December 07,2023

Wyden, Sullivan, Panetta, Carey Introduce Legislation to Improve Housing Affordability for Middle-Income Families

The bipartisan, bicameral legislation would establish a Workforce Housing Tax Credit to increase the supply of housing for middle-income Americans

The Workforce Housing Tax Credit is designed to best meet the housing needs of individual communities by allowing housing finance agencies to use the credit to support both low-income and middle-income families

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., U.S. Senator Dan Sullivan, R-Alaska, and U.S. Representatives Jimmy Panetta, D-Calif., and Mike Carey, R-Ohio, today introduced the Workforce Housing Tax Credit (WHTC) Act to 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 housing near where they work. 

The Workforce Housing Tax Credit Act would help to close this gap by establishing the first-ever middle-income housing tax credit, which is estimated to finance approximately 344,000 affordable rental homes. The legislation also provides 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 at any time. It also allows buildings to combine the two credits to help make more low-income housing projects financially feasible.

“Right now, America’s nurses, firefighters and teachers are struggling to find affordable housing near the communities they serve. More must be done to fill the ‘missing middle’ between low-income housing and million dollar homes,” Wyden said. “Establishing a middle-income tax credit will guarantee more housing, and the flexibility our bill provides will help housing finance agencies best meet the needs of their individual communities.”

“Everywhere I travel in our state, I hear from Alaskans reeling from the scarcity of housing. It’s a challenge that afflicts rural and urban communities, low and middle-income families, and stands as an obstacle to greater economic opportunity,” said Sullivan. “Solving this challenge is a top priority for me, and it will take multifaceted solutions with everyone pulling on the same oar. On the federal level, my colleagues and I are introducing the Workforce Housing Tax Credit Act to broaden a tried-and-true federal tax incentive program—the low income housing tax credit. This will catalyze the private sector to build more housing in urban and rural areas for working families—teachers, law enforcement, first responders, nurses—the backbone of so many communities. Expanding LIHTC will help address the core issue of homelessness and overcrowding in Alaska and empower hard-working Alaskans to stay in our communities and build a more robust workforce.”

“In the 19th Congressional District, there are many working families who earn living wages but make too much to qualify for low-income housing and too little to afford to buy a home in this area,” said Panetta.  “Our bipartisan, bicameral Workforce Housing Tax Credit Act would address that gap by incentivizing investment in the development of middle-income housing for middle income families.  This legislation would help ensure that middle-income working families spend time in our communities rather than spend time in their commute and that people who work here, can afford to live here, and call California’s 19th Congressional District home.”

“Too many Americans are in the difficult position of making too much money to qualify for housing tax credits, but not enough money to afford to live where they work,” said Carey. “Our legislation seeks to bridge the gap by creating a new housing tax credit for middle-class families. A strong middle class means a strong America, and that starts in the home.”

Highlights of the Workforce Housing Tax Credit Act include:

  • Similar to LIHTC, state housing finance agencies 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. For 2024, the allocation would be $1 per capita with a $1.5 million small state minimum. An additional 5% of the allocation is 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 can 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.

  • The effective date for this provision is buildings placed in service after 2023, in taxable years after 2023.

“More and more Americans are finding themselves struggling to make rent or find housing in the communities where they work. Teachers, nurses, and fire fighters often find themselves priced out of living in the communities they serve,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home developer from Birmingham, Ala. “The Workforce Housing Tax Credit Act would provide states and developers with a new source of funding to produce affordable rental housing serving workers earning up to 100% of the Area Median Income.  This is exactly the type of solution we need Congress to enact in order to begin solving the housing affordability crisis.”

“It is no secret that the nation faces a severe affordable housing shortage. Senator Wyden has led the charge to address this crisis through his efforts to secure and expand the Low-Income Housing Tax Credit. Now, along with Senator Sullivan in the Senate and Congressmen Panetta and Carey in the House, these leaders are expanding on those efforts with the introduction of the Middle-Income Housing Tax Credit,” stated David Gasson, Executive Director of the Housing Advisory Group. “As the LIHTC does for families, seniors and veterans, the MIHTC will address the vital need for housing of our workforce and those not able to afford market rate housing. We are very appreciative of these housing champions and their efforts to address the nation’s housing crisis.”

“NMHC and NAA strongly support the introduction of the Workforce Housing Tax Credit Act by Senators Wyden and Sullivan and Representatives Panetta and Carey. The Workforce Housing Tax Credit would complement the widely successful Low-Income Housing Tax Credit (LIHTC) by supporting moderate income households that are also facing rising housing costs. It would help expand the supply of housing available in communities across the country which, in turn, will help create more housing affordability,” said National Multifamily Housing Council (NMHC) President Sharon Wilson Géno and National Apartment Association (NAA) President and Chief Executive Officer Robert Pinnegar.

A one-page summary of the Workforce Housing Tax Credit Act can be found here.

Legislative text can be found here.