Washington (KINY) – 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), on Thursday 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 Senator 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 the Workforce 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.”
On Aug. 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.
“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,” said Bryan Butcher, CEO and executive director of the Alaska Housing Finance Corporation. “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.”
“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,” Anchorage mayor Dave Bronson said. “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.”
“Any effort to increase access to attainable housing in Alaska is another tool in the toolbox 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 of the Alaska Native Village Corporation 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,” President of Matsu Homebuilders Association, David Miller said. “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 makes 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.”
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 15 years, with a 15-year compliance period and a 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 its 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.
A one-page summary of the Workforce Housing Tax Credit Act can be found here.
Legislative text can be found here.
