As you recall, the House version included a $7,500 home buyer tax credit provision at an overall cost of $2.5 billion that removed the recapture provision. The Senate’s more expansive $15,000 home buyer tax credit that NAHB fought hard for had a cost of $36 billion. When the conferees met, the focus was on paring back the total cost of both bills. The final $789 billion bill shaved $50 billion from the Senate proposal and $30 billion from the House plan. As part of the effort to cut the cost of the final bill, negotiators agreed on an $8,000 tax credit for first-time home buyers. While we would have preferred a more enhanced tax credit like the Senate version, the conferees did retain some key elements from the Senate and made other modifications that are beneficial to home buyers and home builders. For qualified home purchases in 2009, the legislation:

• Stipulates that the $8,000 first-time home buyer tax credit does not have to be repaid, unlike the tax credit passed last summer;
• Makes the tax credit refundable, or claimable regardless of tax liability;
• Is effective on or after Jan. 1, 2009 and before Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;
• Allows tax credit home buyers to participate in the mortgage revenue bond program; and
• Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds.

More information on the first-time home buyer tax credit can be found at www.federalhousingtaxcredit.com once the bill is signed into law.

While much of the industry’s focus was on the home buyer tax credit, there are several other important components in the legislation that will help small businesses and bolster the housing market. (See the story below for the key provisions of the American Recovery and Reinvestment Act of 2009.)

A Major Lobbying, Grassroots and PR Push

The following action items pertain to NAHB’s efforts this week to craft the best possible stimuluspackage for the housing community.

• After a deal was announced on Wednesday on a final stimulus bill, NAHB lobbyists and grassroots continued an 11th hour push with key congressional leaders and staffers to include the best possible home buyer tax credit in the stimulus package as congressional staff rushed to complete the technical drafting of the final elements of the bill. NAHB succeeded in raising the tax credit amount from $7,500 to $8,000 and extending its effective date from Sept. 1, 2009 to Dec. 1, 2009.
  
  NAHB was also able to expand the net operating loss provision in the bill to include businesses with average gross receipts of up to $15 million. The previous limit had been $5 million.
  
  
• With House and Senate negotiators paring down a home buyer tax credit in the Senate bill, NAHB on Thursday ran new ads in Roll Call, Politico and The Hill calling on lawmakers to include a robust home buyer tax credit in the final bill adopted by Congress.
  
  
• The Senate approved its stimulus package on Feb. 10 by a vote of 61 to 37. Thanks in large part from the efforts of the entire NAHB federation, the bill included an expanded home buyer credit in the amount of $15,000 available to anyone buying a principal residence. The tax credit would apply to all purchases occurring within a year after the bill is signed into law and it is a true credit. It would not have to be repaid. Following Senate passage, NAHB issued a press release under the headline, “$15,000 home buyer tax credit will get U.S. economy back on track.” NAHB said the tax credit offers the best opportunity for economic recovery and called on Congress to ensure that the full $15,000 tax credit remains in the final stimulus plan.
  
  
• A second press release was also sent out citing research by NAHB that the $15,000 home buyer tax credit will result in nearly 500,000 additional home sales and create 255,000 new jobs in the year ahead. Further, NAHB estimates the additional half a million home sales will generate $12.3 billion in wages and salaries, $9.7 billion in net business income and  an additional $8.7 billion in federal, state and local tax revenues. Reuters cited NAHB’s figures on the 500,000 additional home sales and 255,000 new jobs that would be created if the $15,000 tax credit is enacted. The Reuters report also appeared in CNN/Money, The Washington Post, CNBC and other major media outlets.
  
  
• NAHB ran full page ads on Feb. 10-11 in Roll Call, Politico and the Hill in which ordinary Americans tout the benefits of the $15,000 home buyer tax credit and say they plan to buy a home if the provision were to be enacted into law. A full page ad also ran in the Feb. 11 issue of USA Today, urging consumers to call their members of Congress at 1-866-924-NAHB and tell their lawmakers to include the full $15,000 credit in the final stimulus bill.
  
  
• NAHB sent a “key vote” letter to all members of the Senate immediately after the Senate approved a procedural motion on a 61-to-36 vote Monday evening that will allow the chamber to hold a final vote on the stimulus package the next day. The letter, designated a key vote for housing because of its importance to the industry, urged the Senate leadership to ensure that a substantial home buyer tax credit and provisions to bring investment back into the Low Income Housing Tax Credit program remain in the final stimulus package as the Senate and House move to conduct conference negotiations.
  
  
• NAHB issued a press release publicizing a new poll that shows two out of three Americans support a $15,000 home buyer tax credit as part of the economic stimulus package now before Congress. The survey, conducted on Feb. 8 by Voter Roll Call of Verona, N.J., found that one-third of all respondents and 61 percent of renters would be more likely to buy a home if the $15,000 housing tax credit were to be enacted into law. This is extremely significant because normally in any one year only about 5 to 7 percent of households purchase a home.
  
  
• NAHB incorporated data from the survey into a template press release and send it to EOs through the PRx so that it could be distributed to local media. Customizing the release with quotes from local HBA leaders and residents helped to show federal lawmakers that their constituents would buy a new home if the $15,000 credit were included in the final stimulus package. The Builders League of South Jersey immediately distributed the release to their local media in the New Jersey and Philadelphia area.
  
  
• As the Senate moved to wrap up consideration of its version of the economic stimulus bill, NAHB President Jerry Howard conducted several interviews on the need to ensure that the $15,000 home buyer tax credit remained in the final Senate package. Howard spoke with CNN/Money, AP, Dow Jones, Bloomberg, Congress Daily, National Journal, The Hill, National Mortgage News, ICIS News and SNL Financial.

For more information on the legislation, contact Greg Brown at 800-368-5242, x8421.

• $8,000 first-time home buyer, true tax credit (no repayment) for the purchase of a principle residence between January 1 and December 1, 2009.  Recaptured if home is sold within three years.  Removes the restriction on the use of tax credit proceeds with Housing Finance Agency-issued tax exempt mortgage revenue bonds.  
  
• Short-term gap financing for Low Income Housing Tax Credit (LIHTC) projects:
  1. Provision allowing states to turn in portion of 2009 LIHTC allocations for cash.
  2. Special appropriation of $2 billion in HOME funds.
  
• Up to a ten-year deferral of tax from business debt cancelled as part of a repurchase or restructuring
  
•  5-year carryback of 2008 net operating losses for businesses with gross receipts of less than $15 million (three year average).
  
•  Extension of enhanced bonus depreciation.
  
• Extension of increased small business expensing.
  
• Enhancements to the section 25C program for energy efficiency remodeling improvements to existing homes.
  
• One-year patch of the Alternative Minimum Tax.
  
• Increase New Markets Tax Credit allocating authority for 2008 and 2009.
  
• Delays for one year the start of 3% government contractor withholding requirement.

Appropriations Provisions

• $2 billion for full year payments to owners of Section 8 project based rental assistance properties.
  
• $2.25 billion through HOME program and Low Income Housing Tax Credit program to fill financing gaps.
  
• $1 billion for CDBG.
  
• $2 billion for Neighborhood stabilization program.
  
• $1.5 billion for homelessness prevention activities (help with rents, etc).
  
• $250 million for energy retrofitting and green investments in HUD assisted projects.
  
• $1 billion for Section 502 direct loans under the Rural Housing Service. 
  
• $10.4 billion for Section 502 guaranteed loans under the Rural Housing Service. 
  
• $27.5 billion for highway spending.

Other Key Provision

• Increases in FHA, Fannie Mae and Freddie Mac loan limits to 2008 levels.

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