The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Ohio Gov. Mike DeWine has signed a measure passed late in the previous session which appropriates nearly $6 billion in federal funds from the American Rescue Plan Act. The governor declined to issue any line-item vetoes despite calls to do so, particularly from affordable housing advocates.
Friday morning DeWine acknowledged “no legislation is perfect,” but argued House Bill 45 delivered on his priorities like mental health funding. He described his decision to accept the housing provisions as part of the typical back-and-forth legislative process.
“Everybody has different priorities,” DeWine said. “That provision in regard to housing was not a priority of mine, but it was, obviously, of some members of the General Assembly.”
Stacking incentives
One of the changes making the affordable housing community nervous has to do with two tax incentives. One, is the federal low income housing tax credit; the other is Ohio’s historic preservation tax credit. To make financing more feasible, developers paired these credits. Under HB 45, projects receiving the federal credit will be ineligible to receive the state credit.
Another change allows county auditors to assess affordable projects, which must offer below-market rent, as if they were operating as a market-rate development.
“These amendments threaten the financial viability of existing developments that house tens of thousands of seniors, children, and people with disabilities,” Coalition on Housing and Homelessness in Ohio Executive Director Amy Riegel said in a press release urging DeWine to veto the provisions.
“And they will discourage the creation and rehabilitation of future affordable housing projects in Ohio at a time when housing costs are exploding,” she added.
Lt. Gov. Jon Husted explained lawmakers raised concerns about developers stacking the two credits, “because that, in their minds, was not what that was designed for.”
A comprehensive approach
In response to those concerns, DeWine promised to include what he terms “a comprehensive approach to our housing issues.” Among those proposals is a state version of the low-income housing tax credit.
“It’s something that a number of states have. We do not have it. I believe that it will be a game changer, if the legislature does in fact approve that. So that will be a very top priority,” DeWine explained.
In addition, DeWine will propose an expansion of the historic preservation tax credit.
Husted argued the new state tax credit should be able to make up for any losses that come from not being able to stack incentives.
“That will help fill in any funding gaps that may that this legislation may have created,” Husted said. “And we should be able to determine if there are any negative impacts to the local tax treatment because we will see at that point whether or not there is a reduction in the number of people taking advantage of both the federal and state tax credits as we move forward.”
The right approach?
Still, budget proposals aren’t binding. With DeWine’s signature, legislative leaders have gotten what they wanted. There’s no guarantee lawmakers will consider DeWine’s proposal.
The governor and the lieutenant governor, though, contend they’ve received assurances their ideas will get a fair hearing. “We have the commitment of the Senate President,” DeWine argued, “that that debate will occur, and we will have ample opportunity to make our case.”
DeWine dismissed suggestions that vetoing the housing provisions now might bring lawmakers to the negotiating table in a few months to hash out housing policy in the budget. “There’s a trust question here,” DeWine said.
“I did not feel that, in good faith, for the agreement we had before and agreements we might have in the future, that this would be a very wise thing to do,” DeWine added.
Support despite misgivings
COHHIO’s Amy Reigel issued a statement after DeWine’s announcement expressing frustration with his decision but applauding his plans for the coming session. In particular, she warned that without legislative tweaks Ohio won’t be able to access $161 million emergency rental assistance from the feds.
“Rents are increasing at an unprecedented rate, evictions have returned to pre-pandemic levels, and local agencies can’t find affordable rental units to move people out of homelessness,” Reigel said. “The state government has time to craft a state housing tax credit, but there is no time left for thousands of Ohioans who have an eviction notice on their front door.”
She encouraged DeWine to use additional American Rescue plan dollars to “jumpstart” his affordable housing initiatives in the coming year.
Meanwhile, other organizations were quick to register their approval of the governor’s decision.
The County Commissioners Association singled out a relatively small but “crucial” appropriation for new electronic poll books. The organization also cited significant investments in sewer and water systems, lead mitigation, and workforce housing. The Buckeye Institute took a victory lap over changes to the state’s Afterschool Child Enrichment program.
Organizations that serve seniors, including LeadingAge Ohio, applauded investments in nursing homes, and behavioral health organizations praised spending on mental health services.
