From the Field: Nebraska Establishes Rural Workforce Housing Investment Fund

Nebraska Governor Pete Ricketts (R) joined legislators in creating the Rural Workforce Housing Investment Fund when he signed Legislative Bill 518 (LB 518) on April 27. The $7.3 million initial distribution of grants through the fund is a transfer from the Nebraska Affordable Housing Trust Fund (NAHTF) and as such is not an increased investment in housing. The Rural Workforce Housing Investment Fund was created as a response to growing concerns from rural Nebraska communities claiming they cannot attract a skilled, robust workforce and therefore lose out on potential economic development.  LB 518 passed by a unanimous 49-0 vote in Nebraska’s legislature. The bill was supported by Nebraska Housing Developers Association, an NLIHC state partner.

The new Rural Workforce Housing Investment Fund will provide grants to support new construction or rehabilitation of rental or owner-occupied housing in rural communities that can demonstrate a compelling need through a housing needs study. Grants are available only to nonprofit development organizations, and all grants must be supported by a 1:1 match from local governments or other contributors. All potential projects will be evaluated for feasibility, with recipients of funds needing to show that their projects will be ready for occupancy within 24 months of the award. The Rural Workforce Housing Investment Fund is not meant to be a source of subsidy layering for developers: the funds cannot be used in conjunction with HOME, Community Development Block Grant, Low Income Housing Tax Credit, or NAHTF grants.

The Department of Economic Development will administer the Rural Workforce Housing Investment Fund and will produce additional rules for the program. LB 518 does not specify any affordability targets or requirements, but the NAHTF requires affordability levels no higher than 120% of area median income (AMI). Advocates will work to ensure that money transferred out of the NAHTF will maintain the same affordability requirements.

In addition to the $7.3 million taken from the NAHTF to fund rural workforce housing, the legislature reallocated $2.25 million from the NAHTF to the state’s general fund in each year of the biennial budget. The overall reduction in NAHTF funding stands at $11.8 million. One reason the NAHTF was targeted as a funding source was an accounting problem that until recently under-counted the amount of funding available. The error amounted to $10.3 million more available in the NAHTF than originally thought, making it a target for legislators working toward a balanced budget.

Nebraska Housing Developers Association Executive Director Sara Tichota celebrates the new resource for rural housing development saying, “Rural workforce housing has long been an urgent problem for Nebraskans, and I am glad we are now providing a new tool that will unlock economic development in many smaller communities.”

For more information about the “Rural Workforce Housing Investment Act” and efforts to protect the Nebraska Affordable Housing Trust Fund, contact Sara Tichota at [email protected].