The Housing Alliance of Pennsylvania, an NLIHC state partner, and its members successfully advocated for the passage of Senate Bill 30, “The Pennsylvania Housing Tax Credit Act” (Act 107 of 2020). Act 107 will create the Pennsylvania Low Income Housing Tax Credit (LIHTC) program, which will be mirrored after the federal LIHTC program. The legislation, sponsored by Senator Tom Killion (R), passed the General Assembly and the Senate with strong bi-partisan support. Additional legislation will be needed to authorize the allocation of the tax credits. Pennsylvania is now the seventeenth state in the U.S. with a state housing tax credit program.
“We advocated for the State Housing Tax Credit because it stimulates private investment in affordable housing – which will help in the economic recovery after the COVID 19 pandemic by creating jobs and helping to meet the need for more affordable housing.” said Phyllis Chamberlain, executive director of the Housing Alliance.
An economic impact brief published by the Housing Alliance in 2019 shows that every $10 million invested in affordable housing construction in Pennsylvania will generate $19.6 million in total economic impact and support 110 jobs.
The federal LIHTC program allocates tax credits to the states which developers then use to raise money for the construction of affordable rental housing. In exchange for receiving the tax credits, developers agree to keep rents affordable in a set number of apartments for 15-30 years. The federal program has been the main vehicle for financially supporting the construction of affordable housing for the last 34 years and is responsible for approximately 90% of affordable rental housing construction and renovations in the country.
The federal LIHTC program is very competitive in Pennsylvania, with just one out of every three applications getting funded each year. Advocates referred to this demand when making the case for the state LIHTC program. The large number of federal LIHTC applicants shows that there would be additional private capital available for affordable housing opportunities if another affordable housing tax credit program were created.
“I cannot emphasize enough how much a state tax credit program is needed to deliver affordable housing in Pennsylvania,” said Pennsylvania Housing Finance Agency (PFHA) Executive Director and CEO Robin Wiessmann. “Whenever we allocate federal tax credits, the demand always far exceeds the supply of tax credits we have available. At a time when a growing number of Pennsylvanians have to spend too much for stable housing, these state tax credits will be greatly appreciated.”
The PFHA will administer the state tax credit and are in the process of establishing guidelines and procedures that are similar to those for the federal LIHTC program. Although funding was not allocated to the program this year, it can quickly get off the ground as soon as funding becomes available.
For more information, contact Gale Schwartz, associate director for policy and strategic initiatives at the Housing Alliance of Pennsylvania, at [email protected].