A bill was introduced in Congress last week that seeks to increase the supply of affordable housing for middle-income families.
Sponsored by U.S. Sen. Ron Wyden (D-OR), the Workforce Housing Tax Credit Act, S. 3436, would create more affordable housing opportunities for middle-income families who earn too much to qualify for low-income affordable housing and not enough to afford housing near where they work.
It would do this by establishing the first-ever middle-income housing tax credit, which is estimated to finance approximately 344,000 affordable rental homes. Also, the legislation provides flexibility by allowing housing finance agencies to transfer their middle-income allocation to their Low-Income Housing Tax Credit (LIHTC) allocation at any time. Further, it allows buildings to combine the two credits to help make more low-income housing projects financially feasible.
“Right now, America’s nurses, firefighters and teachers are struggling to find affordable housing near the communities they serve. More must be done to fill the ‘missing middle’ between low-income housing and million-dollar homes,” Wyden said. “Establishing a middle-income tax credit will guarantee more housing, and the flexibility our bill provides will help housing finance agencies best meet the needs of their individual communities.”
Along with Wyden, the bill is sponsored by U.S. Sen. Dan Sullivan (R-AK). U.S. Reps. Jimmy Panetta (D-CA) and Mike Carey (R-OH) introduced the same-named bill, H.R. 6686, in the U.S. House of Representatives.
“Solving this challenge is a top priority for me, and it will take multifaceted solutions with everyone pulling on the same oar. On the federal level, my colleagues and I are introducing the Workforce Housing Tax Credit Act to broaden a tried-and-true federal tax incentive program—the low-income housing tax credit,” Sullivan said. “This will catalyze the private sector to build more housing in urban and rural areas for working families—teachers, law enforcement, first responders, nurses—the backbone of so many communities.”
The tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and 30-year extended commitment. Also, they would be allocated to states based on population. For 2024, the allocation would be $1 per capita with a $1.5 million small state minimum.
For new buildings, the credit would equal 50 percent of the cost of the building over the lifetime of the credit. For rehabilitated buildings and bond-financed buildings, the credit would equal 20 percent of the cost of the building. In addition, at least 60 percent of the building’s units must be occupied by individuals with area median incomes of 100 percent or less where the rents are restricted to 30 percent of the designated income.