In the dynamic landscape of community development, one crucial aspect often overlooked is the accessibility of housing for those who serve as the backbone of our society – our firefighters, public safety officers, and teachers. It's an irrefutable truth that these individuals, who contribute to the public’s well-being, often find themselves struggling to live within a reasonable distance of their workplaces due to financial constraints, especially in major cities.
At its core, Workforce Housing is a commitment to fostering thriving communities. The philosophy is simple but profound – the closer public service workers live to their job, the more likely they are to stay. This ripple effect is not only beneficial for the individuals but contributes to the overall well-being and stability of our communities.
Recognizing the aforementioned philosophy, the introduction of Workforce Housing Credits (WHTC) is a beacon of hope, posing to make a substantial difference in the lives of our public service workers. The recently proposed act would be utilized to build affordable housing for individuals falling within the 60% to 100% range of the area median income. What sets this initiative apart is its flexibility, as the credits can also be transferred to Low-Income Housing Tax Credits (LIHTC) for those generally below 60% of the area median income. It's a thoughtful and inclusive approach that recognizes the diverse needs of our workforce.
In a similar process to LIHTC, state housing finance agencies would allocate these tax credits to developers through a competitive process. The structure ensures that the credits are dispersed over a 15-year period, complemented by a 15-year compliance period and a 30-year extended commitment. This would, in the end, finance approximately 344,000 units. The long-term vision not only promotes stability but creates a favorable environment for sustained community growth.
For new buildings, the proposed credit at an impressive 50% of the building cost over the credit's lifetime. Additionally, the credit for rehabilitated buildings and those financed through bonds stands at 20% of the building cost. This would incentivize both new constructions and the revitalization of existing structures, contributing to the overall enhancement of our communities.
States would receive tax credits determined by their populations. In the year 2024, the allocation is set at $1 per capita, ensuring a minimum of $1.5 million for smaller states. An additional 5% of the allocation is earmarked and reserved specifically for the development of middle-income housing in rural areas.
WHTC doesn't operate in isolation but rather collaborates with LIHTC to amplify its impact on low-income affordable housing. This collaboration allows states the flexibility to tailor the allocation to their unique needs, enabling the transfer of middle-income allocations to LIHTC at any point during the year. This strategic union enhances practical financing by combining LIHTC and middle-income housing tax credits.
Last month, Senate Finance Committee Chair Ron Wyden, U.S. Senator Dan Sullivan, and U.S. Representatives Jimmy Panetta and Mike Carey introduced the Workforce Housing Tax Credit Act. The bipartisan proposal is currently slated for assignment to a committee, where its members will examine and make necessary revisions to the bill.
Once the committee has reported on the legislation, it will be up for consideration and voting in the House, and if passed, will move on to the Senate for a vote. Following approval in both the House and Senate, the proposal would then be forwarded to the president. As President Joe Biden has regularly mentioned the need for affordable and safe housing, it is likely he will support turning this into law.
While the proposal is still under review and has yet to be brought to the House floor, it’s important to speak up on behalf of your communities and public service workers by encouraging representatives to move this bill into law when the time comes. Take the time to message or call your representatives about your support of Workforce Housing Credits.
Workforce Housing Credits, ultimately, signal additional efforts toward opportunity and inclusivity, bridging the gap between public service workers and affordable housing. It would create and enable communities to allow our unsung heroes to thrive. As this initiative takes root, let us as an industry rally behind it, recognizing that the key to vibrant communities is ensuring that every individual, regardless of their profession, has the opportunity to call a place 'home.'
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