Ohio is facing an affordable housing crisis, but may soon see some legislative relief.
State Rep. Gail Pavliga, of Suffield, and state Rep. Jim Hoops have co-sponsored a bill, HB560, with the intention of combating the inadequate supply of reasonably priced rental housing.
According to a 2020 report titled The Gap: A Shortage of Affordable Rental Homes, released by the Coalition on Homelessness and Housing in Ohio, and the National Low Income Housing Coalition, more than 400,000 households in Ohio are spending more than half of their income on rent.
In Portage County alone, thousands of people face the dire reality of being unable to afford a place to live.
Pamela Nation Calhoun, executive director of the Portage County Metropolitan Housing Authority, said that the number of applicants for Section 8 and public housing has continued to increase this year.
"Right now we have 2,807 applicants on the Section 8 waiting list," Calhoun said. "But as of the first day of the year, we had 2,129."
The public housing waiting list has similarly lengthened from 1,651 in December 2021, to 1,954 applicants as of June 2.
HB 560 would annually award up to $50 million in nonrefundable tax credits over the course of 10 years to firms building new affordable housing, or rehabilitating existing buildings to serve as shelter for low- income families. Without reauthorization, the program would sunset after six years.
"We can use these affordable housing units for senior citizens...for workers that are making a lower income, and also for recovery housing," Pavliga said. "We could really utilize that in any way the community would want to choose to do so."
In order to qualify, approved in-state developers would have to pair with an investor willing to take the risk.
"That's the beauty of this," Pavliga said. "It's a free enterprise type thing with very little government intervention." The bill would bring together private investors and capital to work for the good of people in need, she said.
The incentives are performance based. Developers won't receive the tax credit until the units are built and occupied.
The proposed legislation is designed to build on the successes of a similar federal project, the Low Income Housing Tax Credit. The Ohio Housing Finance Agency would administer the new program as it does with the LIHTC.
Last month, Pavliga and Hoops testified to the Families, Aging, and Human Services Committee about the bill's potential impact on Ohio's housing crisis.
"Each year, Ohio is allocated about $120 million of federal bond volume cap for multifamily development," Hoops said. "Unfortunately, due to a lack of private sector investment in Ohio, much of this federal allocation has gone unused in our state since 2015. Said another way, Ohio is leaving money on the table and some of our constituents out in the cold."
Pavliga cited a study on the possible economic impact of the bill conducted by Elliott D. Pollack & Co., an economic and real estate consulting firm based in Scottsdale, Arizona, and former director of the Ohio Office of Budget and Management Greg Browning. According to their findings, HB 560 would encourage the development of 2,300 additional rental housing units every year during the tax credit's lifespan.
Pavliga said the study indicates that 34,000 new construction jobs would be created by the bill's passage.
The tax credit would have a total economic impact of $11.4 billion, including $1.7 billion generated in tax revenue to state, county, and local governments over the affordable units lifetime.
During a second hearing on May 26, proponents of the bill testified before the committee, answering questions and hashing out some of the finer points of the legislation.
Chris Hite, president of Sugar Creek Capital, a Missouri based firm that owns, manages, and invests in affordable housing that utilizes low-income tax credits, said that the income threshold for people applying to live in the housing developed under HB560 would vary depending on the county.
"About $30,000 to $40,000 would be your upper limit, depending on where you live in Ohio," Hite said. "If your county's a higher income county, it's going to be higher."
Representative and committee chair Susan Manchester asked Hite if upward mobility would disqualify people from their low-income housing after they're already living there.
"Good news — maybe bad news, depending on your policy bent," Hite said, "but you can win the lottery and still keep your unit."
Following the hearing, Pavliga talked about some of the things that she liked about the bill.
"What I like about it is it wasn't a federal handout. Therefore, companies have to get together...It's two-pronged: you have to get an approved developer within the state that will either renovate or do new builds, and then get an investor," she said. "So, the investor takes the risk, not the government. This program is just to really incentivize affordable housing "
Calhoun is optimistic about the effects HB560 will have, should it become law. She said that from what she's seen, state affordable housing tax credits have been effective in the 22 other states that have implemented them.
"Based upon the research that I've found there, and what I've seen from those states that have already implemented [the program], housing production has increased," Calhoun says. "Particularly affordable housing production has increased greatly in these states. I'm hopeful that some of that development will take place in our community."