A new Ohio tax credit program incentivizes affordable housing. Advocates are still wary
The state of Ohio has a new financial incentive to build rental housing for low-income residents.
The state budget recently signed into law establishes a Low-Income Housing Tax Credit for developers. It's similar to the federal tax credit by the same name, often shortened as LIHTC.
"I must say that everywhere I go, when I talk to people, housing is an issue," said Gov. Mike DeWine after signing the budget into law last week.
DeWine promised new spending on affordable housing earlier this year, after choosing not to veto a bill that banned developers from using both federal LIHTC and state historic tax credits for the same project.
"I pledged to the people of Ohio that we would address the issue of housing in this budget," DeWine said. "With the help of this legislature, we did that."
The program is capped at $100 million a year for four years, estimated to build about 3,500 total affordable apartments. Advocates were lobbying for a larger version, with the House passing a program capped at $500 million a year.
"Did we want it to be more? Yes. But we had an uphill battle in the Senate," said Bobby Maly, CEO of The Model Group. "I think the fact that we went from something that didn't exist to having a meaningful state credit program is a really great win."
Maly says unfortunately, historic neighborhoods may still feel the loss of the state historic tax credits.
"If you look at it from a macro level — the state or the region — I think it will have a much bigger impact," Maly said. "But certain neighborhoods will be disproportionately affected."
Amy Riegel, executive director of the Coalition on Housing and Homelessness in Ohio, says the new program helps fill the gap left by the historic credits.
"We are in a position though, where we can't just fill gaps ... the deficit of housing is growing year over a year," Riegel said.
State data shows a significant need for more affordable housing. In 2021, a quarter of Ohio renters were spending at least half their income on housing. Black renters are more likely than white renters to be severely rent-burdened.
Advocates are celebrating a few other housing items in the budget. There's a $50 million a year tax credit for single-family homes affordable to low-income families.
And the budget reverses a recent change to the way county auditors determine property value for affordable housing projects, which could have meant a big tax increase.
Riegel is concerned about the future, though.
"One thing that we did see through this process was that there were really strong sentiments against affordable housing, and in many cases, direct attacks on the ability of this state to build affordable housing," she said.
Lawmakers in the Senate tried to abolish the Ohio Housing Finance Authority, which manages public financing for affordable housing. That didn't end up in the final version.
But the Senate successfully cut back a proposed expansion of a program that offers housing assistance to unstably housed pregnant women. The Healthy Beginnings at Home program started in Columbus and will not expand to Dayton, Akron, Cleveland and Cincinnati as planned.
Maly is wary as well, but encouraged by how advocates came together over the past year.
"To really engage proactively rather than waiting for something negative to occur," he said. "And I think we've now built some muscles that will allow us to do that going forward."