Virginia Lawmakers Approve New Affordable Housing Tax Credits
Developers in Virginia would get more help securing financing for affordable housing under a bill currently awaiting Gov. Ralph Northam’s signature.
Last week, the General Assembly approved a state-level tax credit program for affordable housing developments. The bill allows developers who have a project that’s part of the federal Low-Income Housing Tax Credit program to get matching state-level credits. The House and Senate reached a compromise on $15 million in tax credits per year.
Andrew Clark, vice president of government relations for the Home Builders Association of Virginia, said developers can use the credits to get more funding from investors. He said that’s usually the hardest part when you’re building something to rent below market value.
“In the affordable housing world, there’s a lot of talk about land use, and density and zoning, and those are all important, but one of the biggest impediments for non-profit or private-sector builders is the ability to finance these deals,” he said. “Traditional financing mechanisms don’t come close to covering the cost of what it costs to actually build and develop these projects.”
If signed into law, Virginia would join 17 other states in creating an affordable housing tax credit program. It’s expected to be one of the most effective measures the state has taken to subsidize affordable developments.
The federal Low-income Housing Tax Credit program is widely held as the most effective, and longest-running, program for spurring development. The Urban Institute estimates it is responsible for creating nearly 3 million housing units since 1987.
Virginia currently has an unmet need for 150,000 affordable homes, according to the National Low Income Housing Coalition.
Delegate Jeff Bourne, who sponsored the House version of the bill, recently told VPM he hopes the new program can help to alleviate the affordable housing crisis, which will only be made worse by the COVID-19 pandemic. He said it could also help the economy as country moves out of the recession.
“If we’re building more affordable projects, then we are going to need more workers to be on those projects,” Bourne said. “Getting people back to work is another huge piece of this.”
While Bourne’s version of the bill failed to get enough votes to advance out of committee, the senate version, carried by Sen. Mamie Locke (D-Hampton) was approved by both chambers with bipartisan support. The bill still needs final approval from the governor.