On February 21, the Indiana Senate Tax and Fiscal Policy Committee proposed language that would include the value of Low Income Housing Tax Credits when assessing the overall value of affordable housing developments for tax purposes. The Indiana Association for Community and Economic Development (IACED), an NLIHC state partner, opposes the measure because the higher taxes would threaten the financial stability of affordable housing and place low income residents at risk of homelessness.
IACED Executive Director Andy Fraizer and IACED members testified in opposition to the provision before the House Ways and Means Committee. At the hearing, advocates reminded legislators that a 2004 law clarified that the value of federal housing tax credits should be excluded from property tax assessments. Prior to the 2004 law, numerous assessment appeals and lawsuits had been filed, creating uncertainty among affordable housing investors. Advocates cautioned that another change in state law would mean renewed uncertainty and legal action, jeopardizing millions of dollars of investment across the state.
Advocates point out that the legislation would make the state less competitive for scarce financing opportunities, compounding the provision’s negative impact on affordable housing. Additionally, the bill’s opponents said that thousands of jobs related to housing preservation and development would be lost at a time when the state’s unemployment rate remains high. “Financing for affordable housing is difficult to find for everyone, but the need is particularly acute in the Midwest,” said Mr. Fraizer. “A reversal in state law on how affordable properties are taxed would only exacerbate this situation.”
Advocates presented the committee with a sign-on letter expressing opposition from more than 50 organizations. In response to these efforts, Senator Greg Walker (R), a member of the Senate Tax and Fiscal Policy Committee, offered an amendment removing the language and directing a legislative interim study commission to investigate and propose changes. On February 28, Senator Walker's amendment passed unanimously on the Senate floor. The amended bill passed the full Senate the next day by a vote of 47-3. The conference committee is scheduled to begin meeting in the coming days. IACED will continue monitor the situation and engage with the conference committee as needed.
“By changing the calculation of property taxes on these units of affordable housing, properties are put at the risk of foreclosure and countless Hoosiers at risk of homelessness,” said Mr. Fraizer. “Reversing course on an issue that was settled by the state relatively recently would be a mistake and will discourage investors from bringing resources into our state at a time when we need them the most. We are thankful for the leadership of Sen. Walker and the support of his colleagues, and are hopeful that our work to protect affordable housing will be affirmed by the conference committee shortly.”
For more information, contact Andy Fraiser at firstname.lastname@example.org.