Whitehouse’s Affordable Housing Construction Act would expand the supply of housing financed by the Low-Income Housing Tax Credit
Washington, DC – U.S. Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Budget Committee, today introduced the Affordable Housing Construction Act, new legislation to address the housing affordability crisis that’s squeezing Rhode Island families. Whitehouse’s bill would more than triple the size of the Low-Income Housing Tax Credit (LIHTC) and would provide additional funding for sustainable, accessible, and energy-efficient housing developments. The bill would also loosen financing requirements and extend the required length of time that the housing must remain affordable from 30 years to 50 years. Senator Jack Reed (D-RI) is a cosponsor of the legislation.
“Rhode Island families, who have gotten squeezed by skyrocketing rents in recent years, are among the hardest hit by the nationwide affordable housing supply crunch. My legislation is aimed at bringing down rents by increasing the supply of affordable rental homes in the Ocean State,” said Senator Whitehouse. “In combination with my proposal to create a refundable first-time homebuyer tax credit, we can help ensure more Rhode Islanders have a safe, stable place to call home and a solid foothold in the middle class.”
Whitehouse will discuss the new legislation at tomorrow morning’s Senate Budget Committee hearing entitled, “The Costs of Inaction: Economic Risks from Housing Unaffordability.” Rhode Island House Speaker K. Joseph Shekarchi will testify at tomorrow’s hearing.
“I was thrilled to be invited to testify in Washington at Senator Sheldon Whitehouse’s request, and I whole-heartedly support his proposed legislation to significantly increase the Low Income Housing Tax Credit,” said Speaker Shekarchi. “The tax credits provided by LIHTCs can make the difference between building and not building a development, and Rhode Island – like almost every state in the nation – is in the midst of a severe housing shortage. In tackling our housing crisis, we need to look at every possible tool at our disposal, and LIHTCs are a proven means of attracting investments in affordable housing. I sincerely thank Senator Whitehouse, as well as Senator Jack Reed, who is another strong advocate for affordable housing and supports this legislation, for creating innovative solutions to address this pressing issue.”
In Rhode Island, there are currently no communities where families earning the state’s median income can afford to buy a typical home, and there is only one municipality in the state where a family making the median income can affordably rent an average-priced two-bedroom apartment. The greater Providence area experienced a 7.5 percent rent increase in 2023 – the largest year over year increase in the country.
The Affordable Housing Construction Act would result in up to an additional $71 million annually for affordable housing development in Rhode Island—creating hundreds of additional affordable units in the state each year, according to an analysis by RI Housing.
Nationwide, the shortage of affordable housing costs the American economy an estimated $2 trillion each year. The United States is facing a shortage of an estimated 7.3 million rental homes, and development has been unable to keep up with rising demand. High housing costs reduce disposable income and economic mobility, stifling economic opportunities for those who can no longer afford housing in their communities. Investing in creating housing stock would provide relief to millions of Americans and drive economic growth.
Senator Whitehouse’s Affordable Housing Construction Act would combat homelessness and decrease the cost of rent for lower-income Americans by significantly expanding the nation’s supply of housing financed under the LIHTC program. LIHTC is the nation’s most important federal program for affordable housing construction. The credit has financed the construction of 3.5 million housing units since its creation in 1986 and produces an average of 115,000 affordable rental units annually. However, the credit is oversubscribed, with too many eligible projects competing for too few funds.
The Affordable Housing Construction Act specifically would:
- Make permanent the temporary 12.5% boost to LIHTC;
- Triple the LIHTC state allocation of $2.90 per capita to $9.79 and triple the small state minimum from $3.36 million to $11.34 million beginning in 2025;
- Set aside one-third of each state allocation for boosts to projects that meet special requirements, such as paying a prevailing wage, using renewable energy sources, proximity to public transportation, providing accessible units, or allocating at least 20 percent of the units for extremely low-income renters;
- Lower the private activity bond threshold for the rehabilitation credit from 50% to 15%; and
- Extend the required affordability period for LIHTC buildings from 30 to 50 years.
“Similar to many states, Rhode Island is experiencing a housing crisis that is decades in the making due to low housing production rates. Low supply has led to soaring housing costs, burdening many Rhode Islanders and putting homeownership out of reach for too many families. Senator Whitehouse’s proposed Affordable Housing Construction Act would provide new resources that are needed to spur the development of affordable housing that would meet the needs of Rhode Islanders,” said Dan Connors, Interim Secretary of the Rhode Island Department of Housing.
“Historically the Low-Income Housing Tax Credit program has been the primary driver of the creation of thousands of affordable rental homes in Rhode Island. Rhode Island has benefitted from the guaranteed small state minimum but each year the program has been heavily oversubscribed, meaning there are more developments seeking to utilize the funds, than there are funds available. Without access to the substantial capital that the LIHTC program brings to the transaction, hundreds of desperately needed affordable rental homes cannot be built. The expansion of the small state minimum proposed in the Affordable Housing Construction Act would be monumental for Rhode Islanders, allowing more rental homes to be developed for extremely and very low-income households. The Housing Network of Rhode Island and its members thank Senator Whitehouse for his recognition of the importance that the LIHTC program plays in our state, and taking proactive measures to ensure that more resources are made available to aid in efforts to address our state’s urgent housing crisis,” said Melina Lodge, Executive Director of the Housing Network of RI.
“The economic stability of Rhode Island’s workforce is badly stressed by housing costs. The National Low Income Housing Coalition’s 2024 Out of Reach Report has increased the state’s hourly ‘housing wage’ to $33.20, which is the 12th highest nationally. This is the highest ranking for the state since we were on the brink of the foreclosure crisis in 2007-2008. Of the top 20 occupations considered by Rhode Island’s Department of Labor and Training in the ‘Fastest Growing Occupations, 2020-2030 Projections,’ 92 percent (108,828) of these nearly 119,000 jobs do not pay this housing wage. In reality, affordably renting and buying in Rhode Island require hourly wages of $36.29 and $69.08 respectively,” said Brenda Clement, Executive Director of HousingWorks RI. “Improving and expanding important federal resources like the LIHTC are critical to help our state to build more housing (particularly rental homes) that are affordable for Rhode Islanders. We thank Senator Whitehouse and our congressional delegation for their strong leadership on housing.”
“The Rhode Island Coalition to End Homelessness is proud to endorse Senator Whitehouse’s Affordable Housing Construction Act that will help those struggling to provide a roof over their heads each night. More than 56 percent of extremely low-income renter households in Rhode Island are severely cost burdened, according to the National Low Income Housing Coalition’s Out of Reach Report. The measures outlined in this Act will impact availability of affordable units and will address wage gaps for Rhode Islanders who are cost burdened,” said a spokesperson for the Rhode Island Coalition to End Homelessness.
“By expanding the Low-Income Housing Tax Credit – a program with a proven track record as a powerful resource for the development of affordable housing – the Affordable Housing Construction Act would offer even more resources to help ease the housing challenges that too many Rhode Islanders are experiencing. The Rhode Island Association of Realtors is proud to support this proposed legislation that could greatly reinforce our state’s efforts to combat Rhode Island’s critical housing shortage,” said Sally Hersey, President of the Rhode Island Association of Realtors.
“The National Association of Realtors® supports the Affordable Housing Construction Act as a crucial step in addressing the urgent housing affordability crisis. With skyrocketing home and rent prices, expanding the Low-Income Housing Tax Credit is essential for increasing the supply of affordable homes. This legislation has the potential to help alleviate the financial strain on American households and foster stronger, more sustainable communities across the nation,” said a spokesperson from the National Association of Realtors.
The legislation was endorsed by RI Housing, Housing Network of RI, HousingWorks RI, RI Coalition to End Homelessness, the National Association of Realtors, and the RI Association of Realtors.
In March, Whitehouse introduced the First-Time Homebuyer Tax Credit Act, bicameral legislation which would support homeownership among lower- and middle-income Americans by establishing a refundable tax credit worth up to 10 percent of a home’s purchase price – up to a maximum of $15,000 – for first-time homebuyers.
The full text of the legislation is available here.
