Legislative panel advances proposal to cap SC affordable housing tax credit program | Legislature


COLOMBIA — Members of a Senate legislative panel have voted to advance legislation limiting the amount of tax credits the state can give to developers of affordable housing across the state.

By unanimous vote on March 22, a Senate Finance Committee subcommittee proposed legislation that would cap the state’s Affordable Housing Tax Credit program at $15 million per year.

It would also implement a scoring program through the state’s Joint Bond Review Committee for developers seeking tax credits for their projects, guaranteeing only the highest priority projects.

The proposal would set aside a quarter of that $15 million cap specifically for projects in rural areas claiming the 9% federal low-income housing tax credit. This is one of the federal government’s main tools for stimulating the production and rehabilitation of affordable rental housing.

The bill’s move comes as demand for the program, established by lawmakers during the 2020 legislative session, exceeded initial financial expectations by hundreds of millions of dollars. Many of the projects were mainly located in urban areas and could not be built before the introduction of the tax credit.

While tax hawks and state treasurer Curt Loftis have pointed out that the scale of the program is financially unsustainable, affordable housing advocates have described the program as essential to solving the state’s housing crisis.

In an earlier hearing on the bill, city officials, along with affordable housing advocates, urged lawmakers to either raise their proposed cap or impose guidelines that would allow more projects to be developed.

The large backlog had created a large demand for the tax credits, which resulted in the number of tax credit applications far exceeding legislators’ expectations.

Lawmakers debate future of SC's Affordable Housing Tax Credit

Lawmakers said the proposed changes to the law would help the state’s top oversight board make its decisions in a more controlled manner and ensure that large urban projects that have taken the lion’s share of affordable housing funds from the state don’t take all of the future cap of $15 million.

“It’s not even debatable, it’s wrong in rural areas,” subcommittee chairwoman Sen. Nikki Setzler, D-West Columbia, said during the hearing.

If the bill doesn’t pass, Setzler suggested the program — which was already put on hiatus by the state earlier this year — could face an indefinite moratorium.

“We certainly hope that’s not the case,” Setzler said.

The bill is expected to receive a hearing before the full Senate Finance Committee next week.

Editorial: SC needs a strong Affordable Housing Tax Credit to tackle a big problem

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Contact Nick Reynolds at 843-834-4267. Follow him on Twitter @IAmNickReynolds.


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