Sens. Ben Cardin (D-Md.) and Rob Portman (R-Ohio) have introduced legislation to create a tax credit that would encourage the revitalization of distressed single-family homes.
The Neighborhood Homes Investment Act (NHIA) is based on the low-income housing tax credit (LIHTC) and New Markets Tax Credit. These longtime programs have successfully financed affordable multifamily rental housing and economic development projects, but they can’t get to the problem that the new legislation seeks to address, says Benson “Buzz” Roberts, president and CEO of the National Association of Affordable Housing Lenders.
The proposed credit aims to incentivize private investment into neighborhoods where homes are in need of revitalization, but the resale value of properties is too low to attract investment for construction or renovation. The lack of developed single-family homes makes it difficult to bring new homeowners into these areas or renovate existing homes.
“Every state has neighborhoods like this where the numbers just don’t work,” Roberts says. “It costs more to build or substantially rehab than the market can support. That’s holding back neighborhoods.”
Supporters of the bill (S. 4073) estimate that the new credit would encourage private investment in about 500,000 homes that currently cannot be developed or rehabilitated because the costs exceed the value of the home.