New bills by Sen. Ron Wyden (D-Ore.) calls for the creation of a tax credit to help middle-income renters and another to help first-time homebuyers.
Both pieces of legislation aim to provide a comprehensive affordable housing package in tandem with the low-income housing tax credit (LIHTC), according to Wyden.
“Repairing the country’s housing policy to help people in Oregon and nationwide afford a place to live requires a full tool box,” said Wyden, ranking member of the tax-writing Senate Finance Committee, in a statement. “My bills aim to remodel housing policy by targeting improvements to help American families struggling to pay soaring rents and trying to save for a downpayment on their first home.”
Wyden wants to establish a middle-income housing tax credit (MIHTC) aimed at sparking the development of rental homes affordable to Americans with moderate incomes. The bill (S. 3365) builds on the successful LIHTC model, allocating funds to states based on population with state housing authorities and then following a competitive process to allocate the tax credits to developers for individual new construction projects or rehabilitations.
To qualify, at least 60% of the property’s units must be occupied by individuals with incomes of 100% or less of area median gross income (AMGI). Furthermore, tenants’ rents must not exceed 30% of the 100% of AMGI. The affordability restrictions would remain in place for up to 15 years after an initial 15-year compliance period. Wyden’s office released a fact sheet about the proposed credit.
A state’s unused MIHTC allocation would get added to the state’s existing LIHTC allocation after one year.
While saying that it welcomes new solutions to the affordable housing crisis, the National Low Income Housing Coalition called the proposed MIHTC “misguided and a wasteful use of federal resources.”
“There is no sound rationale for investing billions of dollars of scarce federal resources targeted toward the development of market-rate housing, when changes to local zoning laws would have largely the same impact,” said Diane Yentel, NLIHC president and CEO, in a statement. “At a time when there are more than twice as many children living in homeless shelters as there are severely cost-burdened middle-income renter households, we must target federal funding to where it is most needed: making homes affordable for the lowest-income people. Local communities can and must do their part in eliminating the exclusionary zoning policies that put pressure on middle-income renters in a handful of metro areas.”
Wyden’s other bill (S. 3364) aims to help deal with increasing housing costs by providing first-time homebuyers up to a $10,000 refundable tax credit. This credit would equal 2.5% of the home purchase with the maximum credit reached at homes selling for $400,000—below the median home price in Portland, Ore., according to his office.