Building Homes, Revitalizing Communities, and Increasing Wealth through Homeownership

THE PROBLEM

Our nation is experiencing a housing affordability crisis. Americans are finding it increasingly difficult to purchase their first home, and as our existing housing stock ages, many lower income homeowners cannot afford to finance critically needed repairs.

 21%: The market share of first-time homebuyers, a historic low.
40 years old: The median age of today’s first-time buyer, an all-time high.
27 years vs. 44 Years: The median age of a single-family home in 1993 compared to 2023.

THE CAUSES

The affordability challenges are driven by at least four primary factors:

Lack of Housing Supply
America has been under-producing homes for decades, creating a shortfall of millions of homes and driving up home prices for all potential homebuyers.

Increased Construction Costs
Prices for construction materials have risen steadily since 2000 and remain significantly higher than pre-pandemic levels; making it more difficult to build moderately priced homes for first-time homebuyers.

Rising Home Prices
Starter home prices surged 54% over the past five years, from $190,559 in 2019 to $292,950 in 2024.

Higher Borrowing Costs
The twin impacts of rising home prices and rising interest rates on home loans have caused monthly payments on the typical starter home to rise by 116% nationally from five years earlier, and in some states the figure is well over 150%.

THE SOLUTION

As complex as these challenges are, there is a solution: Congress needs to enact the Neighborhood Homes Investment Act (S.1686/H.R. 2854).

• This bipartisan legislation would create a federal tax credit to support the development and rehabilitation of single-family homes, with a priority on homes in economically challenged communities.

• The tax credits would be administered by state housing finance agencies, which would identify targeted communities, award credits to qualified developers though annual competitions, set cost and construction standards, and monitor awardees for compliance.

• The credit is targeted and efficient. It can only be applied to the portion of the project costs needed to ensure financial viability, and any unused credits would be returned to the state agency for future distribution.

• The credit benefits families most in need. It can only be used to support moderately priced homes affordable to families making below 140% of area median income (below 100% of area median income in the case of owner occupied rehabilitations).

It is also flexible enough to support the array of needs facing our families and communities, most notably by:

1. Spurring the Development of New Homes in Communities with Low Home Values.
Neighborhood Homes prioritizes distressed communities, where construction costs typically exceed the value of the homes upon sale. This includes urban areas with high poverty, low family incomes and low home values; low-income rural communities; and communities that have been impacted by natural disasters. The tax credit would finance the gap between the total construction costs and the final sales price-- bringing new homes on line in communities that have been left behind.

2. Making Homes More Affordable for Lower Income Families and First-Time Homebuyers.
In other markets, where home values have increased in recent years, the Neighborhood Homes credit could be used as a tool to help developers bring down the sales price on a home, making the home more affordable to a lower income family or first-time homebuyer.

3. Helping Lower Income Families Make Critical Home Repairs.
Homeownership continues to be the best way for families to pass on legacy wealth. But older homeowners on fixed incomes, and owners of homes in communities with lower home values, often have difficulty securing financing needed to make critical home repairs to shore up the value of the property. The Neighborhood Homes Tax Credit can be used to offset 50% of the cost of home repairs in homes owned by families making below the area median income.

As South Dakotans, we take pride in our communities and the opportunities they offer. From our small towns, to rural areas, to our two metropolitan areas, each corner of our state has its own unique charm and potential. Yet, there is a pressing challenge that threatens our future growth: the lack of affordable, quality housing.

Fortunately, there is a solution currently before Congress: the bipartisan Neighborhood Homes Investment Act, which aims to help make affordable homeownership a reality for the communities and the families that need it most.

Today, communities across our state are dealing with a significant shortage of livable and affordable homes, including homes for purchase. This crisis not only slows growth in the community, but it also keeps families from building wealth through homeownership. According to recent data from the Federal Reserve Bank of St. Louis, the median price of a home in South Dakota went from approximately $240,000 in 2021 to $395,000 in 2025 – a 65% increase in just four years. This staggering increase in prices, combined with rising interest rates, has made homeownership increasingly out of reach for many South Dakotans.

The lack of affordable housing also impacts our economy. If there aren’t enough affordable homes to support a thriving workforce, businesses planning to expand or launch may look to other states rather than bring more jobs and economic opportunities to South Dakota. As the Neighborhood Homes Coalition says, homes are where jobs go to live.

At Grow South Dakota, we have developed or renovated homes over the past decade, and we are increasingly struggling with the issue of building modestly priced homes for first time homebuyers. With rising construction costs and home sale prices rapidly outpacing family incomes, we often see a gap between and separating the costs to build the home and making the home available to the typical South Dakota first time homebuyer.

The Neighborhood Home Investment Act would address this issue by offering a tax credit for building or renovating homes in areas where the construction costs are higher than what the property can sell for on the market.

What makes this bill especially promising is its flexibility. It can also be used to help lower income homeowners make critically needed repairs to their homes in instances where traditional financing is not available.

The legislation also allows local leaders in our state to place the priority on financing homes in areas that need it most–like South Dakota’s rural and Native communities, as well as areas with high poverty and historically low home values and those that may be recovering from natural disasters.

It is estimated that this legislation would spur the production and rehabilitation of 1,900 homes across our state over the next decade. This means both improved housing and more homeownership opportunities, including for those buying their first home. This would also lead to good-paying construction jobs, as well as draw new workers and businesses into our
communities.

There is a path forward to addressing the housing challenges in our state, and it is important that our elected officials prioritize it. Just this week, eight housing focused organizations headquartered in, and serving, South Dakota communities sent a letter to our Congressional delegation supporting the enactment of this common-sense solution to help address the housing affordability crisis. I hope my fellow South Dakotans will join me in urging Congress to support the bipartisan Neighborhood Homes Investment Act.

Together, we can open the door to homeownership for more people across our great state.

Speakers highlighted the Neighborhood Homes Investment Act, bipartisan legislation that would create a tax incentive to build and preserve hundreds of thousands of affordable, single-family homes for homeownership in communities across the country, as a pragmatic solution to boosting affordable homeownership.

WATCH clips from the Policy and Practice Conference HERE. 

Highlights featuring the Neighborhood Homes Investment Act and the need for more affordable homeownership supply:

“Americans are really uncertain about the future, with 82% responding they think it will be harder for young people to buy a house when they grow up. But it doesn’t have to be this way, and Americans are ready for federal action,” said Sarah Brundage, NAAHL President & CEO and Co-Chair of the Neighborhood Homes Coalition, in opening remarks. “In the lead-up to the 2024 presidential election, a majority of respondents across party lines identified legislation to boost supply and address costs as an important priority.”

Sarah Edelman, Executive Vice President of Policy and Programs at the National Community Stabilization Trust and Co-Chair of the Neighborhood Homes Coalition, noted that the Neighborhood Homes Investment Act is “a strongly supported bipartisan proposal that would help…make starter home production more economical.”

The Neighborhood Homes Investment Act “offers a commonsense, at least partial, solution to our affordable housing crisis,” stated Senator Mark Warner (D-VA), co-lead of the Neighborhood Homes Investment Act, in recorded remarks. “This legislation would create tax incentives to build and preserve more than 500,000 single family homes in under-resourced communities.”

“This important bipartisan legislation creates new incentives for building and restoring affordable housing in areas that need it most. Through this bill we can continue supporting innovative public-private partnerships that scale housing investments and strengthen local economies” said Senator Todd Young (R-IN), co-lead of the Neighborhood Homes Investment Act, in recorded remarks.

Stockton Williams, Executive Director of the National Council of State Housing Agencies touted the Neighborhood Homes Investment Act as an “opportunity for future advocacy” when it comes to the creation of a tax credit to support the rehabilitation and construction of single family homes.

The Neighborhood Homes Investment Act (S.1686, H.R. 2854) is the most widely supported homeownership supply bill in Congress. The bipartisan, bicameral legislation would expand affordable homeownership supply by creating a federal tax credit to build and rehabilitate affordable homes for urban, suburban, rural, and tribal communities, giving families opportunities to build wealth where they live and work.

Learn more at www.neighborhoodhomesinvestmentact.org.

Ben Carson served as secretary of the Department of Housing and Urban Development from 2017 to 2021. Henry Cisneros is board chair of the Bipartisan Policy Center and served as HUD secretary from 1993 to 1997.

We each led the Department of Housing and Urban Development. We served in different administrations and hold different political views, but on this we agree: The severe homeownership gap in the United States demands urgent bipartisan action, and Congress is failing to respond.

The nation has an estimated shortage of more than 4.5 million homes, and building keeps getting more expensive. But Congress’s sweeping new domestic policy bill offered nothing to explicitly address the crisis that is putting homeownership out of reach for American families.

Lawmakers urgently need to correct this failure. One promising solution is the Neighborhood Homes Investment Act (NHIA), a pragmatic and widely supported proposal that would help build and restore homes in the communities that need them most.

In May, construction of new homes plummeted 9.8 percent, hitting its lowest level in five years, according to HUD. Rising costs and regulatory barriers have made building affordable homes too expensive, leaving many builders pessimistic about starting new construction. High interest rates have worsened the problem, making homeownership more expensive by increasing the cost of credit.

The persistent housing shortage pushes up home prices, straining household budgets — especially for low- and middle-class families. Small towns that once embodied the American spirit of freedom and opportunity are now littered with abandoned properties, the legacy of years of underinvestment since the housing market crashed in 2008.

The NHIA can help mend this blighted landscape. This bill would create a federal tax credit that incentivizes developers to build affordable homes and rehabilitate vacant properties for owner-occupancy, primarily in distressed neighborhoods. In many low-income areas, it costs more to build or fix up a home than the home can sell for. That’s known as the “value gap,” and it’s why private developers often walk away from affordable housing projects — the math just doesn’t work.

The neighborhood homes tax credits established by the NHIA would help cover this gap. If a home cost $250,000 to build but sold for only $200,000, a tax credit could fill the $50,000 difference, making the project viable. Notably, the credits are designed to cover only the amount needed to close this value gap, ensuring the subsidy wouldn’t be larger than necessary. In addition, credits could be claimed by an investor only after the home is completed and sold to a low- or middle-income buyer, guaranteeing that the benefit would actually go toward creating affordable housing and supporting homeownership.

Like the low-income housing tax credit — a bipartisan program responsible for the vast majority of affordable rental housing built over the past few decades, neighborhood homes tax credits would go to the states, which would then identify target communities, set construction standards and award credits to qualified developers.

In addition to directly improving the housing market, neighborhood homes tax credits would also probably generate broader economic benefits. Building and renovating housing creates jobs for construction workers, contractors and suppliers. Revitalizing distressed communities also increases neighborhood property values, making homeowners wealthier.

Politics are complicated, but this decision isn’t. In a 2024 survey by the Bipartisan Policy Center, 74 percent of respondents reported that the lack of affordable homes is a significant problem in the United States — including 83 percent of Democrats, 71 percent of independents and 68 percent of Republicans.

HUD Secretary Scott Turner recently said homeownership “plays a critical role in the values of life, liberty and the pursuit of happiness.” We couldn’t agree more. Homeownership is the primary way most American families build wealth. As home values appreciate, owners build equity — an asset they can tap for education, retirement or emergencies — making homeownership a key driver of long-term financial security and upward mobility.

We can give more families a path to homeownership if we empower builders with the right tools to create affordable homes in the neighborhoods they are needed most. The Neighborhood Homes Investment Act does exactly that. Congress should include it in future bipartisan housing legislation or a tax package.

The Neighborhood Homes Investment Act is widely supported legislation that would create a new tax incentive to build and preserve more than 500,000 affordable, single-family homes for homeownership over ten years in under-resourced communities. 

The letter reads, in part, “The Neighborhood Homes Investment Act is the most widely supported homeownership supply bill in Congress and is essential to the President’s commitment to deliver price relief to Americans by lowering the cost of housing and increasing housing supply.”

The letter to Senate Majority Leader Thune and Chairman Crapo can be found here and below:

Dear Leader Thune and Chairman Crapo,

All across the country, from rural communities to the largest cities, we face a critical shortage of affordable homes for homeownership. With the One Big Beautiful Bill Act, Congress has the opportunity to begin to address this housing shortage and expand opportunities for homeownership. We urge you to use this opportunity to address the economic needs of millions of American families by including a tax provision to support the creation of affordable homes for homeowners around the country.

The Neighborhood Homes Investment Act (S.1686, H.R. 2854) is the most widely supported homeownership supply bill in Congress and is essential to the President’s commitment to deliver price relief to Americans by lowering the cost of housing and increasing housing supply. Introduced by Senator Todd Young (R-IN) and Representative Mike Kelly (R-PA), the legislation would create a new tax incentive to build and preserve more than 500,000 affordable, single-family homes for homeownership over ten years in under-resourced communities.

Under the proposed program, federal tax credits would help close the gap between the cost of constructing or rehabilitating a home and its market value. These credits would be allocated by formula to state housing finance agencies and then distributed through a competitive process to project sponsors—such as developers, local governments, or financial institutions. Project sponsors would have five years to complete homes, which must be sold at affordable prices, generally capped at four times the area’s median family income.

Over ten years, the Neighborhood Homes Investment Act is projected to support the construction or rehabilitation of 500,000 homes, generate $151 billion in development activity, and create 1.1 million jobs. It targets disinvested urban neighborhoods, rural areas, and communities hit by natural disasters or economic decline. Eligible families earning up to 140% of area median income (AMI) can purchase homes, while those earning up to 100% of AMI can access rehab loans—bringing stability and opportunity to underserved areas across the country.

We were pleased to see that the House and Senate included provisions from the Affordable Housing Credit Improvement Act to expand the supply of affordable homes for renters. We now urge Congress to also address the needs of aspiring and existing homeowners.

We appreciate your leadership and attention to this critical issue. If you have any questions, please do not hesitate to contact Matt Josephs, Senior Vice President of Policy at LISC (mjosephs@lisc.org), or Sarah Brundage, President and CEO of the National Association of Affordable Housing Lenders (sbrundage@naahl.org). Additional information and resources on the Neighborhood Homes Investment Act can be found on our website at www.neighborhoodhomesinvestmentact.org.

Sincerely,

The Neighborhood Homes Coalition

Download Presentation Slides

On June 10, 2025, the Neighborhood Homes Coalition hosted a public webinar highlighting how the Neighborhood Homes Investment Act could help close this gap by increasing the supply of affordable homes in underserved communities. Viewers heard directly from legislative leaders, builders, and investors about how the program would work, why it’s urgently needed, and how to support its passage. Whether you're a builder, policymaker, advocate, investor, or housing practitioner, this webinar offers valuable insights and tools to help advance this critical legislation.

Featured Speakers:

U.S. Senator Todd Young (R-IN)

Zachary Amos, Habitat for Humanity of Greater Memphis

Bryan Blom, Porterfield, Fettig & Sears

Sarah Brundage, NAAHL

Matt Josephs, LISC

Jacques Logan, National Equity Fund, Inc.

Christopher Tyson, NCST

Time: 2:00 - 3:00 p.m. ET

We need to build more affordable, single-family (1-4 units) homes for working families ready for homeownership. Join the Neighborhood Homes Coalition for a webinar exploring how the bipartisan Neighborhood Homes Investment Act would boost affordable housing supply in communities that need it most. 

In this public webinar, you’ll hear from the perspective of legislative champions, builders, and investors. They’ll explain how the program would work, why it’s needed, and how you can help advocate for its passage. Whether you're a builder, policymaker, advocate, investor, or housing practitioner, this webinar will provide the tools and insights you need to support and prepare for this critical housing supply bill’s enactment.

Speakers:

• U.S. Senator Todd Young (R-IN)

• Zachary Amos, Associate Director, Advocacy at Habitat for Humanity of Greater Memphis

• Bryan Blom, Partner of Porterfield, Fettig & Sears

• Sarah Brundage, President and CEO, National Association of Affordable Housing Lenders

• Matt Josephs, Senior Vice President of Policy, LISC

• Jacques Logan, Senior Vice President, New Business Initiatives, National Equity Fund, Inc.

The Neighborhood Homes Coalition is a national advocacy group of 48 national organizations, including housing and community development nonprofits, financial institutions, and related trade associations – all supporting enactment of the Neighborhood Homes Investment Act. The coalition is co-chaired by the National Association of Affordable Housing Lenders (NAAHL), the National Community Stabilization Trust (NCST), and the Local Initiatives Support Corporation (LISC).

Interested in getting involved? Email neighborhoodhomes@naahl.org.

National Association of Affordable Housing Lenders (NAAHL)

“Hard-working Americans ready for homeownership need more opportunities to find a modest, affordable home. The Neighborhood Homes Investment Act is a smart solution that will seed thriving communities, attract thousands of jobs, and unlock new economic potential - after all, homes are where jobs go to live,” said Sarah Brundage, President and CEO of the National Association of Affordable Housing Lenders. “We applaud Representatives Mike Kelly and John Larson for leading the bipartisan solution to more affordable homeownership supply. Erie, Hartford, and communities nationwide - especially hard-to-reach and underserved communities - will benefit from the investments into starter homes that the Neighborhood Homes Investment Act will unlock.”

LISC

“The Local Initiatives Support Corporation (LISC) applauds Representatives Kelly and Larson for introducing the Neighborhood Homes Investment Act.  High construction costs, rising interest rates and the general lack of housing supply have put homeownership out of reach for far too many lower and middle income homebuyers.  The Neighborhood Homes legislation would spur the development of hundreds of thousands of modestly priced homes in the communities that need them most, helping to repopulate and revitalize those communities while simultaneously creating opportunities for first time homebuyers.” - Matt Josephs, Senior Vice President for Policy, LISC

National Community Stabilization Trust (NCST) 

“The United States is experiencing a housing affordability crisis at an alarming rate. It is imperative that our elected officials make equitable investments into our housing infrastructure — both for the stability of our nation’s economy and the well-being of neighborhoods across the country,” said Christopher Tyson, President of NCST (National Community Stabilization Trust). “This transformative piece of legislation redirects private capital into communities plagued by blighted homes and encourages expansive revitalization efforts across all geographic regions. The Neighborhood Homes Investment Act will create hundreds of thousands of new units for aspiring homeowners and enable more hard working families to build meaningful wealth for generations to come."

Quotes from Other National Organizations Supporting NHIA: 

AARP

“The Neighborhood Homes Investment Act (NHIA) is a crucial step in supporting older Americans in distressed communities who are grappling with rising home repair costs and lower incomes," said Jenn Jones, AARP Vice President of Government Affairs. More than half of low-income homeowners who are cost-burdened are age 65 and over. By establishing a federal tax credit that bridges the gap between construction costs and the sales price, the Neighborhood Homes Investment Act will make it possible for older adults living on fixed incomes to renovate and remain in their homes and communities.”

American Wood Council

"Our nation’s housing crisis has reached a critical peak, and U.S. wood products are an important part of the solution. Wood product manufacturing in this country supports rural jobs and economies and offers a safe, renewable and sustainable building material to help address the need for affordable housing. AWC is excited to join the Neighborhood Homes Coalition and support the NHIA as it seeks to encourage new home construction through tax credits in areas with a high need for affordable housing."

Bipartisan Policy Center (BPC) Action

“BPC Action applauds the bipartisan, bicameral reintroduction of the Neighborhood Homes Investment Act (NHIA) by Reps. Mike Kelly (R-PA) and John Larson (D-CT) and Sens. Todd Young (R-IN) and Mark Warner (D-VA). Estimates show a shortage of between 1.5 and 5.5 million affordable homes in the U.S. This legislation would expand access to stable homeownership and preserve affordable housing in communities that need help the most by facilitating the construction and rehabilitation of 500,000 owner-occupied homes over the next decade. We look forward to ensuring this vital legislation is enacted in the 119th Congress.” – Michele Stockwell, President, BPC Action

Community Opportunity Alliance

"Community development organizations develop 13,000 affordable homeownership units and rehab an additional 17,000 every year in the hardest to reach communities. The type of resources NHIA will provide will give these powerful organizations a new, unique resource to transform the futures of underserved people and places." - Frank Woodruff, Executive Director of Community Opportunity Alliance.

Enterprise Community Partners

"The Neighborhood Homes Investment Act is about helping families realize the dream of homeownership in rural, suburban, and urban neighborhoods that deserve more opportunities to build wealth.  By mobilizing private capital to rehabilitate or construct 1- to 4-unit housing, the NHIA will create homes that families can actually afford to buy," said Pat Cave, Senior Vice president of Policy, Enterprise Community Partners. "Enterprise strongly supports the creation of the Neighborhood Homes Tax Credit, and we commend Senators Young and Warner, and Representatives Kelly and Larson on their bipartisan leadership in introducing this important piece of legislation."

Habitat for Humanity International

“The lack of affordable housing is a crisis that impacts each and every community across the nation,” said Habitat for Humanity International CEO Jonathan Reckford. “Families cannot gain a solid foundation without affordable housing, and so Habitat is encouraged by the bipartisan support for the Neighborhood Homes Investment Act, which would create a tax credit to build and rehabilitate homes for low- to moderate-income homeowners. I applaud Senators Young and Warner, and Representatives Kelly and Larson for re-introducing the legislation as it would ensure more Americans have access to a safe and affordable place to call home.”

Housing Assistance Council

"The 'value gap' can often be a barrier to home repair in rural places, which have a disproportionately high rate of aging and substandard housing," said David Lipsetz, President & CEO of the Housing Assistance Council, "We applaud the reintroduction of the Neighborhood Homes Investment Act, which would bring private investment to the table to rehabilitate owner-occupied homes through a new and innovative tax credit."

National Community Reinvestment Coalition (NCRC)

"Everyone is aware of the dire need for new supply-side investments in housing in thousands of communities around the country, which reflects a market failure that only federal intervention can correct," said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition. "I applaud the authors of the carefully crafted and efficiently targeted Neighborhood Homes Investment Act and urge its passage. Long-suffering communities across this country need new and refurbished housing capacity in order to jumpstart local economic growth and raise quality of life. The NHIA will benefit everyone, not solely the lower-income and minority communities who have been excluded from homeownership for so long."

National Council of State Housing Agencies

“The shortage of affordable for-sale housing supply is the primary barrier to homeownership for working families. The market will not become more affordable until more is done to address this issue,” said Stockton Williams, executive director of the National Council of State Housing Agencies. “The Neighborhood Homes Investment Act would establish an innovative public-private partnership based on the Housing Credit model to boost single-family supply, help low-and moderate-income households realize the dream of homeownership, and revitalize struggling neighborhoods.”

National Housing Conference

“The Neighborhood Homes Investment Act (NHIA) will revitalize distressed urban, suburban, and rural neighborhoods with federal tax credits, mobilizing private investment to build and rehabilitate homes for lower- and middle-income homeowners. With a shortage of affordable housing supply, this initiative would help bridge the gap between development costs and market prices in neighborhoods where housing values don’t currently support new construction and rehabilitation lending. Over the next decade, NHIA can support the creation of hundreds of thousands of homes where it’s needed most. NHIA is one of the top priorities of the National Housing Conference. We are committed to working with policymakers and stakeholders to advance this vital, bipartisan legislation.”

National NeighborWorks Association

“With almost 250 NeighborWorks members nationwide providing over $10 billion of affordable housing and community/economic development per year, the National NeighborWorks Association (NNA) endorses bipartisan supported solutions that address the supply side housing crisis like Neighborhood Homes,” stated Lou Tisler, Executive Director of NNA.  “It is time to address this crisis head on.  It is time to implement community-based solutions.  It is time for Congress to act on the Neighborhood Homes Investment Act.

Novogradac

“We’re encouraged to see the reintroduction of the Neighborhood Homes Investment Act,” said Michael J. Novogradac, managing partner of Novogradac. “Enactment of this tax incentive would help stimulate the economy in a multitude of ways. We urge this freshly seated Congress and the Trump administration to embrace a bill that would help build and renovate single-family, owner-occupied homes in distressed communities across America.

Smart Growth America

"Communities across the United States are facing compounding housing access and affordability crises. We applaud the reintroduction of the Neighborhood Homes Investment Act, which will provide a vital tool to update housing and expand homeownership, improving economic and social outcomes for families across the country, no matter who they are or where they call home. Targeting these investments into existing communities, especially those well-connected to jobs, schools, and essential services, aligns with our vision of creating vibrant, inclusive places where everyone can thrive. " - Calvin Gladney, President and CEO, Smart Growth America

WASHINGTON, DC (May 8, 2025) – The Neighborhood Homes Coalition applauds the reintroduction of the bipartisan Neighborhood Homes Investment Act in the U.S. Senate during the 119th Congress. The bill is led by Senator Todd Young (R-IN) and Senator Mark Warner (D-VA). A companion House bill was reintroduced on April 10 by Representative Mike Kelly (R-PA-16) and Representative John Larson (D-CT-1). 

This widely supported legislation would create a new tax incentive to build and preserve more than 500,000 affordable, single-family homes for homeownership over ten years in under-resourced communities. 

As Congress moves quickly to prepare a reconciliation package, we respectfully urge lawmakers to ensure that the Neighborhood Homes Investment Act is included. Homeownership is the cornerstone of the American Dream and a critical pathway to building wealth. This bill is a pro-growth, pro-family solution that empowers working families to access modest, affordable homes while revitalizing rural, suburban, and urban communities that have long been left behind.

Right now, hardworking Americans are struggling to find an affordable home to own. Too many streets across our nation are lined with vacant lots or dilapidated housing in need of substantial repairs, which in some cases cost more than the value of the home itself. In many communities, especially rural areas, the cost to build or rehab modest homes exceeds what families can afford — stalling development and holding back local economies. The Neighborhood Homes Investment Act addresses this “value gap,” unlocking private investment and making it financially viable to build and preserve affordable, owner-occupied homes.

“Across Indiana, we have seen once-vibrant neighborhoods struggle under poor economic conditions and lack of investment. The Neighborhood Homes Investment Act would help restore these communities by directing private capital into neighborhoods in low-income census tracts, bridging the gap between the cost of renovation and neighborhood property values,” said Senator Young. “This legislation also includes important guardrails to ensure that tax incentives target the families that need it most, continuing the work to avoid the negative and lasting consequences that a lack of safe, affordable housing has on Hoosier families.”

“I’m proud to lead this bipartisan effort to address the lack of attainable housing in our communities. The Neighborhood Homes Investment Act will create new incentives for building and restoring affordable housing in areas that need it the most,” said Senator Warner.

Joining Senators Young and Warner are Senators Cindy Hyde-Smith (R-MS), Kevin Cramer (R-ND), Tim Scott (R-SC), Ron Wyden (D-OR), Tim Kaine (D-VA), and Chris Coons (D-DE) as original cosponsors.

The Neighborhood Homes Coalition commends Senators Young and Warner and each of the bill’s cosponsors for their championing of the bipartisan legislation. The Neighborhood Homes Coalition urges Congress to enact the Neighborhood Homes Investment Act, the widely popular, bipartisan affordable homeownership supply solution, in a 2025 tax package. 

##

The Neighborhood Homes Coalition is a national advocacy group of 47 national organizations, including housing and community development nonprofits, financial institutions, and related trade associations – all supporting enactment of the Neighborhood Homes Investment Act. Learn more about the Neighborhood Homes Coalition at www.neighborhood homes investment act.org. 

The National Association of Affordable Housing Lenders (NAAHL), the National Community Stabilization Trust (NCST), and the Local Initiatives Support Corporation (LISC) co-chair the Neighborhood Homes Coalition.  

Erie, Pa. and Hartford, Conn. share much in common — snowy winters, growing technology sectors and, like many other communities across the nation, a pressing need for more affordable homeownership opportunities. 

In cities like Erie and Hartford — which we proudly represent in Congress — as well as dozens of other older industrial cities, we’re witnessing block after block of aging homes deteriorating within a stone’s throw of burgeoning commercial districts. In east Erie, nearly 20 percent of properties are classified as being in poor or unsound condition, with another 37 percent showing the beginnings of disinvestment or neglect.

The intertwined issues of blight, vacancy and an aging housing stock are not unique to older northeastern cities. They represent a truly national crisis, affecting cities from St. Louis and Detroit to Fresno and Jacksonville, from Baltimore to Birmingham and Charlotte. These challenges hit particularly hard in rural communities that have been suffering with outmigration and years of disinvestment.  

Simultaneously, the U.S. is vastly underproducing housing. By some estimates, there is a shortage of 4 million homes. With construction costs on the rise and mortgage rates still high, it is exceedingly difficult to build homes that are affordable for lower- and middle-income families.

The cost of inaction is severe for American families and local economies everywhere. Many families find it challenging to secure a home they can afford to buy, making it harder to build wealth. Moreover, existing homeowners often face extensive repair needs. In order to reverse the United States’ declining homeownership rate, we must build new homes that Americans can afford to own and make repairs to existing housing across the country.

That’s why we proudly lead the Neighborhood Homes Investment Act in Congress. This bipartisan legislation would create a new tax credit to bridge the gap between the cost of building or repairing a home and the home’s value once it is built. By addressing this “value gap,” developers would be incentivized to build and renovate tens of thousands of homes annually in struggling urban and rural communities, helping to revitalize these areas while making homeownership accessible for many first-time homebuyers. 

Our Neighborhood Homes proposal also utilizes a successful public-private partnership model to target communities in the greatest need, especially rural areas and those with high poverty rates. By partnering with the private sector, our bill could result in 500,000 new or rehabilitated homes over the next decade, while also creating good-paying jobs in construction and related industries.

As Congress prepares tax legislation for 2025, we have a rare opportunity for bipartisan action to address our affordable housing crisis and narrow our country’s staggering homeownership gap. The need to keep our neighborhoods safe, vibrant and economically robust transcends party lines. More than 100 members of Congress from both parties supported the Neighborhood Homes Investment Act last Congress, and the bill has been endorsed by a broad coalition of industry and housing trade groups, state housing finance agencies, neighborhood redevelopment organizations, and both nonprofit and for-profit housing developers.

We have just reintroduced the bill and now it’s time to take it across the finish line. Americans deserve more affordable homeownership opportunities, and many neighborhoods require investments to thrive. We must pass the Neighborhood Homes Investment Act. 

U.S. Reps. Mike Kelly (R-Pa.) and John Larson (D-Conn.) are the co-leads of the bipartisan Neighborhood Homes Improvement Act. Kelly serves as chairman of the Ways and Means Subcommittee on Tax, and Larson serves as ranking member of the Ways and Means Subcommittee on Social Security.

Introduction

We are experiencing a housing supply crisis. An estimated shortage of over 7 million single family homes in the United States is driving up housing costs for families and making it difficult for first-time homebuyers to enter the market.

It is particularly difficult to develop and rehabilitate homes in distressed urban and rural communities, where construction costs often exceed the value of the home. As a result, too many towns have streets lined with vacant lots or dilapidated housing—making it harder to attract employers and hurting the tax base.

We need to build more affordable, single-family homes for working families ready for homeownership. At the same time, we must help current homeowners in older homes make critical repairs so that they can build and pass on generational wealth.

The Neighborhood Homes Investment Act

The Neighborhood Homes Investment Act is the bipartisan affordable homeownership supply solution we need to repopulate and revitalize communities while giving families the opportunity to own homes in the communities where they live and work.

• Neighborhood Homes provides federal tax creditsused to cover the gap between the cost of building or rehabilitating homes and the value of those homes.

• The tax credit covers up to 40% of the costs of building a new home for sale, and up to 50% of thecosts for rehabilitating owner-occupied homes.

• The federal tax credits are provided by formula tostate housing finance agencies, which in turn allocate the credits through a competitive application process to “project sponsors,” including developers, localgovernments, or financial institutions.

• If selected, the project sponsor has five years to develop or rehabilitate the homes. Investors canclaim the credits on a rolling basis after each home iscompleted, inspected, and occupied by an eligible homeowner.

• The homes must be affordable. The sales price of anew home generally cannot exceed 4 times the area median family income.

The Projected Impact of Neighborhood Homes Nationwide

The impact over 10 years with an average Neighborhood Homes Tax Credit of $60,000 would be:

• 500,000 homes built or substantially rehabilitated

• $151 billion in total development activity

• 1.1 million jobs in construction/related industries

• $102.7 billion in wages and salaries

• $45.6 billion in federal, state, and local tax revenues and fees

Who benefits from Neighborhood Homes?

• The Neighborhood Homes Investment Act targets communities that have been left behind—including rural areas and urban neighborhoods devastated by capital flight and that struggle to attract employers.

• Homes must generally be located in communities characterized by relatively high poverty rates, low median family incomes, and low home values.

• Importantly, states are given additional flexibility to serve rural areas, communities affected by natural disasters, lower-income families in gentrifying communities, and other communities the state identifies as needing additional investments in single family housing.

• Families earning up to 140% of the area median income (AMI) will generally be eligible to purchase newly constructed or rehabilitated homes, and families making up to 100% of AMI will be eligible for owner-occupied rehabilitation loans.

Congressional Action Needed

Cosponsorship in the Senate (S. 1686): Contact Greg Warren (greg_warren@young.senate.gov) in Sen. Young’s office, or Alex Porter (alex_porter@warner.senate.gov) in Sen. Warner’s office.

Cosponsorship in the House (H.R. 2854): Contact Quinn Ritchie (quinn.ritchie@mail.house.gov) in Rep. Kelly’s office, or Emily Naden (emily.naden@mail. house.gov) in Rep. Larson’s office.

Join the Neighborhood Homes Coalition and call on Congress to enact the Neighborhood Homes Investment Act today! For more information, please contact the Neighborhood Homes Coalition at NeighborhoodHomes@naahl.org.

A.    State Credit Allocations – To better address the national backlog in housing production and rising development costs, the formula allocation of NHIA credits to states is increased from $7 per capita to $9 per capita, and the minimum state allocation is increased from $9 million to $12 million. 

B.    Addressing Current Market Conditions and Costs – Given rising development costs, the credit for new for-sale homes that can be claimed is now 40% of the total development costs, up from 35% in the prior legislation. Notwithstanding this increase, the credit amount remains capped at the difference between the total development costs and the final sales price of the home. The maximum sales price of homes also remains capped at four times the area median family income. These guardrails ensure that properties are not over-subsidized and remain modest and affordable for first-time homebuyers.

C.    Geographic Flexibility for States

Legislation from the 118th Congress: Requires that 80 percent of all NHIA investments be made in NHIA eligible communities, which have higher poverty rates, lower family incomes, and lower home values relative to the area medians. State agencies could use up to 20 percent of allocations in “other eligible communities” (including rural communities and areas impacted by natural disasters) that might not otherwise meet all three criteria of distress.

Legislation introduced in the 119th Congress: Requires that: (i) at least 60 percent of all NHIA investments be made in NHIA eligible communities; (ii) up to 20 percent may be made in “other eligible communities”; and (iii) up to 20 percent may be made in any other community identified by the state agency as having a shortage of owner occupied homes. States that receive the small state minimum allocations can use up to 40% of their credit allocations in any combination of items (ii) and (iii) above.

D.    Building Codes and Standards – Requires that the states promulgate standards with respect to construction quality that are consistent with building codes or other standards required by the state or local jurisdiction in which the project is located.

E.     Small Residential Builders and Remodelers – Requires state allocating agencies to: (i) provide educational outreach on application and compliance requirements, including for small residential builders and remodelers; and (ii) develop applications that will minimize, to the extent practicable, application costs and barriers to entry for small residential builders and remodelers.

The lack of move-in ready homes makes it difficult to attract or retain homebuyers, often causing property values to decline further. Neighborhood Homes would break this stalemate by creating a federal tax credit that covers the gap between the cost of building or renovating homes and the price at which they can be sold, thus making renovation and new home construction possible and offering pathways to homeownership to first-time homebuyers. 

Neighborhood Homes can also be utilized to allow lower-income homeowners to rehabilitate their homes and build generational wealth.

Neighborhood Homes Tax Credit Allocations

Credits are Administered by States

• Each state receives an annual allocation of credits totaling the greater of $9 per resident or $12 million; adjusted annually for inflation.

• States allocate credits to “project sponsors” (e.g., developers, lenders, local governmental entities) through an annual competition. Project selection criteria include:

o   Neighborhood need for new or rehabilitated homes

o   Neighborhood revitalization strategy and impact

o   Sponsor capability and prior performance

o   Likely long-term homeownership sustainability

o   Any additional state criteria

• States set standards for construction cost and quality, as well as developer fees.

• States can carry over unallocated amounts for three years and can also reallocate any unused credits.

• The IRS promulgates regulations, collects national activity data, and monitors state agency performance and compliance.

Credits are Claimed Only After Homes are Financed

• Project sponsors have five years to raise capital and complete sales or renovations of homes.

• Investors may claim credits only after homes are completed, inspected, and sold or occupied by eligible homeowners.

• Any credits allocated but not utilized after five years are returned to the state agency.

Credits Are Limited in Scope

• New For-Sale Homes: Tax credits cover the lesser of: (i) 40% of the total eligible development costs; (ii) 32% of the national median sales price of a new home; or (iii) the actual gap between the total eligible development costs and the final sales price of the home.

• Owner-Occupied Homes: Tax credits cover the lesser of: (i) 50% of the eligible rehabilitation costs; (ii) the rehabilitation costs minus any homeowner repayments; or (iii) $50,000.

• State allocating agencies can provide up to 20% more credits if needed to cover additional gaps

• This ensures that each home receives only the amount of credits necessary to finance gaps preventing the development, rehabilitation and/or successful sale of the home.

Credits Flow in Communities with the Highest Need

• All states are required to deploy no less than 60% of their allocations in distressed communities; characterized by high poverty rates (at least 30% higher than area poverty rate), low median incomes (at or below 80% of area median income) and low home values (at or below area median home value).

• Larger states (those receiving their full per capita allocation of credits) may deploy: (i) up to 20% of their annual allocations to serve other statutorily identified geographies of high need (e.g., rural communities and those recovering from a federally declared disaster; and (ii) up to 20% to serve other communities that the state has determined has a shortage of affordable single-family homes.

• Smaller states (those receiving the minimum formula allocation) may deploy up to 40% of their annual allocations in any combination of items (i) or (ii) above.

• Maps of eligible communities in each state may be found here.

Homes are Affordable to First-Time Homebuyers

• Sales prices are limited to four times the area median family income (MFI). Example: if MFI is $90,000, the sales price limit would be $360,000. Higher limits apply to homes with 2-4 units.

• For homes developed or substantially rehabilitated for sale, eligible purchasers must have incomes at or below 140% of the area median income (120% in certain communities). 

• A homeowner who sells a home within five years of buying the home will repay part of the gain (profit) to the state to support additional similar activity.

• For owner-occupied home repairs, the homeowner must be making at or below 100% of the area median income.

A federal bill that would increase affordable homeownership opportunities in distressed communities is coming back into the spotlight as a Connecticut lawmaker works to gain its approval.

Rep. John Larson reintroduced the Neighborhood Homes Investment Act. It was first introduced in 2023, and previously received bipartisan support.

“The Neighborhood Homes Investment Act will tackle our housing crisis by incentivizing the construction of new homes and the revitalization of vacant homes in need of repair,” Larson said. “We will continue to work together to spur the development of good, quality housing in the Northeast and across the country, and make homeownership a reality for more of our nation’s families.”

The bill would extend a tax credit to certain developers, which would incentivize them to build or rehabilitate affordable homes in communities with high poverty rates and low homeownership.

The tax credit would cover up to 40% of the costs to build a new home for sale. It would also cover up to 50% of the costs for rehabilitating owner-occupied homes. In Connecticut, the funds would be dispersed by the quasi-public Connecticut Housing Finance Authority.

It would provide the gap financing certain developers would need to take on affordable homeownership projects, according to Matt Josephs, senior vice president for policy at the Local Initiatives Support Corporation (LISC).

“The cost to develop or rehabilitate a home is more than you can get for the sale price,” Josephs said. “So there's no incentive to do these homes, so the homes cannot get built in these communities. The idea is that you have a tax credit that would cover that gap.”

If approved, communities across Connecticut would benefit from the bill, according to Jim Horan, senior executive director of Local Initiatives Support Corporation’s Connecticut office.

“We look at the blight in Hartford and the high cost of both rehabbing the older housing stock that we have and the high cost of new construction, which is astronomical compared to what the market will sell,” Horan said.

Areas of Hartford, New Haven and Bridgeport are among several across the state that would qualify for the program.

The bill would incentivize production and rehabilitation of more than 500,000 affordable homes for sale in qualifying communities over the course of ten years.

Homes with up to four units would also qualify for the tax credit, however, the homeowner must live in one of the units.

To ensure the homes stay affordable, the sales price of a new home can’t exceed four times the average family income for the area.

While the bill is co-sponsored with bipartisan support, it may be several months before Congress votes on the proposal, according to Josephs.

“Many moving parts right now, but the goal is to make sure that this gets in an initial draft out of the House or the Senate in the coming months,” Josephs said.

A local version of the Neighborhood Homes Investment Act was created in Hartford, where Mayor Arunan Arulampalam cited the bill as inspiration for a program rehabilitating Hartford homes for affordable ownership.

“We need to build a stock of housing for our residents to own, to be able to cut off that cycle of consistent reliance on rental housing in this city, consistent reliance on out-of-state landlords,” Arulampalam said. “And to be able to allow families to build generational wealth for themselves and pass it on to their kids.”

HULL, IOWA – Earlier this month, U.S. Rep. Randy Feenstra (R-Hull) helped introduce – alongside Rep. Mike Kelly (R-PA) – the Neighborhood Homes Investment Act, which would mobilize private investment to construct new, affordable homes and revitalize existing homes to attract and keep families and businesses in Iowa. 

This legislation would support the construction or rehabilitation of roughly 500,000 homes for middle- and low-income families.

“Affordable housing is crucial to growing communities, attracting business investment, and keeping young families rooted in Iowa. However, certain barriers, often out of the control of local governments and contractors, cause housing shortages that hinder economic growth and community development,” said Rep. Feenstra. “Serving on the House Ways and Means Committee, I’m glad to help lead legislation to expand the housing supply, including in rural communities, to bring down costs and make the dream of homeownership attainable for more families. By ensuring that our tax code supports homebuilding, we can help families flourish, encourage our businesses to expand, and keep our communities strong.”

More specifically, the Neighborhood Homes Investment Act establishes a federal tax credit that developers can claim to construct new housing or substantially rehabilitate existing homes. This tax credit seeks to close the “value gap” – which occurs when the cost to build a home exceeds the price at which it is expected to sell – by covering up to 35% of development expenses for new construction.

###

By Lily Jin, Associate, Public Policy, OFN

The long-anticipated reconciliation process is finally moving forward on Capitol Hill. On April 10, the House of Representatives narrowly voted to adopt the Senate-passed budget resolution, after Senate Majority Leader John Thune (R-SD) and House Speaker Mike Johnson (R-LA) pledged to secure at least $1.5 trillion in spending cuts in the final tax package. Now that the first step in the reconciliation process is complete, lawmakers can begin writing the bill itself. 

Reconciliation is a special mechanism where Congress can pass a bill with a simple majority in the Senate instead of the normal 60-vote threshold, allowing the majority party to pass legislation without bipartisan support in exchange for limitations on what can be included in the bill. GOP leaders plan to use reconciliation to extend the 2017 Tax Cuts and Jobs Act and implement other priorities on the president’s agenda. 

Advocacy for Key Community Development Tax Provisions

OFN has advocated for several key community development tax provisions to be folded into the bill. 

Several of OFN’s priority bipartisan community development tax bills have already been reintroduced this Congress, including the New Markets Extension Act of 2025 (H.R.1103/S.479), the Affordable Housing Credit Improvement Act of 2025 (H.R.2725), and the Neighborhood Homes Investment Act of 2025 (H.R.2854). The community development tax incentives being considered are crucial tools to drive investment into the nation’s most economically distressed communities and provide relief for small businesses, affordable housing, and community infrastructure. 

The details of the tax package are now up to the committees, with tax provisions falling under the jurisdiction of the House Ways and Means Committee and Senate Finance Committee.

4.17.2025 - LISC Stories

Last week, the House and Senate approved budget resolutions on party line votes that will pave the way to overhaul the tax code and extend or make permanent trillions of dollars of tax cuts enacted in 2017 that are set to expire this year. As in 2017, Republicans will attempt to pass this legislation without Democratic support through a process called reconciliation. With razor thin majorities in the House and Senate, it is too early to say whether Republican efforts will be successful or whether they will need to ultimately need Democratic support to enact a tax package. Regardless of the path taken to get there, one thing is certain: Congress must take this opportunity to address our national housing supply shortage, and to support under-resourced communities.

Rental Housing

We are in the midst of a housing affordability crisis. According to Harvard’s Joint Center for Housing Studies, 22 million families—half of all renter households—are cost burdened, paying more than 30 percent of their income in rent; with one-quarter of all households paying at least 50 percent of their income towards rent. And yet at a time when more affordable housing production is needed, we are underproducing, with the Joint Center report noting that multifamily construction starts have fallen from an annualized rate of 531,000 units in the first half of 2023 to just 343,000 units in the first quarter of 2024.

Bipartisan legislation to expand the availability of affordable apartments was introduced in the House last week. Representatives Darin LaHood (R-IL) and Suzan DelBene (D-WA) re-introduced the Affordable Housing Credit Improvement Act (AHCIA) which would fuel the development of over 1.6 million additional units of rental housing units over the next 10 years, all generally affordable to families earning 60 percent or less of the area median income in their communities.

The bill aims to expand the number of housing units by increasing the amount of tax credits that can be awarded to developers, and by reducing the amount of private activity bonds that must be utilized in order to secure tax credit financing. In the previous Congress, the legislation garnered 273 co-sponsors, in part because it draws on what lawmakers know already works. The Housing Credit has successfully financed close to four million affordable housing units since its inception, helping to house over 9.2 million low-income families. This measure will help seed new developments, rehabilitate existing properties to keep them affordable for lower income families, and support financial stability for millions.

This measure will help seed new developments, rehabilitate existing properties, and support financial stability for millions.

Homeownership

Modelled after the Low Income Housing Tax Credit, the Neighborhood Homes Investment Act (Neighborhood Homes) would create an incentive for investors to finance new and rehabbed single-family homes in rural and urban communities where the cost to build generally outpaces the price at which homes could be sold. The latest iteration of the legislation, introduced last week by Representatives Mike Kelly (R-PA) and John Larson (D-CT), would fuel the development and rehabilitation of more than 500,000 homes over the next 10 years, while supporting 861,000 new jobs in the construction industry. In addition, the availability of additional housing for their employees will help to attract business to under-resourced communities.

Beyond the numbers, Neighborhood Homes responds to a basic fact: there is simply not enough single-family housing being built to meet the needs of American families. The National Association of Realtors estimates that there is a national shortage of over seven million single-family homes. This drives up housing costs for all Americans but particularly hurts moderate-income families and first-time homebuyers that are increasingly priced out of the market. And in many communities, aging and abandoned houses can’t be repaired or resold because there isn’t the financing available to do so. Neighborhood Homes attracts the private capital needed to build these homes, which is one reason why it had more than 100 bipartisan co-sponsors in the House last year.

Economic Recovery

LISC is also hoping to see action on one of the most critical economic development tools to have emerged in the past 25 years—the New Markets Tax Credit (NMTC). Through 2023, NMTC investments totaling $73 billion have supported over $135 billion in total project financing for 8,500 business and real estate projects in some of the nation’s most distressed communities.

The NMTC program is set to expire this year, but Representatives Claudia Tenney (R-NY) and Terri Sewell (D-AL) reintroduced the New Markets Extension Act in February to make the program permanent. The bill would provide $5 billion in an annual allocation authority, indexed for inflation, and would exempt NMTC investments from the alternative minimum tax. Companion legislation was introduced in the Senate by Senators Steve Daines (R-MT) and Mark Warner (D-VA).

This program is a priority for LISC because it is such a powerful tool for community revitalization. It helps supports business and jobs—from health centers to manufacturing facilities to charter schools to retail developments. And it also helps advance affordable housing by financing mixed-use developments that include affordable rental units as well as bringing capital to single-family development efforts.

Collectively, these housing and community development policies directly impact the quality of life for millions of Americans across the country.

As with housing-specific programs, leverage is one key to NMTC’s long track record of success. The credits attract $8 in private capital for every federal dollar spent, and the program generates more federal revenue than it costs in outlays. It brings down the cost of capital for high-impact projects, serves as gap financing so developments are financially viable, and encourages the flow of capital to communities facing economic challenges.

We are also eager to work with Congress to seek improvements to the Opportunity Zones program, which is set to expire next year. Enacted as part of the 2017 Tax Cuts and Jobs Act, it is a different vehicle than the NMTC program, with a more limited geographic scope and an incentive structure that tends to attract investors seeking higher returns than are possible through the Housing Credits or NMTCs. One of the more surprising outcomes of Opportunity Zones is that much of the investments have been targeted to support housing, with hundreds of thousands of multifamily housing units coming online through the initiative. However, it is estimated that less than 4 percent of these units are rent-restricted affordable housing, raising a real concern that low-income families may be displaced from communities that are poised for economic recovery. Any extension to Opportunity Zones must also include provisions that support increased development of affordable housing in these communities.

What’s Next

The Republicans will soon begin marking up its legislation, with ambitious deadlines to produce a tax bill by the end of May. While it is likely that Opportunity Zones will be a part of this package, the fate of LIHTC, NMTCs and particularly Neighborhood Homes—which represents new tax policy and not an extension or improvement of current tax policy—is much less certain.

Nonetheless, there is a clear path for each of these initiatives to be included in the tax legislation, as each has significant Republican support. The housing crisis, once a coastal issue, is now hitting all parts of the country. Both parties have consistently talked about the need to develop more housing, and the AHCIA and NHIA would collectively support over 2 million more units of affordable homes over the next decade. Similarly, the NMTC Program enjoys widespread support from Republicans who appreciate the value of engaging the private sector to invest in all too often forgotten rural and urban communities, and the catalytic impact of these investments.

Collectively, these housing and community development policies directly impact the quality of life for millions of Americans across the country. They can help shore up economic resilience for families and communities alike, supporting long-term growth and driving economic prosperity that would not otherwise be possible. LISC will continue to make this case in the coming weeks and months, so that these families and communities will not be left behind in future tax legislation.

The Neighborhood Homes Investment Act has been reintroduced in the latest session of Congress, once again with bipartisan support.

At the end of the 118th Congress in December, the House version of the bill had 110 co-sponsors, while the Senate had 16, a press release at that time from the Neighborhood Homes Coalition said.

Reps. Mike Kelly, R-Pa., chairman of the Ways & Means Subcommittee on Tax and John Larson, D-Conn., ranking member of the Ways & Means Social Security Subcommittee, introduced the new bill.

"The Neighborhood Homes Investment Act will allow homeowners and developers to not only affordably restore beautiful homes, but also to build and create more affordable housing in communities that need it the most," Kelly said in a press release. "For the families whose dreams of homeownership feel unattainable, this bill could make those dreams closer to reality."

If passed as envisioned, the NHIA would create a tax credit program, awarded to sponsors through competitions administered by state housing finance agencies.

The sponsors would use the credits to raise financing for their projects, with the investors able to claim them against their federal income taxes.

Those credits can only be claimed for homes developed or rehabilitated in eligible low-income communities. This would happen only after the homes are sold and occupied by lower or middle-income families.

"We will continue to work together to spur the development of good, quality housing in the Northeast and across the country, and make homeownership a reality for more of our nation's families," Larson added.

The other co-sponsors are: Randy Feenstra, R-Iowa; Vern Buchanan, R-Fla.; Carol Miller R-W.Va.; Mike Carey, R-Ohio; David Kustoff, R-Tenn.; Nicole Malliotakis, R-N.Y.; Nathaniel Moran, R-Texas; Terri Sewell, D-Ala.; Danny Davis, D-Ill., and Jimmy Panetta, D-Calif.

On the Senate side, Todd Young, R-Ind., will reintroduce the bill as lead sponsor, with Mark Warner D-Va. The previous versions of the legislation had been co-sponsored by Sen. Ben Cardin, D-Md., who retired at the end of the last session.

"This legislation also includes important guardrails to ensure that tax incentives target the families that need it most," Young said in the Neighborhood Homes Coalition release. "I am encouraged by the increasing amount of support this effort is receiving, and I am hopeful that Congress will pass this legislation soon."

The National Housing Conference, a long-time supporter of this legislation, cheered the announcement.

"With a shortage of affordable housing supply, this initiative would help bridge the gap between development costs and market prices in neighborhoods where housing values don't currently support new construction and rehabilitation lending," David Dworkin, president and CEO, said in a statement. "Over the next decade, NHIA can support the creation of hundreds of thousands of homes where it's needed most."

The bill also has mortgage industry backing.

"MBA supports key tax legislation that boosts entry-level housing supply and improves affordability," including the NHIA, said Bill Killmer, in a statement. "As this bill and other bipartisan tax credit proposals are reintroduced in the 119th Congress, we will advocate for their inclusion in any major tax package Congress enacts this year."

The Community Home Lenders of America is also on board, noting if passed, it would reduce the inventory shortage.

"CHLA has long been a supporter of the Neighborhood Homes Investment Act," Scott Olson, executive director, said in a statement. "The best way to address housing homeownership challenges is through the supply side of the equation — and this bill could help in that regard."

By AHF Staff

Lawmakers reintroduced the Neighborhood Homes Investment Act (NHIA) that calls for a new tax incentive to build and preserve more than 500,000 affordable single-family homes over 10 years.

The bill was reintroduced by Reps. Mike Kelly (R-Pa.), chair of the Ways and Means subcommittee on tax, and John Larson (D-Conn.), ranking member of the Ways and Means Social Security subcommittee.

Under this legislation:

• Tax credits would be awarded to project sponsors through statewide competitions administered by state housing finance agencies;

• Sponsors, which could include developers, lenders, or local governments, would use the credits to raise capital for their projects, and investors would claim the credits against their federal income taxes; and

• The credits can only be claimed for homes developed or rehabilitated in eligible low-income communities, and only after the homes are sold and occupied by lower- or middle-income families.

“The Neighborhood Homes Investment Act will revitalize distressed urban, suburban, and rural neighborhoods with federal tax credits, mobilizing private investment to build and rehabilitate homes for lower- and middle-income homeowners,” says David M. Dworkin, president and CEO of the National Housing Conference. “With a shortage of affordable housing supply, this initiative would help bridge the gap between development costs and market prices in neighborhoods where housing values don’t currently support new construction and rehabilitation lending. Over the next decade, NHIA can support the creation of hundreds of thousands of homes where it’s needed most. NHIA is one of the top priorities of the National Housing Conference. We are committed to working with policymakers and stakeholders to advance this vital, bipartisan legislation.”

The NHIA gained strong backing in the 118th Congress, with 111 House cosponsors, including 17 members of the House Ways & Means Committee. The Senate version of the bill had 16 cosponsors last Congress, and a companion Senate bill is anticipated to be reintroduced later this month by Sens. Todd Young (R-Ind.) and Mark Warner (D-Va.).

Read the bill text here.