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HomeMy WebLinkAboutadditional documentsEntered Into Rec. at MCC Mtg. �a a ❑rlanrin ifam Nn• D DATE: November 21, 2017 City Clerk City of San Bernardino TO: Legislative/Communications & Membership Committee (LCMC) FROM: Kevin Gilhooley; Regional Affairs Officer; (213) 236-1878;ilg hooley(&scag.ca.gov SUBJECT: Federal Tax Reform Update RECOMMENDED ACTION: For Information Only — No Action Required EXECUTIVE SUMMARY: On November 2, 2017, Chairman Kevin Brady (R -Texas) of the House Ways & Means Committee introduced a sweeping plan to reform the nation's tax code known as House Resolution 1 (H.R. 1), or the House Tax Cuts and Jobs Act The plan would consolidate income brackets, lower the corporate income tax rate to 20 percent, double the standard deduction, and end or scale back a number of tax credits and deductions. The Ways & Means Committee advanced the measure on November 9 and a vote by the House Committee on Rules and the entire House of Representatives are expected before the Thanksgiving holiday. On November 9, 2017, Chairman Orin Hatch )?-Utah) of the Senate Finance Committee released the Senate's version of the Tax Cuts and Jobs Act, which shares many objectives of the House plan. A vote on the Senate plan is expected soon, to meet the Senate's goal of passing the legislation shortly after Thanksgiving. STRATEGIC PLAN: This item supports SCAG's Strategic Plan: Goal 1: Improve Regional Decision Making by Providing Leadership and Consensus Building on Key Plans and Policies; and Goal 2: Obtain Regional Transportation infrastructure Funding and Promote Legislative Solutions for Regional Planning Priorities. HOUSE TAX CUTS AND JOBS ACT: Republicans in the House of Representatives released a sweeping plan to reform the nation's tax code. The plan consolidates income brackets, lowers the corporate tax rate, nearly doubles the standard deduction, and ends or scales back a number of other tax credits and deductions. Below is a summary of some of plan's major changes. Also highlighted are areas of special importance to the SCAG region. General Overview. Corporate Tax: The House plan drops the tax on corporate earnings from its current 35 percent to 20 percent, effective tax year 2018. The Senate plan introduces this change effective tax year 2019. MA SCAG staff confirmed that some 199 low-income units (in the SCAG region) were rehabilitated as part of development projects that took advantage of this tax credit in 2014, the most recent year for which data is available. County Total # of Units Since oldest record (1987) Since 2010 Imperial 3,208 444 Los Angeles 218,949 27,339 Orange 21,228 7,720 Riverside 17,215 5,916 San Bernardino 11,240 3,882 Ventura 7,103 2,778 All SCAG Region 278,943 48,079 Mort,-, ame Interest Deduction: H.R. 1 preserves the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction going forward, but only for mortgages up to $500,000. This is down from the current $1 million. The change would only apply to home purchases and mortgages made after November 2, 2017. According to Zillow, an online real estate database company, the average home price in Los Angeles, Orange, and Ventura counties is above this $500,000 threshold. The Senate version retains the current tax break that allows homeowners to deduct interest on mortgages up to $1 million. Plug -In Electric Drive Motor Vehicle Deduction: The House proposal repeals the credit for plug- in electric drive motor vehicles. Under current law, a credit is available for new four -wheeled vehicles (excluding low speed vehicles and vehicles weighing 14,000 pounds or more) propelled by a battery with at least 4 kilowatt-hours of electricity that can be charged from an external source. The base credit is $2,500 plus $417 for each kilowatt-hour of additional battery capacity in excess of 4 kilowatt-hours (for a maximum credit of $7,500). Qualified vehicles are subject to a 200,000 vehicle -per -manufacturer limitation. Once the limitation has been reached the credit is phased down over four calendar quarters. The proposal is effective for vehicles placed in service in taxable years beginning after December 31, 2017. Private Activity Bonds & Advanced Refunding: Private Activity Bonds (PABs) are debt instruments issued by a government agency to raise capital for revenue -generating projects where the funds generated are used by a third party. The funds raised often pay for highway and freight transfer projects, allowing a private project sponsor to benefit from the lower financing costs of tax-exempt municipal bonds. H.R. 1 repeals the ability to issue any PABs on a tax-exempt basis after December 31, 2017. This action would eliminate access to tax-exempt financing for facilities such as airports, sea ports, qualified highway or surface freight transfer facilities, and other eligible activities defined as private activity. Private activity bonds are considered a critical tool for many of the region's planned infrastructure investments as identified in SCAG's 2016 Regional Transportation Plan/Sustainable Communities Strategies. For example, planned investments at the Port of Los Angeles would be negatively 9 11/28/2017 Eliminating Bonds Would Slash Affordable Housing) Housing Finance Magazine I Tax -Exempt Bonds, Tax Credits, LIHTC, Rafael E. Cestero, B.. r AFFORDABLE U S (I F I N A N C E E NEWS MANAGEMENT & OPERATIONS FINANCE POLICY & LEGISLATION DEVELAPP F POLICY &LEGISLATION HOME> POLICY & LEGISLATIOI, > ELIMINATING BONDS WOULD SLASH AFFORDABLE HOUSING Posted on: November 07, 2017 !► 0 Like 157 41 rsa AFFORDABLE HOUSING FINANCE Eliminating Bonds Would Slash Affordable Housing Housing advocates say the loss of PABs would devastate LIHTC production by half. By nna Kimura The proposed elimination of private -activity bonds (PABs) would devastate the production and preservation of affordable housing across the country. Roughly half of all low-income housing tax credit (LIHTC) developments utilize tax-exempt bonds and 4% credits, and losing the use of the bond program could mean roughly 60,000 fewer affordable homes are built or rehabilitated each year, estimate authorities. Although the Republican House tax reform plan maintains the LIHTC program, the initial Nov. 2 proposal repeals PABs, which are used in conjunction with the 4% -rousing credit. The plan also seeks to lower the corporate tax rate from 35% to 20%, another move that could significantly reduce LIHTC investment. TRENDING "What the private -activity bonds provide is both reasonably priced construction andThe Develo[: permanent financing, but they also come with the as -of -right 4% LIHTC, says Rafael Playbook Cestero, CEO and president of the Community Preservation Corp. (CPC), a nonprofit affordable housing and community revitalization finance company based in New York LIHTC Mark( City. UN Tax Reform I Rafael Cestero Approximately 50,000 to 60,000 affordable homes are produced with bond -financed 4% credits each year, reports the National Council of State Housing Agencies. Multifamily bonds without credit financing produce about another 10,000 affordable rental homes per year. As a result, the repeal of tax-exempt bonds could mean the loss of more than 500,000 affordable homes over 10 years. Novogradac & Co. estimat( that all the different measures in the House tax reform legislation would reduce the total amount of LIHTC-financed affordable rental homes by nearly one million over 10 years. "It would be a catastrophe, says Bob Moss, principal and national director of governmental affairs at CohnReznick, a national accounting and advisory firm. "in New York alone, housing advocates project that [the state] will lose $4.5 billion in affordable "k Fannie, Fred Enter LIHTC Tax Reform from AHF Li, hftp://www.housingfiinance.com/policy-legislation/eliminating-bonds-would-slash-affordable-housing o 1/4 S A N C I T Y O F B E R N A R D I N O Mayor and City Council Meeting December 6, 2017 Items 2 & 3 Mt Vernon Bridge Project and 215 Freeway Landscaping Item 4 Fire Wildland Interface County Fire Item 23 Final Environmental Impact Report General Plan Amendment 16-09 Development Code Amendment (Zoning Map Amendment) 16-11 Subdivision 16-08 Development Permit Type -D 16-26 City Staff T Q o �CD K 0 W m N 0 rL 0 Q _. n ca rt go Fm y Q cn v r) O O O p �• o' 0• :3 r r -r �p 7 r r �. r+ O p aq * CR N yQ < 03 c = O O_ CD r+ m 3 r"^,n'o'r. h• _�'+`F n;^L=- ��51-�ry+� r++J y hi p�n�S•m y`e-y Yew �.._��M u's� :e � w' d '3' e� � � a w � = •n �. .eray� � � � 'iC y��yrr � �r• ng ^ � � � !ria~ mV O ?i5 47, ❑❑ m nL'a n- i• � �'� X �Y _w Kep gg p •4S R Ogg- n 712,fYn CiIC a w� CAco cl o(D I ww oa :3S D° Cn �o o� ii i , 4 r ci VL Lv I 14V r. 66 or .1F— op ilia 1. 4 1 I lilt L4 —4 pw-+ O�Iw— m ro A W---m�m Aw fAV ell 7 LWON& "Pip w4r, r. w4r, W- 0■ 1 v L -j -V ul rl r- ri iLqLq 1 EA 0c m n �h N3 C13 L.A -4 .--N3 Ul LA D C � N H Gq 3 G T Gn1 3 � . 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