Tuesday, August 13, 2013

Resolution supports federal tax credits for low income development

Cincinnati City Council has passed a resolution expressing its support for the federal Low Income Housing and New Markets tax credits, which are currently under threat of elimination as Congress considers changes to the tax code.

Leaders of the Senate Finance Committee have recently asked all senators to identify which tax breaks, deductions, and credits should be retained – and which ones should be dropped.

The Low Income Housing Tax Credit was established in 1986 as a way to incentivize the development of affordable rental housing by the private sector. Developers sell these credits to investors to raise capital for their projects, reducing the amount that they have to borrow and keeping rents down.

Widely regarded as one of the most successful federal housing programs, properties financed using the credits consistently outperform other real estate categories, with occupancy rates above 96 percent and a cumulative foreclosure rate of less than 1 percent.

New Markets Tax Credits, created in 2000 as part of the Community Renewal Tax Relief Act of 2000, provides incentives to investors who provide equity to certified Community Development Entities, which invest in low income communities. The program has been credited with helping to rehabilitate more than 109 million square feet of commercial real estate and community facilities, thereby creating or preserving more than 360,000 jobs.

Both tax credit programs are seen as key in helping to turn around urban neighborhoods facing significant economic challenges, such as Over-the-Rhine.

Copies of the resolution were sent to Sens. Rob Portman and Sherrod Brown and Reps. Steve Chabot and Brad Wenstrup.

Previous reading on BC:
$54M University Station has financing, is set to go (7/15/13)
Avondale, OTR win nearly $4M in affordable housing funds (6/21/13)
Council supports 10 projects for Low Income Housing Tax Credits (2/19/13)
Amendment opens door to $8M restoration of St. Paulus Kirche (4/9/12)