Portman, Cardin Introduce New Tax Incentive to Revitalize Distressed Homes
Tax Credit Would Encourage Renovations, Require Sales to Low-Income Individuals
WASHINGTON, DC – U.S. Senators Rob Portman (R-OH) and Ben Cardin (D-MD) both members of the Senate Finance Committee, have introduced legislation (S. 4073) to revitalize housing in distressed neighborhoods in Ohio, Maryland, and nationwide. Currently, development lacks in some urban and rural areas because the cost of purchasing and renovating homes is greater than the value of the sale price of homes. The Neighborhood Homes Investment Act (NHIA) will create a federal tax credit to cover the “appraisal gap” that prevents single-family housing development in many low-income neighborhoods. Joining as cosponsors of the legislation are Senators Chris Coons (D-DE) and Senate Finance Committee members Todd Young (R-IN), Sherrod Brown (D-OH) and Tim Scott (R-SC).
The NHIA could lead to the revitalization of 500,000 homes and create $100 billion in development revenue over the next 10 years. NHIA will require that homes constructed or revitalized under the program must be sold to homeowners making less than 140 percent of the area median income. This ensures that improved housing directly benefits members of the communities targeted by the new tax credit. In addition, homeowners receiving funds for rehabilitation of their property must remain in their homes for five years or face a penalty.
“Even prior to the pandemic, when America was experiencing one of the strongest economies on record, highlighted by consistent job creation and wage growth, there were certain geographic areas and vulnerable populations that suffered due to a lack of opportunity and investment. These areas were often marked by stagnant housing markets, foreclosures, and blighted or vacant homes,” Senator Portman said. “The Neighborhood Homes Investment credit established in this bipartisan bill is directly targeted at bringing new investment to these neighborhoods, providing a new tool in our economic toolkit that pairs well with the New Markets Tax Credit, Opportunity Zones, and the Low-Income Housing Tax Credit. This new incentive will help thousands of vulnerable Ohioans in struggling neighborhoods by revitalizing communities and generating new opportunities for their residents.”
“Everyone deserves a safe and affordable place to call home. Our bipartisan tax credit builds on the success of the Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC) to attract investment in communities that need it most,” said Senator Cardin. “By creating this incentive in the tax code, we can drive investment and revitalize neighborhoods in Baltimore and across Maryland and keep them affordable for low- to moderate-income families.”
“Amid the ongoing debates about how to address structural inequalities in our country, there are many real, meaningful changes that we can make from the federal level on housing policy,” said Senator Coons. “We need to encourage investment to reach communities and ensure that lower-income households can access the benefits of this new development. The Neighborhood Homes Investment Act would provide opportunities to Delawareans and revitalize communities up and down the state while taking a step to address inequities in housing access across the country.”
“The Neighborhood Homes Investment Act will help address the housing affordability crisis, create jobs, and encourage economic development. By providing a tax credit to remove and redevelop abandoned buildings, we can incentivize more affordable housing to be constructed in areas that are in need of rehabilitation. This legislation will benefit many communities in Indiana seeking to revitalize,” said Senator Young.
“Although the Fair Housing Act made housing discrimination illegal more than 50 years ago, too many of our communities - particularly Black and brown communities – still reflect historic patterns of segregation and racial disparities in wealth and homeownership,” said Senator Brown. “The Neighborhood Homes Investment Act will help overcome historic patterns of disinvestment in low-wealth neighborhoods and give families a chance to build wealth through homeownership in the communities they love.”
“The Neighborhood Homes Investment Act will help create additional home-buying and home equity building opportunities for Americans that for too long have faced countless obstacles when trying to achieve the American Dream of owning their own home,” said Senator Scott. “I have long been an ardent supporter of homeownership, and that includes closing the gap between white and African American homeownership rates in this country. I am proud to introduce this bill with my colleagues to help more Americans make life-long, intelligent investments and foster holistic economic growth and healing in our nation.”
“Enterprise applauds Senators Ben Cardin and Rob Portman, and the other original co-sponsors, for the introduction of the Neighborhood Homes Investment Act (NHIA). Many of the same Black American communities in Maryland and across the country that have been affected by years of disinvestment and the history of segregation also need resources to recover from the economic downturn in the wake of Covid-19,” said Marion McFadden, SVP of Public Policy at Columbia, Md.-based Enterprise Community Partners. “The NHIA could support an equitable economic recovery by increasing wealth for Black families who own their homes, boosting property values and rejuvenating neighborhoods.”
“Rocket Mortgage would like to thank Senators Portman and Cardin for their commitment to addressing blight and declining property values in America’s distressed communities,” said Bill Emerson, Vice Chairman of Rocket Mortgage. “The homes that will be built or rehabbed thanks to the NHIA will be especially valuable in our home cities of Detroit and Cleveland. These cities, and many neighborhoods across the country, are in dire need of the high-quality, affordable housing that the NHIA is intended to create.”
The NHIA could lead to the revitalization of 500,000 homes and create $100 billion in development revenue over the next 10 years. NHIA will require that homes constructed or revitalized under the program must be sold to homeowners making less than 140 percent of the area median income. This ensures that improved housing directly benefits members of the communities targeted by the new tax credit. In addition, these credits are only eligible for houses constructed or revitalized in census tracts that meet certain minimum metrics related to median gross income, poverty rates, and home sale prices.
The credits would only be available after the homes have been completed and sold to a homeowner. NHIA targets neighborhoods that have poverty rates that are 130 percent or greater than the metro or state rate; have incomes that are 80 percent or less than area median income; and have home values that are below the metro or state median value.
The Neighborhood Homes Investment Act (NHIA) also is supported by the following organizations:
Center for Community Progress
Enterprise Community Partners
Habitat for Humanity
Housing Assistance Council
Housing Partnership Network
Local Initiatives Support Corporation
Mortgage Bankers Association
National Association of Affordable Housing Lenders
National Alliance Of Community Economic Development Associations
National Association of Hispanic Real Estate Professionals
National Association of Realtors
National Association of Real Estate Brokers
National Association of State and Local Equity Funds
National Association of the Remodeling Industry
National Council of State Housing Agencies
National Community Stabilization Trust
National Fair Housing Alliance
National Housing Conference
National NeighborWorks Association
Up for Growth Action