A federal bill that would increase affordable homeownership opportunities in distressed communities is coming back into the spotlight as a Connecticut lawmaker works to gain its approval.
Rep. John Larson reintroduced the Neighborhood Homes Investment Act. It was first introduced in 2023, and previously received bipartisan support.
“The Neighborhood Homes Investment Act will tackle our housing crisis by incentivizing the construction of new homes and the revitalization of vacant homes in need of repair,” Larson said. “We will continue to work together to spur the development of good, quality housing in the Northeast and across the country, and make homeownership a reality for more of our nation’s families.”
The bill would extend a tax credit to certain developers, which would incentivize them to build or rehabilitate affordable homes in communities with high poverty rates and low homeownership.
The tax credit would cover up to 40% of the costs to build a new home for sale. It would also cover up to 50% of the costs for rehabilitating owner-occupied homes. In Connecticut, the funds would be dispersed by the quasi-public Connecticut Housing Finance Authority.
It would provide the gap financing certain developers would need to take on affordable homeownership projects, according to Matt Josephs, senior vice president for policy at the Local Initiatives Support Corporation (LISC).
“The cost to develop or rehabilitate a home is more than you can get for the sale price,” Josephs said. “So there's no incentive to do these homes, so the homes cannot get built in these communities. The idea is that you have a tax credit that would cover that gap.”
If approved, communities across Connecticut would benefit from the bill, according to Jim Horan, senior executive director of Local Initiatives Support Corporation’s Connecticut office.
“We look at the blight in Hartford and the high cost of both rehabbing the older housing stock that we have and the high cost of new construction, which is astronomical compared to what the market will sell,” Horan said.
Areas of Hartford, New Haven and Bridgeport are among several across the state that would qualify for the program.
The bill would incentivize production and rehabilitation of more than 500,000 affordable homes for sale in qualifying communities over the course of ten years.
Homes with up to four units would also qualify for the tax credit, however, the homeowner must live in one of the units.
To ensure the homes stay affordable, the sales price of a new home can’t exceed four times the average family income for the area.
While the bill is co-sponsored with bipartisan support, it may be several months before Congress votes on the proposal, according to Josephs.
“Many moving parts right now, but the goal is to make sure that this gets in an initial draft out of the House or the Senate in the coming months,” Josephs said.
A local version of the Neighborhood Homes Investment Act was created in Hartford, where Mayor Arunan Arulampalam cited the bill as inspiration for a program rehabilitating Hartford homes for affordable ownership.
“We need to build a stock of housing for our residents to own, to be able to cut off that cycle of consistent reliance on rental housing in this city, consistent reliance on out-of-state landlords,” Arulampalam said. “And to be able to allow families to build generational wealth for themselves and pass it on to their kids.”
