A coalition of nonprofits, industry trade groups, and state housing agencies is calling on Congress to pass a federal tax credit that would support the creation of 500,000 starter homes in low-income areas.
Introduced in the House and Senate last year, the bill creates a tax credit that would fund part of the development costs to build or rehabilitate half a million homes over the next decade. The program would focus on developing modestly priced, single-family homes in struggling neighborhoods with high poverty rates and dilapidated housing.
State housing finance agencies would administer the new tax credits through a competitive application process. Investors would receive credits only after the project is completed and the home is occupied by a qualified homeowner. The credit would only cover the shortfall between the market value of the home and the cost of development, so if a home sold for more than the development cost, the investor wouldn’t get the credit.
The Neighborhood Homes Coalition is an advocacy group composed of 36 national organizations, including the American Bankers Association, the Mortgage Bankers Association, and the National Council of State Housing Agencies. The coalition argued in its letter to lawmakers that the proposed bill would address a range of economic, racial justice, and climate goals, noting that the program would encourage “energy-efficient investment” and that 63 percent of the census tracts eligible for the tax credits under the bill are “majority minority.”
The program would foster $100 billion in new investment, create nearly 800,000 new jobs, and generate $29 billion in tax revenue for federal, state, and local governments, which is more than its federal budget coast, the coalition claimed.
