EVERETT — Local leaders fighting chronic homelessness and rising housing costs are hoping for a bit more federal help.
U.S. Sen. Maria Cantwell has sponsored legislation that would extend and increase the reach of the Low Income Housing Tax Credit, which provides private landowners with incentives to build and maintain affordable housing.
“We know the tax credit works,” Cantwell said. “By increasing it we could get more units built across the country and in the state of Washington.”
Cantwell’s bill has been referred to the Senate Committee on Finance. A similar measure is before the House Ways and Means Committee.
Cantwell recently visited the Meadows II senior apartments in north Everett to meet with city and nonprofit leaders and garner support for the tax credit bill.
About $12.5 million in tax credits helped pay for the 2016 renovations of the Meadows I, II, and III buildings and the Lakewoods II complex in south Everett, said Ashley Lommers-Johnson, executive director of the Everett Housing Authority. The credit has been a common source of funding for many projects in Snohomish County.
By next year, there will have been about $58.3 million in tax credit equity investments in various housing authority projects, Lommers-Johnson said.
Compass Health, an Everett nonprofit that provides mental health and chemical dependency services, also hopes to take advantage of the tax credit program to construct its own 65-unit residential building in the coming years.
“We see ourselves sort of as next in the queue, hopefully from our perspective in 2018,” said Tom Sebastian, Compass Health’s president and CEO. “Having adequate tax credits is a huge component of making it happen.”
Other projects that are expected to use the tax credit include Everett’s Safe Streets Supportive Housing project and Housing Hope’s 76-unit HopeWorks Station housing project on Broadway, which is scheduled to break ground later this year.
The tax credit program has traditionally enjoyed bipartisan support, but it’s unclear if it will survive the process leading up to the 2018 budget. Senate Finance Committee Chairman Orrin Hatch and other Republicans also have signed onto the bill, and the House bill’s sponsor is Ohio Republican Rep. Patrick Tiberi.
But the Trump administration’s initial budget proposal has called for drastic cuts in most discretionary spending not related to the military or border security. Whether the tax credit survives in any form in the current Congress is unknown.
That uncertainty is compounded by an increasing need for affordable housing caused by homelessness, a population over 65 that is expected to double in Snohomish County by 2033, and stagnant incomes for those at the bottom of the economic scale.
That’s creating a tsunami of effects that may compound to make the shortage of affordable housing worse, even if the tax credit can be extended, Cantwell said.
“Now all of a sudden we’re realizing what that tsunami looks like,” she said. “For sure, we’re going to lose ground from where we are today.”
The tax credit program allows private investors to buy those credits in a partnership with property developers.
Broadly speaking, the developer gets a source of cash for the project and the investor gets to reduce taxes owed on other sources of income.
But another issue has just emerged onto the national scene: Administration plans to pass a comprehensive tax reform bill this year.
Potential investors in those tax credit-funded projects now are waiting to see what happens, Cantwell said.
“The discussion has created a chill in the marketplace for investors,” she said.
The tax credit program is just one program that could be a casualty of the new administration. Other programs that many social service providers depend on, such as the Community Development Block Grant program, also are on the chopping block.
Cantwell said she hopes that saving the tax credit will raise awareness and support about what other programs like the block grants fund.
“If I can get support on the tax credit now, there may be support for that down the road,” Cantwell said. “I’m just trying to get what I can.”