“The language unfortunately creates significant unintended consequences,” said Amy Riegel, a Dayton resident who is the executive director of the Coalition on Homelessness and Housing in Ohio. “We are very hopeful that the governor will consider and will take action on these veto requests because it has such a significant impact on the state of Ohio.”
Credit: Tom Gilliam
Credit: Tom Gilliam
Ohio House Bill 45 easily passed both chambers of the Ohio Legislature and is headed to Gov. Mike DeWine’s desk for consideration.
The bill allocates billions of dollars worth of the state’s federal COVID rescue funds to a variety of uses, including nursing facility workforce support, hospital support, lead prevention and mitigation and rent and utility assistance.
But affordable housing advocacy groups said there were some troubling last-minute provisions added to the bill.
One would prohibit projects that use federal low-income housing tax credits (LIHTC) from qualifying for state historic preservation tax credits.
Another would allow county auditors to use a “market-data approach” to determine the values of properties that qualify for federal low-income housing tax credits.
Credit: Cornelius Frolik
Credit: Cornelius Frolik
A third would limit how $161 million in emergency rental and utility assistance can be used. Only rent and utility bills in arrears as of Dec. 31, 2021, would qualify for funding.
Tim Bete, president of St. Mary Development Corp. in Dayton, sent a letter to Gov. DeWine on Dec. 16 urging him to veto these provisions. Ohio House Democrats earlier this month also sent a letter making the same request.
In his letter, Bete said these “unvetted” provisions have not had any committee hearings and will put Ohio’s affordable and workforce housing properties in dire financial risk.
He said the changes would dramatically reduce the availability of new housing units at a time when there already is a severe shortage of affordable and workhouse housing.
“Failure to veto ... (these) sections puts our work and our residents at significant risk,” said Bete, who noted that St. Mary Development Corp. has developed affordable apartment communities for more than 30 years.
The bill would allow county auditors to determine the value of subsidized rental housing based on market data, incomes or costs or some combination of these. That could significantly increase the amount of property taxes low-income housing developments owe.
Some property owners may be forced to try to pass the increased tax burdens on to renters through rent hikes, said Riegel.
“That could be anywhere from $25, $50 to $100 per month ... and that is significant, especially when we think about seniors living in these properties or families living in these properties who may have tight budgets,” she said. “This would be detrimental.”
But in most cases property owners would not be able to pass on the higher tax burdens because of rent caps, and they likely would be forced to cut costs or close, she said.
Property upkeep could suffer, and planned repairs could be shelved, she said.
Lasserre Bradley III, president of development of Cincinnati-based the Model Group, said individuals and businesses need a stable and predictable environment to make long-term investment decisions. “Whiplash” changes like this create an unfavorable business climate and flies in the face of long-range planning based on well-established law and policy, Bradley said.
“Many existing properties would be put into immediate financial jeopardy as they have been operating based on valuations calculated on actual income, which is the only fair way to value properties operating under long-term rent restriction agreements,” he said.
The Dayton Arcade has received millions of dollars worth of state historic tax credits. Sections of the massive property have been converted into more than 100 apartments, the vast majority of which utilized low-income housing tax credits (LIHTC).
Model Group is one of the partners on the Dayton Arcade rehab project.
Credit: Tom Gilliam
Credit: Tom Gilliam
Prohibitions on LIHTC projects using state historic tax credits would impact several of Model Group’s current projects and would have stopped many of its successful past projects from moving forward, Bradley said.
“Utilizing these two funding resources on the same project is not contradictory, but rather accomplishes two simultaneous goals of creating or preserving workforce and affordable housing while also preserving and revitalizing Ohio’s underutilized historic building stock,” he said.
About two dozen historic facility projects across the state that either are in development or that are working to close on tax credits could be at risk if this provision takes effect, some housing advocates said.
Ohio Senate President Matt Huffman, R-Lima, last year inserted language into the state budget bill that would require county auditors to value subsidized rental properties based on market value rents and not on the actual rents received, according to the Columbus Dispatch.
The additions were vetoed by the governor.
Huffman sponsored legislation several years ago that did not move forward but that would have required subsidized rental properties to be valued by income capacity based on market rents and not on their contracted rents. He previously has said that property owners have been able to significantly deflate their property by “leaning” on federal subsidies.
Huffman’s office and other state lawmakers contacted by the Dayton Daily News did not immediately return a request for comment.
Between 2006 and 2018, the Ohio Housing Finance Agency allocated funding for about 40,525 LIHTC units, according to a study. The agency has used the tax credit program to help fund the development of more than 100,000 affordable rental housing units since 1987.
About 30 projects in Montgomery County won LIHTC awards from the housing finance agency between 2006 and 2015, according to a study.
Montgomery County has seen thousands of low-income units open since the late 1980s, according to the U.S. Department of Housing and Urban Development. Some recent additions include the Dayton Arcade, the Omega Senior Lofts and McBride Place.
Riegel said it’s very good news that the state plans to make $161 million available for rent and utility assistance. But she said a last-minute provision would render that assistance useless.
Riegel said the eviction moratorium expired long ago and Ohioans with unpaid rent or utility bills from a year ago or longer likely have been evicted or have moved by now.
Ohio likely will forfeit this federal rental and utility assistance money if it does not use it, she said.
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