SC lawmakers considering scaling back popular affordable housing tax credit program
CHARLESTON, S.C. (WCSC) - Despite its popularity — and also because of it — a program designed to spark more affordable housing construction in South Carolina could be significantly scaled back.
State lawmakers are considering putting limits on the amount of funding allocated to the Workforce and Senior Affordable Housing Act’s tax credit program, which was passed into law in 2020 and has led to the development of nearly 10,000 new affordable housing units in just the last two years, according to housing advocates.
“I hope you will keep in mind not just the cost but also the benefits that this program provides. Everyone talks about the need for more affordable housing, but this is one state program that directly impacts how much housing we can create and put on the ground,” said Tracy Doran, the president of Humanities Foundation, an affordable and workforce housing organization in Mount Pleasant.
The program offers developers state tax credits to build affordable housing, in addition to credits they could receive from a similar program through the federal government.
But with that popularity has come a steep cost: State economists estimated about $25 million worth of credit was approved in the last fiscal year, significantly more than their initial projections before the bill became law in 2020. Earlier this year, state leaders paused the program to reevaluate its expenses.
Now a new bill proposed by two influential Republican senators — Finance Committee Chair Harvey Peeler of Cherokee County and Senate President Thomas Alexander of Oconee County — would cap the program at $15 million a year in total allowances and would also set a more competitive process for developers to receive tax credits.
But during a recent Senate Finance subcommittee meeting, during which senators heard testimony but did not vote to amend or advance the bill, housing advocates, developers, and attorneys asked them to reconsider the limits that legislation would set.
“$15 million is probably too low, just facing the demand for our workforce and what they’re needing to bring people here and be able to house folks, filling the jobs, and bringing business into South Carolina,” Tina Belge of the Greenville Housing Fund said.
Advocates argue the popularity of the tax credit program is a product of how urgent an issue housing is in South Carolina, where nearly a third of all households struggle to afford a place to live.
Unsurprisingly, the state’s population centers are where most of the 24% of renters across South Carolina who spend at least half their income on housing and utilities live, according to a 2019 study, with Richland County home to the largest number of people in that group.
“Affordable housing is a crisis,” Columbia Mayor Daniel Rickenmann said. “It is an issue in our community, and for you to understand right now, I need 6,700 units today, just to fill the gap that we have, let alone the 16,000 that are projected over the next five to 10 years.”
Rickenmann told senators those tax credits are helping not just to expand the capital city’s workforce but also to keep people working and living there instead of moving to neighboring states.
A few people testified the bill’s allowances need to be expanded to help those struggling outside South Carolina’s metro areas. As the legislation is written now, credits would only be approved for projects that some said are primarily geared toward urban development.
“At risk right now, if this bill were to go through as is, you wouldn’t get any rural deals funded, in my opinion,” Affordable Housing Coalition of South Carolina President Kevin Connelly said.
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