Ohio Housing Council June 15th Press Release

by | Sep 7, 2023 | State Updates

For Immediate Release

Contact

Matt Rule
President , Ohio Housing Council
614.579.4588
ohc@ohiohousingcouncil.com

For Immediate Release

Senate Omnibus Budget Amendment Addresses New Housing Development; Proposes Concerning New Administrative Process

COLUMBUS, Ohio – Over the last two years, the business and housing industry have worked closely with the Governor and the Legislature regarding housing issues and we are pleased to see Governor DeWine, the Ohio House of Representatives and the Senate beginning to align behind a state housing tax credit. We applaud the Senate for including a state housing tax credit program in their budget proposal. We encourage the Governor, House and Senate to continue to work towards the House version of the state housing tax credit program and to ensure the state housing tax credit program is sized to provide additional housing at scale. Although we are pleased to see the beginning of an alignment regarding the state housing tax credit, we also are concerned that the Senate’s budget proposal misses the opportunity to address property tax valuation issues and introduces the fundamental restructuring of OHFA and statutory changes to the current administrative processes that could have significant negative impacts and unintended consequences.

Ongoing Budget Discussion

We continue to advocate for the House Budget version of the state housing tax credit in full and believe it is very important that the State make this investment in housing at scale. The House budget proposal would produce five times as many housing units (25,950 units total) as the Senate’s and Governor’s current budget proposals (4,700 units total). The House version is at a scale that would make a significant impact on the statewide shortfall of affordable workforce and senior units.
Additionally, over the last two years, the affordable housing industry has worked closely with the Governor and the Legislature regarding affordable housing property tax valuation issues. The Senate budget proposal has stripped the clarifying language regarding property tax valuation fixing the confusion created by HB 45 at the end of the year. The Senate proposal does not include the uniform valuation methodology agreed upon by OHC and the Ohio Auditors Association and adopted by the House budget proposal after numerous Committee hearings. This compromise establishes equitable and consistent methodologies across the State – and provides financial institutions, owners and management companies with the certainty needed to continue to finance, develop and operate quality housing communities in the State. We urge the Senate to adopt the House compromise.

Concerning New Changes to Administrative Process

The Senate budget proposes significantly altering the structure of the Ohio Housing Finance Agency (OHFA), by transferring the agency and its employees under the Department of Development. Proposing to reconstitute such a complex agency – more than 150 employees, a non-general revenue fund budget in excess of $10,000,000 and 15 departments allocating more than $500,000,000 annually in state and federal resources – without a comprehensive study and committee hearings is concerning.

The Senate budget also significantly changes the administrative process for awarding and administering the current low-income housing tax credit in a material way. OHC is very concerned that these changes will have material unintended consequences leading to the slowing and reduction of housing investment and production, slowing the efficient deployment of capital, undermining OHFA employee morale and technical expertise, and reconstituting established housing industry norms. We urge the Senate, House and Administration to conduct committee hearings and do a study to understand the impact and any potential unintended consequences prior to the execution of such a major restructure. Such careful consideration would be consistent with the multiple-year and thorough process that led to the decision to create a quasi-independent OHFA in 2005.
Since 2005, OHFA has operated under the oversight of a Governor-appointed Board of Directors as a quasi-independent agency provided with the appropriate operational autonomy necessary to quickly address rapidly changing housing needs. During this time, OHFA has demonstrated responsible and proactive state administration of its programs and is widely regarded as one of the most impactful and effective agencies in the country. OHFA’s autonomy is consistent with the structure of 42 of 50 state housing finance agencies (HFAs) nationwide as identified by the National Council of State Housing Agencies (NCSHA). NCSHA is the industry group for state housing agencies that administer the low income housing tax credit (LIHTC) programs nationwide and the arbiter of national best practices for administering LIHTC programs. Since 2005, OHFA has received a number of national awards from NCSHA, including among others, awards for Internal Operations Management Innovation (2020 and 2014) and Encouraging New Production (2017). OHFA’s autonomy has very tangible benefits that should be seriously considered. For example, it has contributed to OHFA’s current AAA bond rating – which leads to lower bowering costs for single-family and multi-family borrowers. A restructure will likely lead to a lower bond rating and therefore higher borrowing costs for single-family and multi-family borrowing costs – this is counterproductive to encouraging home ownership and additional housing development.
The Senate budget also materially changes the administrative process for awarding and administering the current federal low-income housing tax credit program. The new processes in the Senate budget have the potential to have political influences disrupt the data driven process currently used by OHFA consistent with the best practices endorsed by the NCSHA. In all cases, the state’s Qualified Allocation Plan (QAP) and distribution of state and federal housing should be empirical and data-driven. OHFA’s Office of Research and Analytics has served the state of Ohio well in this regard for over a decade – informing the development of OHFA’s Annual Plan, Housing Needs Assessment and QAP – and will be crucial to efficiently allocating resources in the coming years. Also, as described, we have heard from our members in the investment and lending community that they believe the implementation of these new changes will likely disrupt investment in affordable housing in Ohio for over a year, particularly, because of the lack of process that has been used to evaluate such substantive transformation of a very complex agency.
OHC highly recommends the Senate, House and Administration conduct committee hearings and do a study to understand the impact and potential unintended consequences prior to the consideration of such a significant restructure.

About the Ohio Housing Council

The Ohio Housing Council (OHC) is made up of nearly 100 member organizations. We are privileged to be the primary advocacy group in Ohio representing owners, financial participants, property management firms and construction companies in the affordable housing industry. We tirelessly advocate for the efficient deployment of resources to house Ohio’s working families, seniors and formally homeless individuals in affordable multi-family and single-family rental properties. Our state faces an unprecedented housing crisis with almost 400,000 Ohio households that are spending more than 50% of their income on rent. OHC is convinced now is the time for Ohio to double down on what is has historically worked well for Ohioans while also introducing new tools for owners, financial participants and governmental agencies to provide more quality housing across the State. For more information, visit us at OhioHousingCouncil.com