Lawmakers advance governor’s affordable housing incentives package

Iowa Gov. Kim Reynolds’ broad proposal to improve affordable housing advanced in the Iowa Senate with strong support Thursday. 

Representatives of development companies and local governments praised 29-page Senate Study Bill 1142. They said the mixture of tax credits and other support is critical to the state’s future. 

“Helping people find affordable housing was a priority even before the pandemic and since then it’s gotten worse,” said Tom Chapman, executive director of the Iowa Catholic Conference. “We have data that shows when people have high housing costs, it causes their need for food assistance, for example, to go up as well. So the things that we do in this bill to help on the housing side will be very helpful.”

The bill offers disaster housing assistance, housing tax credits, added workforce housing incentives, loan guarantees for downtown revitalization projects, eviction prevention assistance and disaster housing recovery assistance.

A Senate subcommittee on Thursday voted to send the bill to the full Senate Local Government Committee.

In one part of the proposal, Reynolds seeks $50 million in workforce housing tax credits annually for three years, with $20 million reserved for small cities. Another section doubles the amount of money the Iowa Economic Development Authority can use for brownfields development, to $20 million a year. Brownfields typically are polluted, vacant sites where various businesses operated previously. 

Reynolds: Iowa needs 47,000 new homes

Reynolds has noted some economists project Iowa will need to add 47,000 housing units by 2030. Forty percent of the state’s housing was built before 1950, she adds. 

To address that, Reynolds proposed: 

— Doubling the Workforce Housing Tax Credit, to $50 million. The program has a $13.3 million backlog of projects seeing assistance. 

— Establishing an Iowa Housing Tax Credit program offering $15 million in credits a year and aimed at developing 3,750 new rental homes for low-income families by 2030.

— Doubling the Redevelopment Tax Credits for vacant or underused properties to $20 million and extend the program to 2031.

— Creating a Disaster Recovery Housing Assistance program.

— Establishing a Main Street Loan Guarantee Program for eligible downtown revitalization projects. 

— Allowing larger transfers from the real estate transfer tax to the State Housing Trust Fund.

“This bill is really put together to target housing across the spectrum to make sure we are filling those niche needs,” Reynolds aide Logan Shine told a Senate subcommittee Thursday. “As the governor travels the state, almost every staff member, almost every business owner, says we need housing if we expect Iowa to grow. We need places for them to live that they can really afford and we really encourage you to support this bill.”

Business organizations and housing advocates for years have made improving the state’s housing stock, especially at the low and moderate price levels, a top priority to attract workers to Iowa, and to encourage graduates to stay here. 

The subcommittee meeting came one day after Iowa Business Council Executive Director Joe Murphy said Iowa’s stagnant population and the tight workforce that comes with it is “bordering on a crisis.”

Lobbyists: Iowa could get more housing with different tax credits  

Several speakers, including developers from Wisconsin and Colorado represented by former state representative Christopher Rants, said the form of tax credits Iowa is envisioning is different than in most states. If Reynolds changed the type of tax credits involved, the state could gain 20% more spending power for the programs by reducing tax payments by developers, they said.

Jon Murphy of the Iowa Housing Trust Funds Advocate Network said the number of housing trusts in Iowa has doubled to 27 since 2008, when the state started allocating $3 million a year. The bill would allow that to increase with transfer from the real estate transfer tax. 

Matt Eide, lobbyist for Weinberg Investments Inc., encouraged lawmakers to consider expanding the bill to also allow qualifying developers to use the money to remodel existing units that don’t meet code.

ABI: Rural Iowa especially needs housing help

The Iowa Association of Business Industry spoke in favor of the bill. “We think this bill is especially important for rural Iowa,” said ABI lobbyist Brad Hartkopf. “Often jobs are available out there but because of the lack of workforce housing, employees can’t just get out there and take those jobs because they don’t have homes to go to.”

Lisa Houser, executive director of Habitat for Humanity, asked lawmakers to expand the bill to include stronger incentives for home ownership. “This bill does a lot for developers and for renters,” Houser said. “We do believe that it could be a bit more comprehensive if more was focused on home ownership — not to take out any of the other sections.”

The subcommittee of Republicans Mark Lofgren of Muscatine and Mike Klimesh of Spillville and  Democrat Todd Taylor of Cedar Rapids unanimously advanced the bill.