Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced legislation on November 6 that would significantly inhibit the multifamily industry’s ability to utilize Opportunity Zone tax incentives. In addition to fostering transparency through reporting requirements, the Opportunity Zone Reporting and Reform Act would prevent multifamily developments from benefiting from Opportunity Zone tax benefits unless at least 50 percent of units are affordable to residents earning 50 percent or less of area median income. The legislation would also reverse favorable Treasury guidance that enables taxpayers to exclude land for purposes of calculating whether an asset’s basis has been doubled for purposes of a qualifying multifamily rehabilitation.
NMHC and NAA strongly oppose provisions in Senator Wyden’s legislation that would make it more challenging to develop and rehabilitate multifamily properties. With the nation confronting a severe shortage of affordable housing, the multifamily industry believes that restricting development is unwarranted. This is particularly true given that local governments today control permitting and can impose inclusionary zoning rules as a condition of a project moving forward.
With respect to multifamily rehabilitations, we have called on Congress to make it easier to renovate existing units and have made the case that doubling the basis of existing assets – even excluding land – can be difficult to achieve. Finally, the industry is also concerned that these proposals would be made effective retroactively, which could disrupt Opportunity Zones developments that are in process.
NMHC and NAA will be submitting a comment letter to express our concerns and will keep members up to date on the status of this legislation.
For more information on Opportunity Zones, visit our advocacy page.