Dive Brief:
- Two representatives have reintroduced the Workforce Housing Tax Credit Act, a bipartisan measure that aims to expand the supply of housing accessible to moderate-income households who earn too much to qualify for low-income affordable options and not enough to afford to buy or rent market-rate homes.
- Rep. Jimmy Panetta (D-Calif.) authored the legislation and co-introduced it on May 6 with Rep. Mike Carey (R-Ohio). If established, it would be the first-ever middle-income housing tax credit and could finance roughly 344,000 affordable rental homes, according to a press release from Panetta’s office.
- The National Multifamily Housing Council and the National Apartment Association, along with 14 other housing industry organizations, sent a letter of support to the cosponsors, saying, “our industry strongly supports this groundbreaking legislation that represents an integral step to address the severe shortage of workforce housing.”
Dive Insight:
The workforce housing tax credit, designed to encourage construction of rental housing for those earning 60% to 100% of the area median income, is a longstanding priority for the rental housing industry, the NAA and NMHC said in a statement. Panetta, Carey, Sen. Ron Wyden (D-Ore.), Rep. Andrea Salinas (D-Ore.) and Sen. Dan Sullivan (R-Ark.) first introduced the Workforce Housing Tax Credit Act in December 2023, but it died in committee.
The workforce housing program would work similarly to the Low-Income Housing Tax Credit: State housing finance agencies would allocate credits to developers through a competitive process, who then sell them to investors to raise equity for projects. The LIHTC program, created in 1986, has been the federal government's primary policy tool for spurring affordable rental housing development.
The WHTC credit for new buildings would equal half the building’s cost over the lifetime of the credit, and would cover 20% of the cost for rehabilitated and bond-financed buildings. The WHTC tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and a 30-year extended commitment.
The WHTC proposal has been designed to complement, not compete with, the LIHTC program, the NAA said in a press release, and it “is confident that there exists sufficient demand to support both programs, should the WHTC become a reality.”
States can tailor the WHTC credits to their needs and can elect to transfer any portion of their middle-income allocation to LIHTC at any time during the year. Developers can also combine WHTC and LIHTC credits for different units in the same building, as long as at least 20% of the total units are for middle-income renters.
To qualify for the WHTC credit, at least 60% of the building’s units must be occupied by renters with AMIs of 100% or less where the rent prices are restricted to 30% of the designated income.
The WHTC credits would be allocated to states based on population at $1 per capita with a $1.5 million small-state minimum, and an additional 5% of the allocation would be reserved for housing projects in rural areas.
The legislation takes a proven approach and applies it to the part of the market the housing system is failing to serve, Mike Kingsella, CEO of Up for Growth and Up for Growth Action, said in Panetta’s release.
“We have built a strong system to support low-income housing, but there is no comparable tool for middle-income workers who keep local economies running and are increasingly priced out of the communities they serve,” Kingsella said. “This bill makes middle-income housing pencil and gives developers a real path to deliver housing at scale, so people can afford to live near their jobs.”
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