2017 Virginia General Assembly Presented Busy Year for VAHCDO Members
The 2017 session of the Virginia General Assembly presented a busy year for VAHCDO members in Virginia.
The issue that was foremost on the minds of many in the VAHCDO community, and a number of other folks, was the issue of tax credits. As you may know, there has been much discussion over the past few years about the various tax deductions and credits offered in Virginia and which ones (if any) should be curtailed, modified, or outright eliminated in order to increase tax revenue or lower overall marginal rates.
One of those tax preferences under the microscope has been Virginia’s historic rehabilitation tax credit. While the Joint Committee to Evaluate Tax Preferences has not completed its look at this credit and others, that did not stop legislators from putting forward proposals in this session to make changes in the historic rehabilitation tax credit. One proposal would have ended the credit in 2022, and another would have phased it out by 2027. Fortunately, both of those proposals were defeated.
What was approved was a $5 million cap on the amount of historic rehabilitation tax credits that may be claimed in any one year. This cap carries a sunset clause after two years, and payers can claim the credits in later years. With that stated, however, there is still cause for concern. While this change might be modest in that it only affects a tiny number of taxpayers, the possibility of more future changes that would scale this tax credit back introduce significant uncertainty into what has been a successful program in Virginia. As a result, investors are more hesitant to commit to the type of projects that utilize this particular credit. In fact, the uncertainty raised by this debate is reported as the reason why a developer in the Suffolk area chose not to go forward with a major redevelopment project in the downtown area. As the work of the tax preferences subcommittee moves forward, this is an issue that we will have to continue to monitor.
Another issue that presented concern was legislation that would have placed a 5% cap on late fees for rent. This could have been very problematic for PHA’s and others who offer income-based rent in that it would have yielded late fees that were mostly meaningless. As a result, these fees would have been less likely to have their intended effect of encouraging tenants to pay rent on time and not begin falling behind. This issue has been referred to the Virginia Housing Commission for study over the course of the year.
On a more positive note, VAHCDO put forward legislation that corrected a Code section that affected town housing authorities in a way that was not intended. This change makes clear that town housing authorities must seek construction approval from the Town Council where they operate instead of the county Board of Supervisors where the town in located. This had been the case for years, but clean-up amendments in this part of the Code of Virginia some years back had inadvertently changed this. Our bill simply cleared this up.
As we move forward, VAHCDO will continue to work to ensure that the interests and concerns of redevelopment and housing authorities in Virginia are addressed on the legislative process.
Posted on Fri, May 12, 2017