Page 15 - Builder Brief December 2021 Issue

The Bad
As noted above, there are several provisions in the Build Back Better Act that NAHB opposes, including onerous tax and code requirements that would hurt small business owners and worsen housing affordability:
Taxes
The expansion of the Net Investment Income Tax (NIIT) to include investment income derived from an active trade or business. In opposing this provision, NAHB said: “Real estate is a capital intensive business, and increasing the cost of doing business by either limiting losses—which are generated by investing in more housing, an activity Congress should seek to encourage—or increasing taxes on rental income via the expansion of the NIIT, is difficult to justify at a time when we face a serious housing shortage. Congress should carefully consider how these tax hikes may exacerbate the ongoing housing affordability crisis facing the United States.”
Retroactive tax changes to qualified contracts, which could affect the LIHTC program.
Requiring the use of Energy Star for new residential construction as the sole means to qualify for the 45L tax credit. In opposing this provision, NAHB noted that Energy Star is a niche market — less than 10% of single-family and multifamily units were certified in 2020 — and while the program has its merits it will never be adopted widely.
Codes
• The requirement for use of the “latest published
editions of relevant performance-based building codes.” While this provision is intended to incentivize the adoption of the latest published edition of a building code, it is unclear whether states and local governments will continue to have the ability to evaluate and amend updated editions of a consensus-based code prior to adoption.
• Moreover, provisions requiring the use of “performance-based building codes and standards” does not guarantee that the code or standard is developed through a consensus process. It is critical that codes and standards are developed in a transparent process to ensure code development fully reflects the public interest.
• NAHB is also concerned with grant programs that promote adoption of ‘net-zero’ provisions, as included in the appendix to the 2021 edition of the International Energy Conservation Code (IECC). These targets are not appropriate or cost-effective for many jurisdictions; rather, the Department of Energy should help states advance the codes in a manner that best fits the needs of state and local governments.
Next Steps
It is unclear if the Senate will pass the Build Back Better Act “as is” or modify the bill and send it back to the House for another vote. If the Senate moves to alter to the legislation, NAHB will advocate for changes that are beneficial to the housing industry.
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