Bill Introduced to Promote Housing through State Tax Credits
On Monday, a bill was introduced to spur affordable housing development through a state tax credit. The tax credit, backed by the HousingJobs Campaign, would help fund rental housing intended for low- and moderate-income people.
At least half of all state or federally-funded rental housing developed in the state of Minnesota currently depends upon federal housing tax credits for the projects to be viable. This new proposal would expand the number of projects that would move forward.
Rental developments that receive funding under either the federal low-income housing tax credit program or the state’s Challenge program would be eligible for the new state tax credit.
The state tax credit would encourage private investment in affordable housing, in particular from local sources, and would be more flexible than the current federal housing tax credit program. For example, the tax credit could be used to help finance a project with as few as four units, which the federal housing tax credit does not.
Tax credits are often pieced together with other funding sources to successfully finance much-needed housing, including housing for working families and homeless people. Minnesota Housing finds that for every $1 issued as a tax credit, an additional $7.30 is leveraged in private investment.
Thirteen other states, including Illinois and Missouri, already benefit from similar state tax credit programs. The credit would make Minnesota more attractive to investors in low-income affordable housing projects.
The state credit would qualify companies and/or individuals for tax credits if they invest a sum of money to finance affordable housing construction or rehab for a qualified project. Under this proposal, investors would receive the credits over the course of five years.
The bill (HF 1319 / SF 838) was introduced by Sen. David Senjem in the Senate and Rep. Tara Mack in the House. Senate co-authors include Sens. Brown, Howe, Dibble, and Bakk and House co-authors include Reps. Davids, Clark, Wardlow, Howes, Rukavina, Franson, and Myhra.
This tax credit proposal has been a key initiative of the HousingJobs campaign led by MHP and the Metropolitan Consortium of Community Developers (MCCD). HousingJobs has put forward several housing proposals intended to support the economies of Minnesota communities and put Minnesota’s construction workers back on the job. For more information about the tax credit bill and other HousingJobs proposals, visit MHP’s State Policy and Factsheet page.