Relating to the allocation of low income housing tax credits.
The proposed amendments in SB898 will specifically limit the amount of low income housing tax credits allocated per application to a maximum of $6 million, with individual developments receiving no more than $3 million. This legislative change is expected to create a more structured and equitable distribution of tax credits, potentially enhancing competition among developers and ensuring that funds are better utilized in creating affordable housing units across Texas. However, it could also be viewed as limiting for certain projects that may require additional funding to meet local housing needs.
Senate Bill 898 aims to revise the allocation process for low income housing tax credits in Texas. This legislation seeks to amend Section 2306.6711(b) of the Government Code, which governs how the Texas Department of Housing and Community Affairs allocates these critical tax credits. Under the proposed changes, the department would be required to adhere to new procedures aimed at ensuring that the amount allocated to applicants does not exceed specified limits, thus reforming the application evaluation process. This bill is particularly pertinent as it addresses the ongoing need for affordable housing solutions in the state, a significant concern for many Texans.
One potential point of contention surrounding SB898 arises from the limitation on the amount of tax credits that can be allocated per development. Proponents argue that establishing a cap will prevent any one project from monopolizing state resources, allowing for greater distribution of funds across multiple initiatives. Conversely, critics may contend that these limits could inadvertently stifle larger developments that aim to create significant numbers of housing units, negatively impacting the overall availability of affordable housing in high-demand areas.
If passed, the new guidelines set forth by SB898 will take effect on September 1, 2025, meaning that it will influence the allocation of tax credits based on the upcoming qualified allocation plan for 2026 and beyond. This timeline suggests that stakeholders in the housing sector will need to prepare for these changes well in advance as they adjust their strategies for funding new housing projects. Overall, SB898 represents an important step in Texas's approach to addressing low income housing through a more regimented and equitable tax credit allocation system.