WASHINGTON Twenty-six housing and community development groups have come together to form the Community Homeownership Credit Coalition to push for the enactment of a homeownership tax credit proposed by the Bush administration that would help increase the supply of affordable homes for sale.
The community homeowner-ship tax credit is designed to help bridge the gap that exists between the cost of developing affordable housing and the price at which these homes can be sold in many lower-income neighborhoods. Available through a competitive allocation program administered by state agencies, the program would provide investors with a credit of up to 50 percent of project costs for eligible home rehabilitation or construction.
The program is intended to encourage new construction and substantial rehabilitation of homes for sale to low- and moderate-income families in economically distressed areas. Modeled on the Low-Income Housing Tax Credit, the community homeownership tax credit was first proposed by President Bush during his presidential campaign and was included in the administration's fiscal year 2002 budget proposal.
"Despite our recent economic prosperity, the dream of homeownership remains elusive for too many American families, especially those with lower-incomes," said Martin Edwards Jr., president of the National Association of Realtors. "Immediate action is needed to increase the quality and quantity of affordable homes for sale. The community homeownership tax credit will make home development and rehabilitation more financially feasible, which will go a long way toward enhancing communities and helping lower-income Americans get their piece of the homeownership pie. As Realtors, we're committed to helping make the dream of homeownership a reality for every American."
"Homeownership is essential to a balanced strategy to rebuild communities," said Michael Rubinger, president and CEO of the Local Initiatives Support Corporation, which has invested $4 billion through nonprofit low-income community development organizations. "The community homeowner-ship tax credit will fill the critical financing gap that until now has thwarted the construction and renovation of homes in inner cities, struggling suburbs and isolated rural areas. We are confident the credit will succeed based on our experience with the Low Income Housing Tax Credit, which has mobilized private investment in more than a million rental apartments since 1987."
In spite of overwhelming needs, very little new construction or substantial rehabilitation of owner-occupied homes occurs today in lower-income communities. The major reason is that the cost of developing such housing typically exceeds the maximum feasible sales price of the property in lower-incomes areas. No developer will invest capital and no lending institution will make loans that cannot be supported by the market value of the home. The goals of the community home-ownership tax credit are to enable development to go forward, help revitalize economically distressed communities and increase the rate of homeownership in lower-income areas.