Landmark State Legislation Will Create Affordable Housing Incentives - Metropolitan Planning Council

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Landmark State Legislation Will Create Affordable Housing Incentives

Major omnibus legislation awaiting Governor Pritzker’s signature will increase & preserve affordable housing throughout Illinois

State Senators Sara Feigenholtz, Mattie Hunter, and Ann Gillespie

Image courtesy Illinois Senate Democrats

This post was originally featured on Housing Action Illinois' blog. Housing Action Illinois is a critical voice in advocating for affordable housing in Illinois. MPC was proud to partner with them and other organizations noted below on provisions in HB2621, which passed the legislature on Monday, May 31.

Chicago — On Monday, May 31, the Illinois General Assembly passed major omnibus legislation, House Bill 2621, to increase the supply of affordable housing across the state. The bill creates new resources to finance the development of affordable rental housing and establishes property tax policies to support owners of rental housing to invest in their properties and keep rents affordable. It also strengthens existing state law requiring communities with very small stocks of affordable housing to develop plans to remedy this shortage. The legislation passed both the House and Senate with unanimous, bipartisan support.

“Illinois has a severe shortage of affordable housing, and the COVID-19 pandemic has only exacerbated the number of people facing housing insecurity,” stated State Senator Sara Feigenholtz in a May 30 press release on the legislation. “As of 2019, Illinois was short nearly 108,000 rental homes individuals earning 60% of their local area median income could afford. In Chicago, this is about $56,000 for a family of four. By offering tax incentives, we will be able to keep families together, in their homes and in their communities.”

Key provisions of HB 2621 include:

  • Creating a COVID-19 Affordable Housing Grant Program to support the construction and rehabilitation of affordable multifamily rental housing in response to the COVID-19 pandemic. The fiscal year 2022 state budget includes initial funding of $75 million for the program, using federal funds from the American Recuse Plan. This will ensure that development costs can be paid for while also keeping rents affordable for low-income households.
  • Establishing a property tax assessment incentive to encourage owners of multifamily buildings with 7 or more units to invest in their properties and keep rents affordable. To serve the needs of owners in both high and low cost markets, the legislation creates three different incentive levels, with different levels of investment thresholds, assessed value reductions and affordability requirements. Both market rate and affordable developers can participate.
  • Strengthening the Affordable Housing Planning and Appeal Act (AHPAA). This existing state law requires communities with less than 10% affordable housing to develop plans to address the shortage. HB 2621 will make it clear that this explicitly applies to home rule communities and will require that local governments hold a public hearing on proposed affordable housing plans before finalizing them.

“The provisions in the bill will help reduce Illinois’ significant shortage of affordable rental housing and provide tools to preserve affordable housing in communities where it’s being lost due to increasing rents and property values,” explained Bob Palmer, Policy Director of Housing Action Illinois.

“This policy is a one-stop-shop to address affordable rental needs in both higher cost and lower cost neighborhoods,” said Stacie Young, Director of the Preservation Compact, in the press release from the office of Sen. Feigenholtz.

Other provisions in the omnibus legislation include:

  • Extending the Illinois Affordable Housing Tax Credit (“State Donation Tax Credit”) through 2026.
  • Increasing income targeting for state donation tax credit-financed home ownership projects to 120% of area median income.
  • Improving income-based property tax assessment policies for housing financed with the federal Low Income Housing Tax Credits.
  • Increasing the bonding authority for the Illinois Housing Development Authority (IHDA), so that IHDA can finance more affordable housing.

Housing Action Illinois and our allies are grateful to our champions in the General Assembly, including Senators Mattie Hunter, Ann Gillespie and Sara Feigenholtz, as well as Representatives Will Guzzardi, Delia Ramirez, Curtis Tarver and Mike Zalewski. We also thank all the legislators who co-sponsored various versions of the bills that wound up in the omnibus.

We are also grateful for our partners, including Community Investment Corporation, Enterprise Community Partners, Illinois Housing Council and Metropolitan Planning Council.

Many other groups, elected officials and government agencies also supported, including Cook County Assessor Fritz Kaegi, Cook County Board President Toni Preckwinkle and the City of Chicago Department of Housing.

We urge Governor Pritzker to sign HB 2621 into law as soon as possible.

Bob Palmer, Policy Director for Housing Action Illinois, has almost 30 years experience in housing organizing, advocacy, training, and finance. He has spearheaded successful campaigns to create and fund a state rental subsidy program for extremely low-income households, secure money for affordable housing in Illinois’ capital budget for the first time, pass state legislation protecting homeowners and renters during the foreclosure process, and protect state funding for homeless service providers.

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