Bipartisan Group of Lawmakers Introduce the Workforce Housing Tax Credit (WHTC) Act
Today, Senate Finance Committee Chair Ron Wyden (D-OR), Sen. Dan Sullivan (R-AK), and U.S. Representatives Jimmy Panetta (D-CA), and Mike Carey (R-OH) introduced the Workforce Housing Tax Credit (WHTC) Act to “increase the supply of affordable housing 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.” The provided highlights of the WHTC include:
- Similar to LIHTC, state housing finance agencies allocate the tax credits to developers through a competitive process. The tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and 30-year extended commitment.
- Tax credits are allocated to states based on population. For 2024, the allocation would be $1 per capita with a $1.5 million small state minimum. An additional 5% of the allocation is made available and reserved for middle-income housing developed in rural areas.
- For new buildings, the credit would equal 50% of the cost of the building over the lifetime of the credit. For rehabilitated buildings and bond-financed buildings, the credit would equal 20% of the cost of the building. More credit can be awarded for buildings in difficult development areas, as designated by the U.S. Department of Housing and Urban Development (HUD). However, state housing agencies would only allocate the amount of credit needed to make a housing project financially feasible.
- To qualify for the credit, at least 60% of the building’s units must be occupied by individuals with area median incomes of 100% or less where the rents are restricted to 30% of the designated income. The affordability restrictions would remain in place for up to 15 years after the compliance period (for a total 30-year affordability period).
- WHTC also works in conjunction with LIHTC to support low-income affordable housing. First, a state can tailor the allocation to its needs: it can elect to transfer any portion of their middle-income allocation to LIHTC at any point during the year. Second, WHTC can help the financial feasibility of affordable buildings by combining LIHTC and middle-income housing tax credits for different units as long as at least 20% of the total units are middle-income units.
- The effective date for this provision is buildings placed in service after 2023, in taxable years after 2023.
A one-page summary of the Workforce Housing Tax Credit Act can be found here. NAHMA supports this bill and will be advocating for its passage into law.
HUD and DOE Announce New Partnership to Decarbonize U.S. Building Sector at COP28
Yesterday, HUD published a press release announcing a memorandum of understanding (MOU) with the Department of Energy (DOE) to partner on domestic efforts to reduce carbon emissions in the building sector and cost-cutting for consumers through energy efficiency improvements. Both Secretaries of DOE and HUD issued statements on this announcement:
“The new partnerships that we are announcing today underscore our strong and enduring commitment to energy efficiency and climate resiliency for our nation’s communities, homes, buildings, and infrastructure. It also underscores our commitment to sharing research on climate impacts faced by those most at risk,” said HUD Secretary Marcia L. Fudge. “HUD will continue to work closely with the Department of Energy fortify homes and communities across the country, ensuring they are prepared to response to the challenges posed by the climate crisis through mitigation, adaptation and resilience.”
“Today’s announcement reinforces the Biden-Harris Administration’s whole-of-government effort to lower costs for working families and ensure the benefits of the transition to a cleaner energy future are fully accessible, especially to those in low-income areas and underserved communities,” said DOE Secretary, Jennifer M. Granholm. “This new partnership will allow DOE and HUD to leverage each other’s expertise to deliver on President Biden’s commitment to provide more affordable and healthier housing for Americans while also reducing deadly emissions that fuel the climate crisis.”
House Financial Subcommittee Holds Hearing on Housing Affordability
Yesterday, the House Financial Services Subcommittee on Housing and Insurance held a hearing, Housing Affordability: Governmental Barriers and Market-Based Solutions. Witnesses testifying included: Norbert Michel, Vice President and Director of the CATO Institute’s Center for Monetary and Financial Alternatives; Seth Appleton, President of U.S. Mortgage Insurers; Emily Hamilton, Senior Research Fellow and Director of the Urbanity Project in George Mason University’s Mercatus Center; Diane Yentel, President and CEO of the National Low Income Housing Coalition; Arianna Royster, President of Borger Residential on behalf of the National Apartment Association.
Per the hearing’s memorandum, the goal of this hearing was to “focus on the continuing affordability challenges that many currently face in both the single-family housing and rental markets. The witnesses will discuss the factors that have contributed to those challenges, particularly government-created barriers such as restrictive land-use and zoning policies, and various market-based solutions to address them.”
Lawmakers and witnesses covered a broad spectrum of current housing challenges during the hearing, including the lack of housing supply leading to increased home price and rent growth outpacing household income; impacts of inflation and interest rates; labor market challenges; impacts of government programs, financing, and regulations; supply chain issues, and land-use and zoning policies. This hearing can be viewed HERE.