Today, Rep. Adam Schiff (D-Burbank) introduced the Affordable and Homeless Housing Incentives Act, which would create new tax incentives for property owners who sell to nonprofits and public agencies that develop affordable housing or homeless shelters. This new legislation expands on the affordable housing bill he introduced in September to incentivize sales to public housing authorities, and would address the severe shortage of affordable housing options by extending that same tax benefit to owners who sell to nonprofit housing developers. In communities with expensive real estate markets, like Los Angeles, this change will provide public agencies and nonprofits who develop affordable and homeless housing an added advantage as they compete with private developers to acquire property.
“Too many members of our community are struggling to keep a roof over their heads. While there is no silver bullet to end homelessness and make housing affordable, there are many ways Congress and the federal government can work with local communities to address these urgent challenges,” said Rep. Adam Schiff. “Los Angeles County needs to create at least 500,000 more affordable units to meet our current need, which is why I just introduced the Affordable and Homeless Housing Incentives Act. My bill will give organizations that develop affordable housing an advantage as they compete with private developers in bids to acquire property and develop affordable housing—a crucial leg up in places like Los Angeles with competitive real estate markets.”
The bill allows property owners to avoid capital gains tax liability by selling to public and nonprofit developers as long as they use the proceeds to purchase a replacement property within three years. In exchange, the purchasers must commit to operate the property as affordable or homeless housing for at least thirty years. To qualify, nonprofit developers must be designated to receive Department of Housing and Urban Development (HUD) housing funds or have a proven history of receiving other local, state, or federal grants for affordable housing.
Last week, Schiff held an event at a local affordable housing development to roll out his new Affordable and Homeless Housing Incentives Act. The event included a round table discussion on affordable housing with residents, public officials, developers, and other local stakeholders, and a walking tour of a recently-opened affordable housing development.
“The Affordable and Homeless Housing Incentives Act of 2020 is a sensible and advantageous tax deferral strategy that will move the needle in favor of affordable housing development projects,” said Glendale Mayor Ara Najarian. “Sellers of land for affordable housing will have more time and flexibility to plan for the use of their capital gains resulting from a sale. The more incentives we can provide market rate land sellers, the more appealing it becomes to produce affordable housing.”
“The City of Burbank supports Congressman Schiff’s Affordable and Homeless Housing Incentives Act, that provides opportunities for cities and non-profits to compete for potential affordable housing building sites,” said Sharon Springer, Mayor for the City of Burbank. “We applaud his effort to advocate at the federal level for innovative solutions that help address housing production, an issue of national, state and local concern.”
“At a time when California needs 1.4 million affordable homes, Congressman Schiff’s bill will make more affordable homes available by incentivizing apartment owners to sell to public and non-profit builders to house more low-income seniors, families and individuals,” said Matt Schwartz, President and CEO, California Housing Partnership. “This bill deserves our support.”
“The bill introduced by Congressman Schiff is important for affordable housing developers in strong real estate markets. It is challenging for non-profits to compete with the for-profit sector who can pay cash and/or access capital more quickly,” said Sarah Letts, Executive Director of the Hollywood Community Housing Corporation. “This bill would give property owners an economic incentive to sell to eligible housing operators like Hollywood Community Housing, thus increasing the supply of critically needed affordable housing and permanent supportive housing for the homeless.”
“There’s a great demand for affordable housing. Before my 48 unit low-income senior building opened, there was a lottery to choose residents. 3,000 people applied, my number was drawn third,” said John C., Resident of West Hollywood Community Housing Corporation. “I am so grateful. I think of the 2,952 others and wonder where they’re now living.”