12.07.23

Sullivan, Wyden, Panetta, Carey Introduce Legislation to Improve Housing Affordability for Middle-Income Families

Bipartisan, bicameral bill would establish a Workforce Housing Tax Credit to increase the supply of housing for middle-income Americans

WASHINGTON—U.S. Senator Dan Sullivan, (R-Alaska), Senate Finance Committee Chair Ron Wyden (D-Ore.), and U.S. Representatives Jimmy Panetta (D-Calif.) and Mike Carey (R-Ohio), today introduced the Workforce Housing Tax Credit (WHTC) Act to increase the supply of affordable housing for middle income families who earn too much to qualify for low-income affordable housing and not enough to afford housing near where they work. 

The Workforce Housing Tax Credit Act would help to close this gap by establishing the first-ever middle-income housing tax credit, which is estimated to finance approximately 344,000 affordable rental homes. The legislation also provides flexibility so that states can maximize their resources and best meet community housing needs by allowing housing finance agencies to transfer their middle-income allocation to their Low Income Housing Tax Credit (LIHTC) allocation at any time. It also allows buildings to combine the two credits to help make more low-income housing projects financially feasible.

“Everywhere I travel in our state, I hear from Alaskans reeling from the scarcity of housing. It’s a challenge that afflicts rural and urban communities, low- and middle-income families, and stands as an obstacle to greater economic opportunity,” said Sullivan. “Solving this challenge is a top priority for me, and it will take multifaceted solutions with everyone pulling on the same oar. On the federal level, my colleagues and I are introducing theWorkforce Housing Tax Credit Act to broaden a tried-and-true federal tax incentive program—the low-income housing tax credit. This will catalyze the private sector to build more housing in urban and rural areas for working families—teachers, law enforcement, first responders, nurses—the backbone of so many communities. Expanding LIHTC will help address the core issue of homelessness and overcrowding in Alaska and empower hard-working Alaskans to stay in our communities and build a more robust workforce.”

“Right now, America’s nurses, firefighters and teachers are struggling to find affordable housing near the communities they serve. More must be done to fill the ‘missing middle’ between low-income housing and million dollar homes,” Wyden said. “Establishing a middle-income tax credit will guarantee more housing, and the flexibility our bill provides will help housing finance agencies best meet the needs of their individual communities.”

“In the 19th Congressional District, there are many working families who earn living wages but make too much to qualify for low-income housing and too little to afford to buy a home in this area,” said Panetta.  “Our bipartisan, bicameral Workforce Housing Tax Credit Act would address that gap by incentivizing investment in the development of middle-income housing for middle income families. This legislation would help ensure that middle-income working families spend time in our communities rather than spend time in their commute and that people who work here, can afford to live here, and call California’s 19th Congressional District home.”

“Too many Americans are in the difficult position of making too much money to qualify for housing tax credits, but not enough money to afford to live where they work,” said Carey. “Our legislation seeks to bridge the gap by creating a new housing tax credit for middle-class families. A strong middle class means a strong America, and that starts in the home.”

On August 31, Senator Sullivan hosted Housing & Urban Development Secretary Marcia Fudge in Anchorage for roundtable discussions with Alaska stakeholders—rural and urban—on the challenging lack of housing availability in all parts of the state. Below are statements from Alaska leaders on the WHTC Act.

“We have a pressing demand for diverse and affordable housing options that can address the unique challenges posed by the state's extreme climate and vast geographical expanse,” said Alaska Governor Mike Dunleavy. “A combined effort between state, federal, and local governments can bring forward innovative housing solutions for Alaskans.”

“Lack of affordable housing is a big issue facing both rural and urban communities. This bill will help working families in Alaska who don’t qualify for low income housing to be able to afford a home. These Alaskans include teachers, health professionals, public safety officers, our first responders and others who make up the backbone of our communities. I thank Senator Sullivan for reaching across the aisle to come up with creative solutions to our housing challenges,” said Bryan Butcher, CEO and executive director of the Alaska Housing Finance Corporation.

“Providing affordable housing has been one of my top priorities during my time in office. I have had numerous conversations with Senator Sullivan about Anchorage’s housing crisis—a crisis exacerbated by the pandemic and rising inflation. I also attended the roundtable in Anchorage that the Senator co-hosted with Housing and Urban Development Secretary Marcia Fudge, where I was able to talk to her directly about our housing concerns. I thank Senator Sullivan for his work on this important legislation that can incentivize additional home building, especially for hard-working families and individuals here in Anchorage. I look forward to its passage and to working with him to ensure a smooth implementation,” said Dave Bronson, mayor of Anchorage.

“As we all know, we are experiencing a housing crisis in Anchorage and across the state. I have been working closely with Senator Sullivan’s office on potential solutions, and this bipartisan legislation is a key component, along with the Anchorage Assembly’s many legislative efforts addressing housing and homelessness, to ensure Anchorage residents have safe affordable places to call home. This bill will help Alaskans who don’t make enough to afford the high cost of housing, but make too much to qualify for other programs. I thank Senator Sullivan for reaching across the aisle to come up with creative solutions to our housing crisis,” said Chris Constant, chairman of the Anchorage Assembly.

“Any effort to increase access to attainable housing in Alaska is another tool in the tool box of addressing Alaska’s severe housing crisis. We thank Senator Sullivan for his continued focus and work on this critical issue for all Alaskans,” said Meg Zaletel, Anchorage Coalition to End Homelessness.

“The lack of affordable housing is one of the biggest issues facing both rural and urban communities in Alaska. This bill will help low- and middle-income working families in Alaska to be able to afford a home. These include teachers, police officers, our first responders and so many other hard workers who make up the backbone of our communities. I thank Senator Sullivan for reaching across the aisle to come up with creative solutions to our housing crisis,” said Curtis McQueen, Alaska Native Village Corporation Association.

“The lack of affordable housing is one of the biggest issues facing both rural and urban communities in Alaska. This bill will help working families in Alaska with low- or middle- incomes to be able to afford a home. These include teachers, police offices, our first responders and so many other hard workers who make up the backbone of our communities. I thank Senator Sullivan for reaching across the aisle to come up with creative solutions to our housing crisis,” said Eric Visser, Alaska State Homebuilding Association.

“The Matsu Home Builders Association serves the home building community in the Matsu and appreciates the efforts of Senator Sullivan, his staff and others to reduce regulatory barriers to homeownership. This bill proposed to amend the Internal Revenue Code and provide a credit for middle income housing helps to counter many of the adverse conditions that have developed in recent years such as supply chain shortages, labor shortages, inflation and building material price increases. As the fastest growing community in Alaska, the Matsu  recognizes that quality, healthy affordable homes are in short supply and the recent increase to costs make housing affordability and accessibility tougher. This bill will provide a small but needed step to helping working families from teachers to electricians, first responders to small business owners who are the backbone of our community. We appreciate sound efforts to help make the dream of home ownership a reality,” said David Miller, President of Matsu Homebuilders Association.

“As Alaska’s tourism industry works to recover from the pandemic, housing challenges have hampered the industry’s ability to rebuild a full workforce, especially in rural areas. This tax incentive will help alleviate this complex challenge and I thank Senator Sullivan for leading the effort on this important bipartisan bill,” said Jillian Simpson, Alaska Travel Industry Association president & CEO.

“The ANCSA Regional Association (ARA) applauds Senator Sullivan’s proposal to tackle the workforce and housing shortages in our state through the Workforce Housing Tax Credit and expanding the existing Low Income Housing Tax Credit (LIHTC). As employers in the state, ARA members understand how much the lack of affordable housing issues impacts Alaskans and we look forward to seeing this legislation move through the process,” said Kim Reitmeier, ANCSA Regional Association.

“The lack of affordable housing is one of the biggest issues facing both rural and urban communities in Alaska. This bill will help working families in Alaska who don’t qualify for low income housing and are priced out of market rents in our communities.  This includes the professional workforce that play a vital role to ensure our communities are thriving: teachers, public safety, and health care workers.  Senator Sullivan has been an advocate to increase housing across Alaska and we thank him for reaching across the aisle to expand a program and bring more housing units to our communities and families,” said Colleen Dushkin, executive director of Alaska Association of Housing Authorities.

“The Kenai Peninsula Builders Association fully supports the Workforce Housing Tax Credit. Homeownership is the cornerstone of the American Dream and the single greatest wealth creator for all Americans, affordable housing is being attacked from many angles by Federal, State and Local regulations and moving this legislation forward will provide an avenue that our parents and grandparents were afforded in the past. Alaskans particularly face extra challenges with high utility and living expenses, especially in rural Alaska and this will help keep their dreams of home ownership alive. We appreciate your efforts in moving this legislation forward,” said Jeff Twait, Kenai Peninsula Home Builders.

Highlights of the Workforce Housing Tax Credit Act include:

  • Similar to LIHTC, state housing finance agencies allocate the tax credits to developers through a competitive process. The tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and 30-year extended commitment.
  • Tax credits are allocated to states based on population. For 2024, the allocation would be $1 per capita with a $1.5 million small state minimum. An additional 5% of the allocation is made available and reserved for middle-income housing developed in rural areas.
  • For new buildings, the credit would equal 50% of the cost of the building over the lifetime of the credit. For rehabilitated buildings and bond-financed buildings, the credit would equal 20% of the cost of the building. More credit can be awarded for buildings in difficult development areas, as designated by the U.S. Department of Housing and Urban Development (HUD). However, state housing agencies would only allocate the amount of credit needed to make a housing project financially feasible.
  • To qualify for the credit, at least 60% of the building’s units must be occupied by individuals with area median incomes of 100% or less where the rents are restricted to 30% of the designated income. The affordability restrictions would remain in place for up to 15 years after the compliance period (for a total 30-year affordability period).
  • WHTC also works in conjunction with LIHTC to support low-income affordable housing. First, a state can tailor the allocation to its needs: it can elect to transfer any portion of their middle-income allocation to LIHTC at any point during the year. Second, WHTC can help the financial feasibility of affordable buildings by combining LIHTC and middle-income housing tax credits for different units as long as at least 20% of the total units are middle-income units.
  • The effective date for this provision is buildings placed in service after 2023, in taxable years after 2023.

Below are statements from national housing leaders on the WHTC Act.

“More and more Americans are finding themselves struggling to make rent or find housing in the communities where they work. Teachers, nurses, and fire fighters often find themselves priced out of living in the communities they serve,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home developer from Birmingham, Ala. “The Workforce Housing Tax Credit Act would provide states and developers with a new source of funding to produce affordable rental housing serving workers earning up to 100% of the Area Median Income. This is exactly the type of solution we need Congress to enact in order to begin solving the housing affordability crisis.”

“It is no secret that the nation faces a severe affordable housing shortage. Senator Wyden has led the charge to address this crisis through his efforts to secure and expand the Low-Income Housing Tax Credit. Now, along with Senator Sullivan in the Senate and Congressmen Panetta and Carey in the House, these leaders are expanding on those efforts with the introduction of the Middle-Income Housing Tax Credit,” said David Gasson, executive director of the Housing Advisory Group. “As the LIHTC does for families, seniors and veterans, the MIHTC will address the vital need for housing of our workforce and those not able to afford market rate housing. We are very appreciative of these housing champions and their efforts to address the nation’s housing crisis.”

“NMHC and NAA strongly support the introduction of the Workforce Housing Tax Credit Act by Senators Wyden and Sullivan and Representatives Panetta and Carey. The Workforce Housing Tax Credit would complement the widely successful Low-Income Housing Tax Credit (LIHTC) by supporting moderate income households that are also facing rising housing costs. It would help expand the supply of housing available in communities across the country which, in turn, will help create more housing affordability,” said National Multifamily Housing Council (NMHC) President Sharon Wilson Géno and National Apartment Association (NAA) President and Chief Executive Officer Robert Pinnegar.

A one-page summary of the Workforce Housing Tax Credit Act can be found here.

Legislative text can be found here.

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