OMAHA, Neb. (AP) — Some Omaha developers are blaming a narrow interpretation of a new state tax credit for producing fewer affordable housing options than they expected.
Tom McLeay founded Clarity Development, which is behind a recent residential project to bring lower-cost units to the city. The $30 million Aspen Grove apartment complex capped rent, reserving units for households earning less than 60% of the area’s median income. The apartments filled up quickly because there’s an unmet demand in the city for quality housing that’s also affordable, compared to the increasing market-rate apartments rising across the city, McLeay said.
He told the Omaha World-Herald that Nebraska’s 9% housing tax credit that took effect last year isn’t working as he and some developers had hoped.
According to the developers, policymakers are applying a narrow interpretation of the law, which is resulting in the focus on rental dwellings for special needs groups, such as disabled veterans, elderly residents and those with the lowest income.
Former Sen. Burke Harr originally sponsored the bill to target the working poor.
“I think it was a little too complicated,” Harr said. “No one really quite caught on to what we were trying to do.”
Harr and McLeay both said they don’t mean that they want to deny housing to special needs populations, but rather that these groups already get prioritized in a federal housing tax credit program.
The Nebraska Investment Finance Authority administers the federal low-income tax credit program along with the state’s new counterpart. The authority’s executive director, Tim Kenny, said he’ll continue to use the more narrow interpretation unless he’s directed otherwise by Republican Gov. Pete Ricketts or the Legislature.
About $5.3 million in state low-income housing tax credits can be allocated annually, according to the authority. The credits can be claimed for six years, which puts the cost around up to $32 million.
The governor’s office said a change would add more expenses.
But McLeay said the state wouldn’t have to incur extra costs and instead could redirect some state credits to apartment projects aimed at the working poor.
McLeay and Harr warn that the city’s shortage of quality and affordable rental housing could worsen.
Rising constructions have made it financially unmanageable for a for-profit developer to create such options without a financial incentive or subsidy, McLeay said.
Attorney David Levy, who chairs the Omaha Housing Authority, said he wants to see the state expand its housing tax credit for projects aimed at the working poor without taking away funding from another program.
“One of the things urban and rural senators still agree on in this state is that the lack of workforce housing is hurting our ability to grow our economy and tax base,” Levy said. “It’s a very real problem.”