Affordable homes and expanded opportunities for homeownership in Columbus, Franklin, Seymour, North Vernon and other communities around the state and nation could get a boost from bipartisan legislation in Congress that aims to spur investment in a housing market desperate for starter homes.
A broad coalition of public and private sector groups and businesses from Habitat for Humanity and the Urban League to Rocket Mortgage and the National Association of Realtors have thrown their support behind the Neighborhood Homes Investment Act (NHIA), co-authored by Indiana Republican Sen. Todd Young and Sen. Ben Cardin, D-Maryland. The bill would target tax credits for investment in affordable single-family housing development, providing an incentive that advocates say the market needs to boost affordable housing.
A spokesman for Young said the senator is planning to visit with area Realtors in Columbus later this month to discuss housing issues, though details have not been finalized. If approved, the program would provide Indiana more than $42 million in available tax credits for development of affordable housing in qualified areas.
Young and Cardin have advocated jointly for the legislation, including earlier this year in an appearance on Fox News. A companion bipartisan bill also was scheduled to be introduced this week in the House, advocates said.
According to the National Homes Coalition, which supports the legislation, the plan would benefit communities that “struggle with stagnating or distressed neighborhoods and low homeownership rates.”
The goal of the program would be to increase homeownership. If approved, the program would provide investors with tax credits for refurbishing or building affordable housing, but the credits could only be claimed after units were build and occupied by homeowners.
“Whether you’re Republican or Democrat, liberal or conservative, you drive through areas, maybe you live in an area, where there is a whole lot of blight that tears down property values, it undermines morale in the community, and it leads to a lack of private sector investment in the local area,” Young said.
“We’ve come up with a way to unlock that private investment in local houses to help revitalize areas and make sure that we shift any risk from taxpayers to private investors so that (homes) are actually occupied by an owner before the taxpayers are on the hook at all,” he said.
The bill says it has the potential to generate 500,000 homes over 10 years, $125 billion of total development activity, more than 800,000 jobs in construction and construction-related industries, and more than $35 billion in federal, state, and local tax revenues.
Buzz Roberts, president and CEO of the national association of affordable housing lenders, said he believes politicians should be able to agree on a proposal that he said is “built on very broadly shared principles.” Whereas tax credits for affordable rental units have been offered to investors for almost 50 years, no such incentive exists for investment in affordable single-family housing. Doing so could help reverse a chronic lack of affordable housing, he believes.
Roberts said that in many areas, the cost of renovating or building entry-level owner-occupied homes is greater than the local market can sustain. For that reason, construction of affordable single-family housing has stagnated. “This is trying to break that cycle,” he said.
“It’s more profitable to build a McMansion than a starter home, but how many McMansions can the market support, really?” he said.
“There’s always strong demand at a lower price point,” Roberts said, but that demand itself also drives up prices. “We’re chasing our tail on affordability. We have to expand the supply and preserve the supply that already exists.”
Roberts believes the NHIA can accomplish that. He noted that affordable rental properties, which receive generous tax credits, have been among the most profitable categories of real estate in recent years, and he believes the same would be true for affordable housing if the tax credit incentives were available to developers.
He said the bill also would delegate to states the oversight of programs and projects that would qualify for the tax credits.
The bills have yet to receive hearings, but backers believe they have momentum for legislation they also believe could play a key role in revitalizing communities that have struggled since the Great Recession of 2008. And Roberts hailed Young’s leadership, calling him “a practical visionary for affordable housing.”
“I think affordable housing has become more and more of a problem in more and more places,” Roberts said. “It used to be more of just a coastal problem with the big cities. That’s no longer the case.”