The Senate Taxation Committee will take executive action this Friday on HB 397, the Montana Workforce Housing Tax Credit. Montana’s workforce housing shortage is one of the most critical issues impacting urban and rural areas across the state. Rent in Montana has grown 62 percent faster than the national average, and 668 percent of Montana renters living on very low incomes pay more than half of their income for housing. This system is simply unsustainable. This program is a much-needed tool to increase Montana’s housing supply as part of the state’s post-COVID come-back plan.
HB 397 incentivizes developers to build more homes for working families. The Montana Workforce Housing Tax Credit is a companion program to the federal Low-Income Housing Tax Credit (LIHTC) and, when paired together, would double the use of these federal funds. About 20 states have state-based housing tax credit programs to address their workforce housing issues. For example, after Colorado renewed its state housing tax credit in 2015, the program helped double the number of new and renovated homes affordable to working families, created 19,000 jobs, and generated $1.5 billion in total economic benefit. Montana’s state housing tax credit looks to deliver similar results in the number of homes created, as well as the financial and economic benefits generated by tax credit supported housing projects.
HB 397 would create:
- More workforce housing: Passing a state-based housing tax credit would allow Montana to double (or possibly triple) the number of rental homes that we can create or preserve each year.
- More investment: A state credit could bring in enough private investment to produce 18,000 homes and generate over $828 million in economic activity over ten years.
- More workforce housing in rural areas: Since 2016, $310 million for 1,900 apartments in federal tax credit requests were denied due to lack of available credits, with more than half of unfunded projects located in rural areas. A state tax credit can support larger urban developments, making more federal tax credits available for rural areas and small towns.
- More good-paying jobs: A single new housing construction project supports 13 jobs earning $600,000 in labor incomes per $1 million invested in new multi-family housing construction projects. Additionally, more available workforce housing allows employers to hire and retain the employees they need to grow their business.
Everyone deserves a home, but homes are also critical to ensuring a stable and productive workforce. Our state continues to suffer the social and economic consequences when people cannot find affordable and quality housing in the communities where they work. Our legislature must act urgently to address this problem by passing the Montana Workforce Housing Tax Credit program.