Momentum and Uncertainty: The Policy Landscape After Historic Tax Credit Wins
Six months ago, the affordable housing industry celebrated what Emily Cadik of the Affordable Housing Tax Credit Coalition called a "once in a generation" legislative victory. The reconciliation bill passed in July expanded the LIHTC program with the potential to build 1.2 million affordable homes—ten times the impact of the previous major win in 2020.But as AHIC conference attendees gathered for a policy update in October, the mood was more complicated. Day eight of a government shutdown. Uncertainty about federal funding. Leaked draft regulations threatening vulnerable residents. And yet—surprisingly—genuine momentum for housing policy that transcends partisan divides.
In a wide-ranging discussion moderated by Cadik and featuring Althea Arnold (Stewards for Affordable Housing for the Future) and Sharon Wilson Géno (National Multifamily Housing Council), three policy experts mapped out both the extraordinary opportunities and very real threats facing the affordable housing sector as 2025 draws to a close.
The Shutdown Reality
"Shutdowns are bad governance," Arnold stated plainly. "No one wants to shut down." While housing subsidies were continuing as expected, the cascading effects were already being felt. HUD staff operating with skeleton crews. Transaction approvals delayed. And the psychological toll of agencies forced to implement contingency plans before shutdowns and then dig out from backlogs afterward.
The panelists identified the next week as critical. Friday marked the first missed paycheck for federal workers, and military personnel faced the same fate. "When you start seeing federal workers aren't getting paid, the troops aren't getting paid, that's when you're going to really start seeing pressure.”
Wilson Géno raised a more strategic concern: the momentum that emerged after July's tax credit expansion—unprecedented bipartisan cooperation on housing, committee hearings, legislative packages—was at risk of dissipating. "As we go through the calendar, we get closer to Thanksgiving recess, Christmas holidays recess. The time gets shorter and shorter," she warned. "I am worried if we don't see some movement here in the next week or 10 days that we are going to lose what is perhaps a once in a generation opportunity."
Beyond the Tax Credit: Protecting the Ecosystem
While the housing credit expansion dominated headlines, the panelists emphasized that July's reconciliation bill touched numerous other tax provisions critical to multifamily housing. The 1031 exchange program, Section 199A, carried interest—all facilitate investment in housing and all got put back on the table when the tax door opened.
"We were very concerned that we could lose some of these or some of these could get adjusted," Wilson Géno explained. "We were fortunate that by and large, we had very few changes to the rest of the tax code." Given where interest rates have been, that stability matters enormously for continued investment.
Arnold highlighted a less-noticed consequence: the rollback of clean energy tax credits in the same bill. Beyond immediate project impacts, there's a longer-term energy supply and demand concern. "We have higher demand now for energy—AI, data centers, more people using electricity," she noted. "What we're seeing is utility costs going beyond what inflation would predict and more volatility with utilities."
The bill also tightened eligibility for social safety net programs like SNAP and Medicaid. According to Congressional Budget Office analysis, the lowest-income households—those earning under $18,000 annually—could lose approximately $1,600 in non-cash benefits per year. "They're going to have to make some tough choices soon, and that will certainly impact how we think about rents and ongoing operations," Arnold observed.
The Road to Housing Act: Bipartisan Progress
In August, Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren—"who don't often agree on a lot of things," Cadik noted—assembled a bipartisan housing package and passed it out of committee unanimously. The Road to Housing Act represents exactly the kind of momentum Wilson Géno worried about losing.
One provision generating particular excitement: lifting the public welfare investment cap from 15% to 20%. Banks currently face limits on how much they can invest in public welfare investments, with about 80% of that going to LIHTC. The cap was previously lifted from 10% to 15%, and data suggests many banks are approaching the current ceiling.
Cadik revealed preliminary survey results: of $9.7 billion in LIHTC investment from responding banks, approximately 45% comes from institutions approaching that 15% cap. "This is going through the Banking Committee, not the tax committees, not waiting for a tax bill," she emphasized—meaning more legislative vehicles are available and action could come relatively quickly.
Other promising Road to Housing provisions include streamlining NEPA environmental reviews, updating FHA multifamily loan limits by eliminating the so-called "RadCap," and revamping long-dormant programs like HOME and CDBG to focus them more directly on housing production and preservation.
The House isn't expected to simply adopt the Senate version wholesale, but bipartisan interest remains strong. Representative Mike Flood of Nebraska, who chairs the House housing subcommittee, has made housing his top priority—remarkable for a member from a state not traditionally associated with housing crises. "Housing is one place where we are seeing uniformity and both sides of the aisle getting together," Wilson Géno noted, adding that supporting housing legislation gives members something concrete to show constituents when facing reelection.
HUD Funding: The Aspirational Budget
Earlier in 2025, the Trump administration's "skinny budget" proposal scared the industry with proposed cuts to numerous HUD programs, including attempts to block-grant Section 8, Section 202 housing for the elderly, and Section 811 housing for persons with disabilities.
But Wilson Géno offered reassuring context: "I was talking to a very senior administration official... and he said to me point blank that budget is aspirational. It's a political statement more than a practical reality." With housing ranking as a top-three issue in nearly every congressional district, members aren't going to support deep cuts that could tag them as anti-housing.
Indeed, both House and Senate appropriators rejected the block-granting proposals in their 2026 funding bills, and did so on a bipartisan basis. Republican chairs in both chambers pushed back on poorly formulated proposals that failed to address how to keep people stably housed.
Arnold emphasized that while Section 8 isn't going anywhere, one program facing potential disruption is the Continuum of Care (CoC) program—$3.2 billion annually in homelessness assistance grants. Delays caused by new contractual language requirements around DEI and climate change could lead to funding lapses by January. "87% of that funding is actually used for permanent supportive housing—operating costs and services for PSH properties in your portfolios," she noted, urging the industry to make clear this isn't just a homelessness program but critical operating support.
Section 8 Reform: Beyond Survival to Modernization
The panelists agreed Section 8 is here to stay, but that opens opportunities for meaningful reform. "It was never intended to be the primary vehicle for housing subsidy in this country," Wilson Géno stated. "It is antiquated. The triparty relationship between the housing agency, the property owner, and the resident is no longer relevant in the current housing market."
One bold idea gaining traction: treating Section 8 residents like SNAP recipients, providing them with a card allowing them to participate in the private market with dignity rather than navigating complex bureaucratic relationships. "There has been experimentation... those kinds of bolder types of looks at that program I think are on the horizon for us," Wilson Géno said.
Looming Threats: Work Requirements and Mixed-Status Families
Not all policy developments inspire optimism. Leaked draft regulations from HUD propose ending prorated subsidies for mixed-status families (similar to a failed Trump administration effort in the first term) and giving discretion to public housing authorities and owners to impose work requirements and time limits—potentially up to 40 hours weekly and as short as two-year limits per household.
"We're going to have to push back pretty hard on these proposed rules," Arnold said, emphasizing not just resident impacts but "negative impacts on administrative burden. What does it mean when you have residents that need to re-certify and then you have to do turnovers? The economic consequences of these proposed changes... are going to be significant."
On the possible work requirements, once you exempt seniors, disabled individuals, families with young children, and military families, "the number of people to whom those requirements actually apply is relatively small. Its impact is relatively small," Wilson Géno said.
The concern is more about the churn and administrative costs than the policy achieving its stated aims.
BABA and the Cost Challenge
One audience question highlighted the industry's ongoing vulnerability: rising per-unit costs. The Build America, Buy America Act requirements add significant compliance burdens and expenses, leading some developers to forgo federal funding sources entirely.
Representative Flood's HOME program reauthorization bill includes an exemption from BABA requirements for HOME funds—a recognition that "while the intent of BABA is good, the compliance, the added costs, the entire process is going to be cost prohibitive."
The industry is also proactively addressing cost criticisms through research. Wilson Géno described ongoing work through RAND Corporation and others comparing market-rate development costs with LIHTC costs in California, Texas, and Colorado. The goal: "advocate for changes in the program that would help proactively fix some of these problems before we start getting criticized again."
As she put it: "We've built the castle now. Now we have to build a moat around it"—protecting the new resources by demonstrating they can be deployed cost-effectively at scale.
What's Next
No one on the panel expected another tax bill anytime soon. Ways and Means Chairman Jason Smith of Missouri—himself a housing credit advocate—stated bluntly that anyone expecting another tax bill through this House "is not living in reality."
But that doesn't mean legislative opportunities don't exist. The Road to Housing Act provisions can move through banking committees. HOME and CDBG modernization can advance separately. FHFA has already moved to lift caps on GSE investments in housing credits. And the housing crisis itself continues generating bipartisan momentum for action.
"There's a sense in D.C. that we're finally starting to do things on housing," Cadik observed. "Now the question is, what do we do next?"