Bipartisan Bill to Create a Tax Credit to Increase Housing Supply and Revitalize Distressed Homes

 

Legislation Would Help Cover the Cost of Building or Renovating Homes, Help Existing Homeowners Stay in Their Homes

Washington, D.C. –– Colorado U.S. Senator Michael Bennet, a member of the U.S. Senate Finance Committee, co-sponsored legislation led by U.S. Senators Ben Cardin (D-Md.) and Rob Portman (R-Ohio) to build and revitalize housing in distressed neighborhoods in Colorado and across the country. Currently, private development is lacking in some urban and rural areas because the cost of purchasing and renovating homes is greater than the value of the sale price of homes. The Neighborhood Homes Investment Act (NHIA) would create a federal tax credit to bridge the gap between the cost of building or renovating a home in these areas and the price at which they can be sold. The NHIA would also help existing homeowners in these neighborhoods to renovate and stay in their homes.

“We appreciate Senator Bennet’s commitment to seek solutions to the crisis of inadequate housing supply, especially in his leadership with Senators Cardin and Portman in co-sponsoring the Neighborhood Homes Investment Act.  Over the years Total Concept has built and rehabilitated over 1,000 homes for families in these rural areas. NHIA would help be a catalyst to spur additional private-public partnerships to address the need of affordable housing in Colorado and across the nation,” said Steven Cordova, Executive Director of Total Concept. Total Concept is a nonprofit organization serving families with a broad range of housing services in rural and southeastern Colorado.

The NHIA could lead to the revitalization of 500,000 homes and create $100 billion in development revenue over the next 10 years. About 22% of metro areas nationwide and 25% of non-metro areas would qualify for NHIA investments. The NHIA would target neighborhoods that have poverty rates 130% or greater than the metro or state rate; have incomes that are 80% or less than area median income; and have home values that are below the metro or state median value. The NHIA would require that homes constructed or revitalized under the program be sold to homeowners making less than 140% of the area median income. This ensures that improved housing directly benefits members of the communities targeted by the new tax credit.

Investors, not the government, would bear the risk, because credits would be received only after rehabilitation is completed and the property is occupied by an eligible homeowner. The Treasury Department would be required to provide an annual report on the performance of the program.

The maximum credit amount would be the lesser of 35% of total development costs (property acquisition plus construction and/or rehabilitation cost) or 80% of the national median home sale price. NHIA tax credits would be awarded to project sponsors—developers, lenders, or local governments—through a competitive statewide application process administered by each state’s housing finance agency. Sponsors would use the credits to raise investment capital for their projects, and the investors could claim the credits against their federal income tax when the homes are sold and occupied by eligible homebuyers. State agencies would have an annual allocation of either $6 per capita or $8 million, whichever is higher.

Filed Under: City of GranadaCity of HollyCity of LamarCity of WileyConsumer IssuesEconomyFeaturedHousingMedia Release

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