting be made sufficiently tight to adequately
address substitution concerns?
Would the credit be in addition to any applicable deductions?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Emil E. Parker (CN=Emil E. Parker/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME: 9-MAR-1998 15:28:06.00
SUBJECT: memo to Treasury and others on community revitalization tax credit
TO: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
TEXT:
I plan to send out the memo below later today. Any objections?
TO:
MICHAEL BARR
KARL SCHOLZ
JACQUIE LAWING
PAUL LEONARD
JULIAN POTTER
FROM: EMIL PARKER
PAUL WEINSTEIN
CC:
CECILIA ROUSE
SARAH ROSEN
Gene believes strongly that we can and should do more to promote
investment in low-income communities, especially inner-city areas; Bruce
shares this view. Accordingly, the DPC and NEC will be holding small
meetings to consider particular approaches to achieving this end (in
addition to the larger community empowerment group gatherings).
The Local Initiatives Support Corporation has proposed a community
revitalization tax credit (CRTC), modeled after the low income housing tax
credit but applying to commercial or industrial activity in disadvantaged
areas. The credit would generally be limited to building construction,
rehabilitation and acquisition expenses. The CRTC legislation has been
introduced by Rep. English in the House and Sen. Hutchison in the Senate,
with bipartisan co-sponsors in each chamber.
The proposal enjoys support from the U.S. Conference of Mayors (especially
Mayor Rendell) and the American Association of Enterprise Zones, among
others. While the proposal itself may be seriously flawed, it can serve
as the basis for discussion of broad-based methods to, through the tax
system, enhance incentives for investment in distressed neighborhoods.
A description of the community revitalization tax credit is attached. Gay
Joshlyn from our office will be calling to set up a meeting later this
week.
Questions for discussion
Should a community revitalization tax credit be limited to land
acquisition and building construction, rehabilitation and acquisition
expenses, or should the eligible costs also include spending on, e.g.,
equipment and furniture?
Are start-up costs the (or at least a) major obstacle to new business
formation in low-income communities?
Should a community revitalization tax credit be modeled after the
low-income housing tax credit -- i.e., a limited amount of credits
allocated to States, which in turn distribute them to promising business
projects in low-income areas -- or should the credit be generally
available to firms in those areas? Should it be generally available
(i.e., not allocated by States), but only to firms in low-income areas
that also meet specified criteria?
Is there a need for a syndication component, given that these credits,
even if allocated by State agencies, would be directed to for-profit
concerns? Would a syndication component allow firms to obtain up-front
capital not otherwise available?
What about recapture provisions, particularly in the case of an up-front
credit? Would the owner be required to maintain the enterprise in the
low-income area for a minimum period? What if the business fails? Would
the owner be obligated to repay a portion of an up-front tax credit
taken?
Can the geographical targeting be made sufficiently tight to adequately
address substitution concerns?
Would the credit be in addition to any applicable deductions?
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Susan M. Carr (CN=Susan M. Carr/OU=OMB/O=EOP [ OMB ])
CREATION DATE/TIME:12-MAR-1998 14:41:56.00
SUBJECT: LIHTC edits to the DPC document
TO: Julie A. Fernandes ( CN=Julie A. Fernandes/OU=OPD/O=EOP@EOP OPD
READ:UNKNOWN
Susan M. Carr ( CN=Susan M. Carr/OU=OMB/O=EOP@EOP OMB
READ:UNKNOWN
TEXT:
In addition to some minor edits I am faxing to you on the DPC document,
the examiner for LIHTC suggests the following rewrite of that paragraph.
I'm sending this electronic version to you.
Forwarded by Susan M. Carr/OMB/EOP on 03/12/98
02:41 PM
Alexandra Gianinno
03/12/98 11:57:02 AM
Record Type: Record
To: Susan M. Carr/OMB/EOP@EOP
cc: Randolph M. Lyon/OMB/EOP@EOP, Francis S. Redburn/OMB/EOP@EOP
Subject: LIHTC edits to the DPC document
Below are the edits for the LIHTC portion of the document that you sent
earlier today for review.
Alex
b. Expand Low Income Housing Tax Credit by 40 percent.
The IRS allocates annually to each State an capped amount of Low-
Income Housing Tax Credits (LIHTC) equal to $1.25 per resident. ; the
nationwide cap is accordingly $1.25 per capita. This limit has not been
adjusted since the credit was created in 1986. ; the purchasing power of
the credit has declined by 40 percent since that date. This $1.25 per
capita amount was set in 1986, the year the program was created. The
Administration ,S budget calls for proposes to expand the LIHTC by
increasing raising the per capita limit by 40 percent to $1.75 effective
for calendar years beginning after 1998, at a cost of $1.6 billion over 5
years. This increase will significantly compensate for the loss of the
Credit's purchasing power since 1986. per capita, This e Expansion of the
LIHTCwill help develop an additional 150,000 to 180,000 120,000 affordable
rental units over the next five years.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD ])
CREATION DATE/TIME:13-MAR-1998 15:11:14.00
SUBJECT: Chicago Event
TO: Brian A. Barreto ( CN=Brian A. Barreto/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TO: Peter A. Weissman ( CN=Peter A. Weissman/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TO: Jonathan A. Kaplan ( CN=Jonathan A. Kaplan/OU=OPD/O=EOP @ EOP [ OPD 1)
READ:UNKNOWN
TO: Sally Katzen ( CN=Sally Katzen/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
TEXT:
In mid-April, there is a dedication of a 100-unit Low-Income Housing Tax
Credit project in Chicago. The date is somewhat flexible -- so, we could
potentially do it on the 10th or the 11th.
The project is in West Austin and is called Pine Central. LISC was
involved in building this project, as was the Neighborhood Housing Service
(NHS) which is a subsidary of the Neighborhood Reinvestment Corporation
(which is running our $25 million "Play-by-the-Rules" initiative).
LISC believes that the Mayor would attend, if Gene dedicated the
building. But they couldn't guarantee anything. However, I know that
Marilyn Katz -- who works for LISC in Chicago -- will work day and night
to ensure that the event included the Mayor and had press.
If this works out, I think we could get Paul Grogan -- the head of LISC --
or George Knight -- the head of NRC -- to come out to Chicago to be part
of any event, if we wanted them there.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Peter A. Weissman ( CN=Peter A. Weissman/OU=OPD/O=EOP [ OPD )
CREATION DATE/TIME:13-MAR-1998 16:14:09.00
SUBJECT: Chicago Event
TO: Melissa G. Green ( CN=Melissa G. Green/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
TEXT:
fyi- this is an option if Gene decides to go to Chicago for the UC panel.
Forwarded by Peter A. Weissman/OPD/EOP on 03/13/98
04:13 PM
Jonathan Orszag
03/13/98 03:09:54 PM
Record Type: Record
To: Sally Katzen/OPD/EOP, Peter A. Weissman/OPD/EOP, Jonathan A.
Kaplan/OPD/EOP, Brian A. Barreto/OPD/EOP
cc:
Subject: Chicago Event
In mid-April, there is a dedication of a 100-unit Low-Income Housing Tax
Credit project in Chicago. The date is somewhat flexible -- so, we could
potentially do it on the 10th or the 11th.
The project is in West Austin and is called Pine Central. LISC was
involved in building this project, as was the Neighborhood Housing Service
(NHS) which is a subsidary of the Neighborhood Reinvestment Corporation
(which is running our $25 million "Play-by-the-Rules" initiative).
LISC believes that the Mayor would attend, if Gene dedicated the
building. But they couldn't guarantee anything. However, I know that
Marilyn Katz -- who works for LISC in Chicago -- will work day and night
to ensure that the event included the Mayor and had press.
If this works out, I think we could get Paul Grogan -- the head of LISC --
or George Knight -- the head of NRC -- to come out to Chicago to be part
of any event, if we wanted them there.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Paul J. Weinstein Jr. (CN=Paul J. Weinstein Jr./OU=OPD/O=EOP [ OPD )
CREATION DATE/TIME:27-MAR-1998 15:22:42.00
SUBJECT: EFT, Child Care/Low-Income Housing Tax Credit
TO: "BARRM%DOM3.DOPO6" <Michael.Barr ("BARRM%DOM3.DOPO6" <Michael.Barr @
MS01.DO.treas.sprint.com> [ UNKNOWN ])
READ:UNKNOWN
CC: Cecilia E. Rouse ( (CN=Cecilia E. Rouse/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
CC: Sarah Rosen (CN=Sarah Rosen/OU=OPD/O=EOP @ EOP [ OPD )
READ:UNKNOWN
CC: Emil E. Parker ( CN=Emil E. Parker/OU=OPD/O=EOP @ EOP [ OPD
READ:UNKNOWN
CC: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP @ EOP [ OPD ])
READ:UNKNOWN
Jennifer L. Klein ( CN=Jennifer L. Klein/OU=OPD/O=EOP [ OPD )
READ:UNKNOWN
TEXT:
1. I know that I keep bothering you regarding this issue, but I am very
concerned about EFT and the rollout of regulations later this spring. I
want the White House to get a briefing on the status of the proposed
regulations -- even if you are not in complete agreement on the final
product at Treasury -- in order to prepare people here for the best and
worst outcomes. As you know, there are a great deal of people here
interested in this proposal. Let Jerry Hawke know that we want to get an
update in the three weeks.
2. Awhile back we discussed the LISC proposal regarding child care
facilities and the LIHTC. My superiors (Bruce and Elena) are all over me
about when Treasury is going to sign off. Have you reached an agreement
with Tax Policy yet are does the DPC and the NEC need to intervene? Let
me know asap.
Thanks.
Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. email
Jonathan Orzag to SCHOLZK%DOM13.DOPO7. Subject: Some
03/30/1998
b(6)
Stuff. [partial] (1 page)
COLLECTION:
Clinton Presidential Records
Automated Records Management System [Email]
OPD ([Quality Housing or LIHTC))
OA/Box Number: 250000
FOLDER TITLE:
[12/03/1997 - 03/30/1998]
2014-0224-F
ab1492
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - 15 U.S.C. 552(b)]
P1 National Security Classified Information |(a)(1) of the PRAJ
b(1) National security classified information |(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute |(a)(3) of the PRA]
an agency |(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information |(a)(4) of the PRA!
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information |(b)(4) of the FOIA]
and his advisors, or between such advisors |a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy |(a)(6) of the PRAJ
b(7) Release would disclose information compiled for law enforcement
purposes |(b)(7) of the FOIAJ
C. Closed in accordance with restrictions contained ir donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions |(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells |(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
RECORD TYPE: PRESIDENTIAL (NOTES MAIL)
CREATOR: Jonathan Orszag ( CN=Jonathan Orszag/OU=OPD/O=EOP [ OPD
CREATION DATE/TIME:30-MAR-1998 22:49:28.00
SUBJECT: Some Stuff
TO: "SCHOLZK%DOM13.DOPO7" <KARL.SCHOLZ ("SCHOLZK%DOM13.DOPO7" <KARL.SCHOLZ @
MS01.DO.treas.sprint.com> @ inet [ UNKNOWN])
READ:UNKNOWN
TEXT:
Karl:
Long time, no speak.
I am still stuck on homeownership and am not going to move off of it
anytime in the near future so I thought I would try to rope you in.
These are really long-term issues and should not get your attention now
(unless you are not very busy).
My questions:
1. Do you have any revenue estimates for lowering the cap on the
mortgage interest deduction to $500,000? or $750,000? or any other
level. How many people would lowering the threshold to each of these
levels affect? What's their average income?
An aside: Is there special treatment for farms when it comes to
the mortgage deduction?
2.
What are your specific concerns about IDAs?
(b)(6)
(b)(6)
(b)(6)
were you objecting to tax credits (I
assume refundable) to the individual, did you not like the idea of tax
credits to the institution, or did you hate the whole damn thing?
3. Homeownership and the Low-Income Housing Tax Credit. It seems
as though D'Amato has some kind of proposal to open the LIHTC up to
housing cooperatives. I could not find the proposal -- it certainly is
not in his LIHTC proposal. However, the Neighborhood Reinvestment
Corporation (NRC) says that he wants to do it. Maybe it is in some form
of draft legislation or something. Regardless, the NRC believes that this
proposal would be too narrow (if you want to go down this road) because
Mutual Housing Associations could fall through the cracks. According to
the NRC, this proposal would not cost a dime. Anyway, what is your view
-- or your staff's view -- on opening the LIHTC to some forms of
homeownership, such as co-ops and Mutual Housing Associations?
Thanks Call me if you have any questions.
Jon