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CBA Letter to Senators Baucus and Hatch regarding LIHTC and NMTC
Dear Chairman Baucus and Ranking Member Hatch:
As your committee begins its historic effort to address tax reform, the Consumer Bankers Association (CBA) wishes to take this opportunity to speak on behalf of its member banks and their efforts to serve low-income consumers.
Two very important federal programs drive private investment for affordable housing and job creation in lowincome areas: Low Income Housing Tax Credits (LIHTC) and New Markets Tax Credits (NMTC). Together, these programs leverage private capital, private development expertise, and private asset management to provide economic development and job growth from rural America to our urban centers. Their common theme is incenting private parties to invest capital for the direct benefit of lower-income Americans. Ultimately, because these programs provide stability and lessen the need for many other types of more costly government assistance, the benefits of less tax burdens are extended to the broader population.
We have attached a sampling of LIHTC and NMTC programs, provided by our member banks, to demonstrate the tremendous extent to which they effectively leverage private investment to build affordable housing and develop communities in Montana, Utah, and throughout the nation. The members of CBA fully appreciate the weight of tax reform discussions that rest on your shoulders. During the discussions, we ask that you consider the substantial benefits of these two programs as follows.
1. Both programs support consumers and are a steady source of stimulus to both rural and urban economies.
2. Both programs benefit low- and moderate-income communities by leveraging capital into affordable housing and community development.
3. Since President Reagan signed it into law, LIHTC has been the only significant source of private capital for affordable rental housing in the U.S., bringing hundreds of billions of dollars to developments with extremely successful overlays of private market risk controls.
4. The LIHTC and NMTC programs have been in place for 27 and 13 years, respectively. During that time an efficient and effective marketplace has developed through the use of these programs to finance highimpact projects and businesses.
5. Meeting the needs of affordable housing for lower-income families and new business facilities in lowerincome areas cannot be realized without public-private partnerships. Without the benefit of these programs, the economics do not support independent private sector engagement.
To read the full Comment Letter, download the PDF.