A group of Democratic and Republican senators have introduced legislation to provide tax credits for renovation of distressed housing to increase the amount of affordable housing.
Senators Ben Cardin (D-Md.) and Todd Young (R-Ind.), both on the Senate Finance Committee, announced the effort in a press release this week.
"Currently, private development lacks in some urban and rural areas because the cost of purchasing and renovating homes is greater than the value of the sale price of homes," they said. "The Neighborhood Homes Investment Act (NHIA) creates a federal tax credit that covers the cost between building or renovating a home in these areas and the price at which they can be sold. The legislation also caps the price of sales for each home to ensure that they are affordable housing options in the community."
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The bill, filed as S.657, includes Finance Committee Chair Ron Wyden (D-Ore.), as well as Senators Jerry Moran (R-Kan.) and Sherrod Brown (D-Ohio), Chair of the Committee on Banking, Housing and Urban Affairs.
"Everyone deserves a safe and affordable place to call home," the release quoted Cardin. "Our bipartisan tax credit will drive housing investments and revitalize neighborhoods across Maryland while keeping them affordable for low- and moderate-income families."
"This legislation also includes important guardrails to ensure that tax incentives target the families that need it most, continuing the work to avoid the negative and lasting consequences that a lack of safe, affordable housing has on Hoosier families," said Young in the statement.
The bill's text says that the NHIA "has the potential to generate 500,000 homes over 10 years, $125,000,000,000 of total development activity, over 800,000 jobs in construction and construction-related industries, and over $35,000,000,000 in federal, state, and local tax revenues."
According to the senators, all risk would be borne by investors, not the government, and credits would only be available after restoration is complete and an eligible homeowner — making less than 140% of the area's median income — is living there.
The bill would target areas with poverty rates 130% or more than the metro or state rate, which have incomes of 80% or less than the area's median income, and with home values below the metro or state median value.
The credit cannot exceed the least of the following three conditions: the excess of development costs over the sales price, 35% of the development costs, or 28% of the national median price for new homes.
"NHIA tax credits are awarded to project sponsors—developers, lenders, or local governments—through a competitive statewide application process administered by each state's housing finance agency," they said. "Sponsors would use the credits to raise investment capital for their projects, and the investors could claim the credits against their federal income tax when the homes are sold and occupied by eligible homebuyers. State agencies would have annual allocation of either $7 per capita or $9 million, whichever is higher."
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