NJ Will Gain 780 New Rental Homes from Housing Credit Expansion but Still Fall Short of 5,590 Needed Rental Homes
The FY 2018 omnibus spending package included two provisions to strengthen and expand the Housing Credit known as Low-Income Housing Tax Credit.
- The temporary 12.5 percent increase in Housing Credit allocation authority is effective for four years (2018-2021). During those four years, the temporary increase is estimated to produce an additional 28,400 affordable rental homes over the next ten years, according to analysis by Novogradac & Company.
- Additionally, the new option for income averaging, a concept taken from the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661), provides greater flexibility and potential for income-mixing in Housing Credit developments. The new option makes it possible to provide a deeper level of affordability than is currently available.
Novogradac & Company provides an estimate of the number of affordable rental homes and jobs that each state would gain as a result of this temporary expansion.
Overall, the analysis predicts that the expansion will result in the nationwide increase of 32,000 jobs, roughly $2.7 billion more in business income and more than $1 billion in additional federal, state and local tax revenue.
Novogradac & Company estimates that over 10 years:
- New Jersey would gain 780 new rental homes under the FY18 Omnibus
- 880 new jobs would be created
- new business income to the state would be $74,073,000 and
- the federal, state and local tax income would be $28,490,000.
But the gains under the FY18 Ominubus still fall short of the need. Additional Production Needed to Restore Pre-Tax Reform Levels have also been estimated over 10 years.
In New Jersey, it is estimated that:
- 5,590 rental homes ar
- e needed6,320 jobs are needed
- $531,963,000 in new business income and
- $204,601,000 in federal, state and local taxes.
While the temporary expansion is an important down payment on restoring affordable housing production, it does not fully make up for the estimated 235,000 affordable rental homes that will not be produced over the next ten years as a result of the Tax Cuts and Jobs Act.
Enterprise and Monarch Housing remain committed to advancing the remaining provisions of the Affordable Housing Credit Improvement Act, including the 50 percent increase in Housing Credit allocation authority.