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Desperate for affordable housing, some cities sweeten tax breaks for developers

Robbie Sequeira, Stateline.org on

Published in News & Features

A spokesperson from Columbus’ Department of Development told Stateline that housing building permits are projected to be down 10% from last year. But officials expect the expanded tax incentive to accelerate affordable housing in all areas of the city — including in historically underinvested areas.

An hour and thirty minutes away in Cincinnati, an ordinance passed by the city council last month allows affordable housing developments funded by public-private partnerships there to get an automatic property tax exemption without council approval, streamlining the building process.

In their bid to spur more affordable housing, cities also are trying to boost the post-pandemic trend of downtown office-to-housing conversions.

In 2022, D.C. expanded tax breaks for developers converting downtown offices into housing, with tax exemptions for up to 20 years if they meet affordability requirements.

Boston Mayor Michelle Wu, a Democrat, last year also announced a public-private partnership that expands tax breaks for conversions to housing. Developers must reserve at least 20% of their new units as affordable, with some space for federal voucher holders as well.

Chicago and Pittsburgh have put similar tax deals in place in the past two years, with affordable housing stipulations attached.

 

Washington state legislators recently held a hearing on proposed legislation to offer affordable housing tax incentives for conversions statewide.

Washington state Sen. Yasmin Trudeau, a Democrat who represents Tacoma and who sponsored the measure, said her bill is a quick approach to address Seattle’s need for more housing, which is estimated at 1 million new units over the next 20 years.

Trudeau is optimistic about the bill’s chance of success this legislative cycle, as it passed a Senate committee in January. But some aspects of her legislative package didn’t advance, including a tax incentive for converting market-rate apartments to affordable units, as well other legislative levers to maintain affordability.

“There’s a larger conversation we’re not having about ways to maintain affordability, such as rent stabilization or transit-oriented development, which are built-in affordability measures,” she said.

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