Hello, I’m Debi Durham, Director of the Iowa Economic Development Authority. As I travel the state, one thing I commonly hear in every community is the need for affordable housing to accommodate the workers our companies are employing. That’s why three years ago the Iowa Legislature established the Workforce Housing Tax Credit Program, designed to assist developers with the construction or rehabilitation of housing to help communities begin to solve those housing issues.
The program has been met with great enthusiasm, and the $20 million-dollar annual cap has quickly been reached each year since inception. Projects that satisfy eligibility criteria are awarded on a first-come, first-served basis. While there has been a mix of urban and rural development projects, most applications received have been for projects in the state’s larger communities where there is less risk for developers.
To spur growth and further incentivize development in those rural areas where housing needs are critical, in May the Legislature passed the Small Cities Set-Aside bill under the Workforce Housing Tax Credit Program, which dedicates $5 million of the $20 million annual cap to projects in small cities. The set-aside will be available for qualifying housing projects in all Iowa communities except those located in the 11 most populated counties in Iowa, per the most recent census.
In addition to the set-aside, there are new benefits that qualifying projects in small cities will receive:
- First, under the initial program, projects only qualified for up to a 10 percent investment tax credit, but now projects in qualifying small cities may receive up to 20 percent credit for a maximum of $30,000 per housing unit.
- Secondly, under the initial program, new development only qualified for tax credits if they located on a Brownfield or Grayfield site unless a distressed workforce housing assessment had been completed. Under the new bill, projects in small cities can be built on greenfield land without the assessment.
- Lastly, the maximum unit cost for new construction has been raised from $200,000 to $215,000 for projects developed in small cities.
Housing development requires long-term planning. I encourage interested community leaders to start now to learn more about the benefits the Small Cities Set-Aside Program could provide to your city. You can find more information on the Iowa Economic Development website, or by contacting program manager, Steve Benne at 515-725-3066.
We hope these program changes will, literally, help open new doors, in your community. Thank you again, for all the good works you do for your communities and the state, and enjoy a fun and safe Independence Day holiday.