Several
states
have
passed
laws
to
address
housing
affordability,
and
as
the
November
midterm
elections
approach,
more
are
following
suit.

Georgia
state
legislators,
however,
are
taking
a
different
approach
that
has
frustrated
developers
focused
on
housing
for
low-income
earners.
The
Peach
State’s
Senate
passed
a
bill
Thursday
that
would
cut
state-issued
low-income
housing
tax
credits
by
50%
next
year
and
eliminate
them
in
five
years.

The
bill’s
sponsors
would
use
the
cuts
as
an
offset
to
push
through
lower
personal
and
corporate
tax
rates.

Lowering
the
tax
credit
next
year
would
put
owners
of
tax-credit
subsidized
low-income
properties
at
high
risk
of
foreclosure.
Those
owner-developers
say
the
risk
would
cause
a
cascading
national
effect.

“[If]
I
get
barred
in
Georgia,
then
I
can’t
do
business
in
the
other
49
states,”
Ken
Blankenship,
president
of
the

Georgia
Affordable
Housing
Coalition,
told

The
Builder’s
Daily.

If
the
bill
becomes
law,
developers
will
lose
a
key
capital
stack
financing
mechanism,
potentially
limiting
affordable
housing
production
amid
an
estimated
shortfall
of
more
than
200,000
units.
The
change
could
also
impose
another
financial
burden
on
Georgia’s
affordable
housing
developers,
who
are
already
contending
with
property
valuations
that
don’t
pencil
with
their
financing
models.

No
other
state
is
considering
lowering
or
eliminating
state-offered
LIHTC
in
the
new
year.
Kansas
enacted
a
law
last
year
that
cut
the
state’s
available
credits
by
more
than
50%
through
2028,
when
the
program
will
sunset.

Lawmakers
created
the
program
in
2022
to
address
a
need
for
3,800
to
5,000
new
homes
annually.
However,
lawmakers
last
year
did
not
like
estimates
showing
the
state
could
lose
nearly
$1
billion
in
future
tax
revenue
because
of
the
tax
credits.

Impact
of
Georgia’s
LIHTC
on
affordable
housing

Georgia
created
the
state
credit
in
2001
to
match
the
federal
low-income
housing
tax
credits
a
developer
obtains.
It
is
the
only
state
source
for
building
and
preserving
affordable
housing
in
Georgia.

The
credit
has
helped
create
more
than
123,000
affordable
housing
units
since
2001,
according
to
the
Georgia
Affordable
Housing
Coalition.

Nonprofit
organization
Georgia
Advancing
Communities
Together
wrote
in
a
social
media

post
that
the
credit
helped
create
or
preserve
34,731
homes
from
2021
through
last
year.
More
than
60%
of
the
development
has
happened
outside
the
Atlanta
metropolitan
area.
A
third
of
that
development
occurred
in
rural
areas.

In
2022,
a
University
of
Georgia

study
conducted
for
the
coalition
found
$5.79
of
economic
impact
created
for
every
net
$1
in
lost
state
income
tax
because
of
the
tax
credit.

“If
LIHTC
were
eliminated,
Georgia
could
lose
nearly
4,300
jobs
per
year,”
according
to
the
study.

Potentially
compounding
a
financial
problem

Losing
the
tax
credit
would
compound
a
property
valuation
challenge
that
has
grown
problematic
over
the
past
two
decades.
Despite
Georgia
Supreme
Court
rulings,
numerous
counties
across
the
state
treat
the
low-income
housing
tax
credit
as
income.

“You
can’t
tax
what’s
built
at
a
rate
that
is
not
fair
to
the
owner,”
Blankenship
said.
“If
the
state
credit
thing
gets
worked
out,
you’re
still
driving
developers
away
from
certain
areas
that
need
it
the
most.”

The
problem
started
with
Lowndes
County
in
South
Georgia
when
county
officials
chose
to
include
credits
as
income
about
20
years
ago.
The
method
spread
to
other
counties.
According
to
the
coalition,
one
county’s
tax
bill
for
an
affordable
property
now
exceeds
its
revenue
by
200%.

State
lawmakers
passed
a
bill
in
2017
that
included
language
that
tax
assessors
could
not
count
the
credits
as
income
unless
they
could
prove
otherwise.
The
language
presented
a
gray
area
for
counties
to
exploit.

Property
owners
sued
Lowndes
County,
which
tried
to
argue
that
the
bill
was
unconstitutional.
The
state
Supreme
Court
ruled
in
2019
that
the
credits
were
not
income.
The
court
reaffirmed
the
decision
last
year
in
a
separate
lawsuit.
The
decision
has
not
deterred
the
overvaluations
from
continuing,
Blankenship
said.

He
said
the
coalition
wants
to
revive
a
constitutional
amendment
this
year
that
would
treat
affordable
housing
properties,
dubbed
Section
42
under
the
federal
LIHTC
program,
as
a
separate
property
class
for
valuation.
An
effort
two
years
ago
never
made
it
to
the
House
floor
for
a
vote.

Many
states
have
statutes
that
treat
Section
42
as
a
separate
property
class.
They
also
tend
to
exclude
the
credits
in
the
valuation
process.
A
smaller
number
of
states
include
the
credits
in
valuing
property.

Politics
in
play

Blankenship
is
not
confident,
however,
that
they
will
succeed
in
finding
a
lawmaker
to
introduce
the
amendment
this
year
in
the
current
environment.

Republican
Lt.
Gov.
Burt
Jones
is
a
key
player
backing
the
legislation.
Jones
is
running
for
governor
to
replace
Gov.
Brian
Kemp,
who
is
term-limited.
He
has
made
cutting
personal
and
corporate
income
tax
rates
a
major
part
of
his
campaign.
Republican
Sen.
Blake
Tillery
sponsored
the
bill
and
is
running
for
the
seat
Jones
currently
holds.

“They’re
all
supporting
a
reduction
of
the
state
low-income
housing
tax
credit,
which
would
reduce
the
amount
of
affordable
units
in
the
state
that
are
available
for
working
Georgians,”
Blankenship
said.

The
bill
passed
32-18
along
party
lines.
Lawmakers
formally
introduced
it
three
days
before
the
vote.

“The
Senate
is
leading
the
effort
to
continue
making
significant
cuts
to
our
income
taxes,
while
maintaining
the
fiscal
soundness
of
our
state,”
Jones
said
in
a
statement
after
the
bill
passed.

Affordable
housing
advocates
expect
the
bill
to
receive
a
frosty
reception
in
the
Georgia
House.
Lawmakers
failed
to
scale
back
the
credit
in
2024.
The
Senate
pushed
for
a
50%
cut,
as
it
did
on
Thursday.
Affordable
housing
advocates
fought
it.
The
House
made
changes,
and
the
bill
died
in
the
Senate.

Housing
advocates
hope
they
can
kill
the
tax
credit
portion
of
the
latest
bill.