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

Robbie Sequeira, Stateline.org on

Published in News & Features

‘Double-edged sword’

Tax abatement deals might not always live up to expectations, according to David Dworkin, president and CEO of the National Housing Conference, a Washington, D.C.-based affordable housing advocacy group.

“I think tax abatement is a double-edged sword. If you have it, you can create fairly significant incentives to create and maintain, to create and preserve affordable housing where you don’t have it,” said Dworkin.

However, he said, new construction can displace current residents with low incomes, and oversight is needed to ensure that developers follow through on promises of affordable units.

In a review of New York’s affordable housing tax incentives, the Fiscal Policy Institute, a nonpartisan think tank, suggests increased abatements hurt cities by removing their primary source of revenue, handicapping them to handle other costs associated with rising populations and burdening school districts.

Meanwhile, some states are seeing conflicts between legislative action and local goals.

In Florida, for instance, a law passed with bipartisan support last year, the Live Local Act, offers developers sweeping tax breaks in exchange for building affordable units for people making up to 120% of the area median income. Developers that participate also can override local zoning rules to build in commercial and industrial areas.

Developers have rushed to take part, according to The Wall Street Journal.

 

But Pasco County, on Florida’s west coast, is aiming to change the law, arguing that the cutoff for affordable housing should be at 80% of median income to help more families in need.

The law puts local governments in a financial bind, county officials say. In Pasco’s case, commissioners had made plans for their industrial zones and are trying to lure more employers — not residents — to the suburban bedroom county outside of the Tampa-St. Petersburg area.

The Pasco County Attorney’s Office told Stateline in an email that the Live Local Act “forces the county to make these sacrifices for housing” with no guarantee of homes that will be affordable to residents.

In various meetings on the issues, Pasco County administrators have discussed imposing a moratorium on all multifamily development if no change is made to the law.

Other states have sought to rein in local tax breaks.

This year, a Republican bill in the Arizona legislature would halve the period a property can receive tax breaks from eight years to four.

Last year, Texas lawmakers approved a revision to how tax breaks are used for affordable housing. The law closes loopholes that allowed some properties to be tax- exempt for years and requires regular audits for future tax deals.


©2024 States Newsroom. Visit at stateline.org. Distributed by Tribune Content Agency, LLC.

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