Industry Applauds Introduction of Middle-Income Housing Tax Credit
In a tremendous victory for NMHC and NAA, Senate Finance Committee Ranking Member Ron Wyden (D-OR) on September 22 introduced legislation to spur the production of multifamily rental homes for America’s working families through a Middle-Income Housing Tax Credit (MIHTC) that complements the Low-Income Housing Tax Credit. The apartment industry strongly supports the bill, and we immediately applauded its introduction in a statement, based on our concerns that there is a lack of affordable housing available to millions that comprises the nation’s workforce. For this reason, we worked closely with Senator Wyden to develop his proposal that would make building the needed units financially viable.
Specifically, under the “Middle-Income Housing Tax Credit Act of 2016,” states would receive allocations of tax credits that would be distributed competitively to finance 50 percent of the cost of qualifying units. In order to qualify, a development would have to ensure that 60 percent of units were affordable to families earning no more than 100 percent of area median income. Allocated credits would be paid out over 15 years, the same period over which a development would have to commit to maintaining units at restricted rental rates.
The lack of affordable workforce housing is not unique to households receiving federal subsidies and, in fact, is encroaching on the financial well-being of solidly middle-income households. According to just-released data by Harvard’s Joint Center for Housing Studies, in 2015 there were 21.4 million “cost-burdened” renters who were paying more than 30 percent of their incomes for housing.
Additionally, and underscoring the need for the MIHTC, approximately 40 percent of renter households earning between $35,000 and $49,999 were cost burdened last year. This population is exactly the one Senator Wyden’s legislation would serve.
NMHC/NAA also responded to introduction of the MIHTC legislation by following up with a letter of support to Senator Wyden. Importantly, in the letter we urged him to coordinate the legislation with the Community Reinvestment Act (CRA) so that investments using the proposed tax credit would quality for CRA credit – a vital change that would enable the new credit to reach its full potential in all housing markets.