Rep. Panetta Introduces Bipartisan Legislation to Increase Workforce Housing

Monterey, CA - United States Representative Jimmy Panetta (CA-19) authored and introduced the Workforce Housing Tax Credit (WHTC) Act. Rep. Mike Carey (OH-15) co-leads this bipartisan bill that would increase the supply of affordable housing for middle-income families who earn too much to qualify for low-income affordable housing and not enough to afford to buy or rent housing.

The Workforce Housing Tax Credit Act would help to close that gap between middle and low income housing by establishing the first-ever middle-income housing tax credit, which is estimated to finance approximately 344,000 affordable rental homes. The legislation would also provide flexibility so that states can maximize their resources and best meet community housing needs by allowing housing finance agencies to transfer their middle-income allocation to their Low-Income Housing Tax Credit (LIHTC) allocation when necessary. It also allows buildings to combine the two credits to help make more low-income housing projects financially feasible.

"In California's 19th Congressional District, there are many people who work and support their families but make too much to qualify for low-income housing and too little to buy or rent a home near their workplace," said Rep. Panetta. "My bipartisan Workforce Housing Tax Credit Act would address that gap by incentivizing investment in the development of workforce housing for middle-income families. This legislation would help ensure that middle-income working families spend time in our communities rather than stuck in their commutes and that people who work here can afford to live here and call California's 19th Congressional District home."

"I am proud to once again co-lead the Workforce Housing Tax Credit Act alongside my Ways and Means colleague, Congressman Panetta," said Rep. Carey. "Columbus, Ohio has seen incredible population and economic growth, but with this new development comes significant challenges. Given the current shortage of affordable housing, we must continue to do everything we can to incentivize the development of low and middle-income housing, and this bill does exactly that. Stable housing is essential to the success of individuals and families, and I will continue to focus on ensuring people in Ohio's 15th Congressional District have access to housing."

Highlights of the Workforce Housing Tax Credit Act include:

• Similar to the LIHTC, state housing finance agencies would allocate the tax credits to developers through a competitive process. The tax credits would be provided to developers over a 15-year period, with a 15-year compliance period and 30-year extended commitment.
• Tax credits are allocated to states based on population, at $1 per capita with a $1.5 million small state minimum. An additional 5% of the allocation would be made available and reserved for middle-income housing developed in rural areas.
• For new buildings, the credit would equal 50% of the cost of the building over the lifetime of the credit. For rehabilitated buildings and bond-financed buildings, the credit would equal 20% of the cost of the building. More credit could be awarded for buildings in difficult development areas, as designated by the U.S. Department of Housing and Urban Development (HUD). However, state housing agencies would only allocate the amount of credit needed to make a housing project financially feasible.
• To qualify for the credit, at least 60% of the building's units must be occupied by individuals with area median incomes of 100% or less where the rents are restricted to 30% of the designated income. The affordability restrictions would remain in place for up to 15 years after the compliance period (for a total 30-year affordability period).
• WHTC also works in conjunction with LIHTC to support low-income affordable housing. First, a state can tailor the allocation to its needs: it can elect to transfer any portion of their middle-income allocation to LIHTC at any point during the year. Second, WHTC can help the financial feasibility of affordable buildings by combining LIHTC and middle-income housing tax credits for different units as long as at least 20% of the total units are middle-income units.

"NMHC strongly supports Reps. Panetta and Carey's introduction of the Workforce Housing Tax Credit Act," said NMHC president Sharon Wilson Géno. "Building on the immensely successful Low-Income Housing Tax Credit, the Workforce Housing Tax Credit would extend critical support to moderate-income households who are struggling with housing costs. Together, both tax credits will help grow the supply of housing across communities nationwide and move us closer to the affordability solutions that American renters urgently need."

"The Workforce Housing Tax Credit Act is a smart, targeted solution to one of the most pressing challenges facing our housing market today, the shortage of homes affordable to middle-income families. By leveraging the proven success of the Low-Income Housing Tax Credit, this legislation will unlock private investment and expand housing options for teachers, first responders, and other essential workers who are increasingly priced out of the communities they serve. We applaud Representatives Jimmy Panetta and Mike Carey for their leadership in advancing a bipartisan approach that strengthens our housing supply, supports economic mobility, and brings more Americans closer to achieving the dream of stable, attainable homeownership," said Shannon McGahn, Executive Vice President and Chief Advocacy Officer for the National Association of REALTORS®.

"The National Affordable Housing Management Association (NAHMA) strongly endorses the Workforce Housing Tax Credit Act. As the leading voice for affordable housing providers, we recognize that our nation's housing crisis now extends well into the 'missing middle,' impacting the very workers who sustain our local economies. While the Low-Income Housing Tax Credit (LIHTC) remains our most successful affordable housing tool for low-income families, a widening gap exists for those earning up to 120% of the Area Median Income (AMI). Teachers, first responders, and healthcare professionals are increasingly priced out of the communities they serve. This bipartisan legislation, introduced by Representatives Panetta and Carey, provides a necessary, market-based extension of the proven tax credit model to meet this specific need. By providing a scalable financing tool, this Act will empower developers and managers to expand the supply of stable, high-quality housing for middle-income earners. NAHMA commends this proactive approach to strengthening the housing continuum. We urge Congress to act swiftly to pass this legislation, ensuring that the American workforce has access to the housing security essential for economic stability and community growth," said Kristina Cook, NAHMA Chief Executive Officer.

"The Mortgage Bankers Association is pleased to support the Workforce Housing Tax Credit Act. Expanding the availability of rental housing for middle-income households is critical to addressing the nation's housing supply challenges. This legislation would help address a significant gap in the market, supporting the development of housing for working families who earn too much to qualify for existing programs but still struggle to find affordable options near where they work or want to live. We appreciate Representatives Jimmy Panetta and Mike Carey for their bipartisan leadership on this important issue," said Bill Killmer, Senior Vice President, Legislative and Political Affairs at the Mortgage Bankers Association.

"I applaud Representatives Jimmy Panetta and Mike Carey for their leadership in introducing and championing the Workforce Housing Tax Credit Act. As Harvard's Joint Center on Housing Studies has regularly documented, renter cost burdens are climbing up on the income spectrum, leaving households in many urban, suburban, and rural communities that earn too much for traditional rental housing subsidies but too little for market-rate rental housing with few or no affordable housing options. This bill provides states with a very flexible rental housing financing tool to address this growing national need," said Michael Novogradac, Managing Partner at Novogradac & Company LLP.

"The Workforce Housing Tax Credit Act takes a proven approach and applies it to the part of the market our housing system is failing to serve," said Mike Kingsella, CEO of Up for Growth and Up for Growth Action. "We have built a strong system to support low-income housing, but there is no comparable tool for middle-income workers who keep local economies running and are increasingly priced out of the communities they serve. This bill makes middle-income housing pencil and gives developers a real path to deliver housing at scale, so people can afford to live near their jobs,"

Full text of the bill is available here.

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