A bipartisan group of senators introduced on June 25 their version of the Neighborhood Homes Investment Act (NHIA), which proponents say would encourage building or rehabilitating an estimated 500,000 homes in urban and rural areas.
Advocates say the tax credit could attract $100 billion in investment for single-family houses that right now cannot be built or rehabilitated because the cost would exceed their value.
The Senate bill is S.4073. A similar measure -- H.3316 -- was introduced in the House last June. That was before the pandemic, of course, and bipartisan and public support for economic relief in general may bode well for the proposed tax credit's future among lawmakers otherwise charged with partisanship.
A tax credit of up to 35%
The NHIA tax credit would be for up to 35% of the eligible development cost. Reducing that risk of loss "would encourage investment, create affordable homeownership opportunities, and support widespread revitalization of urban, suburban, and rural communities," the Neighborhood Homes Coalition says in a press release about the Senate move.
The Neighborhood Homes Coalition comprises 22 organizations, including housing and community development nonprofits, financial institutions, and trade associations that support making the idea into law.
The tax credits would be awarded to project sponsors through statewide competitions administered by state housing finance agencies.
Sponsors could include developers, lenders, or local governments, which "could 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 moderate- and middle-income homebuyers," the coalition says in the release.
An opportunity zone of bipartisanship?
S.4073 was introduced by Sens. Ben Cardin, D-M.D., and Rob Portman, R-O.H., and cosponsored by Sens. Chris Coons, D-D.E., Sherrod Brown, D-O.H., Todd Young, R-I.N., and Tim Scott, R-S.C.
"Even prior to the pandemic, when America was experiencing one of the strongest economies on record, highlighted by consistent job creation and wage growth, there were certain geographic areas and vulnerable populations that suffered due to a lack of opportunity and investment. These areas were often marked by stagnant housing markets, foreclosures, and blighted or vacant homes," Portman says in the coalition's press release.
"The Neighborhood Homes Investment credit established in this bipartisan bill is directly targeted at bringing new investment to these neighborhoods," the Buckeye State Republican says, "providing a new tool in our economic toolkit that pairs well with the New Markets Tax Credit, opportunity zones, and the Low-Income Housing Tax Credit."
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