Senate Passes One Big Beautiful Bill
By a vote of 51-50, the Senate today passed their version of the One Big Beautiful Bill Act and sent it back to the House.
Sens. Collins (R-ME), Paul (R-KY), and Tillis (R-NC) were the Republicans voting no, with Vice President Vance breaking the tied vote. The bill now goes to the House, where several divisive issues remain to be resolved before a vote on the bill. That process has begun with the goal of getting the bill on the President's desk by this Friday, July 4th. While that may be possible, Speaker Johnson and President Trump will have to do a lot of convincing and cajoling to get the bill approved in the House to meet that timeline.
The LIHTC section of the bill remained unchanged in the Senate version, increasing the 9% allocation by 12% and reducing the bond test to 25% for developments that meet the criteria. Borrowing from our friends at the Affordable Housing Tax Credit Coalition, as this is the best explanation we have seen thus far:
The new bond test requires that at least 5% of a project's land and building cost be financed with bonds issued after 2025, and that total bond financing equals at least 25% of that cost. For example, a project with $8 million in land and building costs that uses $1.6 million in 2025 bonds and $400,000 in 2026 bonds meets the test: the 2026 bonds equal 5% of the total cost, and total bond financing equals 25%. However, a project with $1.9 million in 2025 bonds and $100,000 in 2026 bonds would not qualify, as the 2026 bonds only cover 1.25% of the total cost. Additionally, the use of the term "issue date" indicates that bonds must be newly issued after 2025—simply drawing down undisbursed portions of 2025 bonds in 2026 does not meet the requirement. For instance, if a project has $2 million in 2025 bonds, with $400,000 undrawn in 2026, it would still fail unless a new issuance of at least $400,000 in 2026 bonds occurs.
As for the energy provisions in the Senate version, the Senate softened the language to allow wind and solar developments that begin construction within 12 months of enactment of the OBBB to receive the IRA credits. Any developments that begin construction after that date would have until the end of 2027 to be placed in service to receive the IRA credits. The proposed tax on solar and wind developments was taken out of the bill.
We now await the House to see what, if any, changes they make to the Senate language. We will, of course, keep you informed as action occurs. We also want to thank all those HAG members and housers out there who advocated for the LIHTC with Senators and their staffs.
Thank you, and have a wonderful July 4th Holiday.