Some of the provisions of the DASH Act
The DASH Act includes a laundry list of items meant to help improve housing affordability, reduce homelessness, and incentivize builders and investors to focus more attention on housing that’s within reach of more buyers and renters. While there are far too many items to go into in this space, a few of the most relevant include:
- The Emergency Affordable Housing Act (EAHA), meant to strengthen the Low Income Housing Tax Credit (LIHTC) against any economic fallout from the pandemic. It is expected to produce nearly 1 million new affordable housing units over the next 10 years.
- The Middle Income Housing Tax Credit (MIHTC), a new program that would pick up where the LIHTC ends by providing developers who house tenants living at 60% to 100% of the median area income with tax credits equivalent to 50% of the present value of construction costs over 10 years.
- The Renter’s Tax Credit (RTC) intends to provide a refundable tax credit to investors who rent to tenants with incomes at or below 30% of the area’s median income. This credit provides up to 110% of the difference between market rent and utilities and the equivalent of 30% of the renter’s income.
- The Neighborhood Homes Investment Act (NHIA) will give a tax credit to homebuilders that specifically target neighborhoods with poverty rates of at least 130% of the area’s average rate, buyers with income of less than 80% of the area median income, and homes with values below the metro or state median. Maximum credit amounts would be the lesser of 35% of total development costs or 80% of the national median home sale price.
- The Down Payment Tax Credit for First-Time Homebuyers would provide first-time homebuyers with up to $15,000 in tax credits (equal to 20% of the home’s purchase price), phasing out above 110% of conforming loan limits and $100,000 in income for single filers or $200,000 for joint filers.
The 253-page bill includes other legislation that addresses land acquisition, modular construction, reinvestment in rural housing, and voucher programs for homeless families.
The Millionacres bottom line
First, it’s important to stress that the likelihood of the DASH Act being passed in its entirety is almost zero, but it’s still an important piece of legislation, because Chairman Wyden heads the Senate Finance Committee. This committee has an important role in drafting the tax provisions for the infrastructure priorities in the reconciliation package that’s currently being kicked around in Congress.
Even though this Act may not stand a chance of becoming law in its entirety, it’s a signal to the rest of the Senate what items Wyden and the committee consider critical affordable housing provisions for the package in process. So there’s still a good chance that the spirit of the DASH Act will remain intact as other finance legislation goes through Congress.
There are several provisions that would be really useful for contractors and investors interested in putting a major effort toward creating more affordable housing without working on impossibly thin margins. More tax credits, for example, for building housing that addresses the current crisis of affordability would not only give investors an extra reason to get into affordable housing but to maintain the properties with the same gusto they might approach a Class A or Class B investment.