COLUMBIA — A Reagan-era federal tax credit to boost construction of affordable housing could be expanded at the state level with S.C. lawmakers considering an incentives package.
The measure, which moved through the S.C. House last year, won a favorable recommendation by the Senate Finance Committee this week and is a floor vote away from appearing on Gov. Henry McMaster’s desk.
Under the proposal, developers would be eligible for tax breaks of either 4 percent for rehabilitating existing housing or 9 percent for new construction.
The total credits available would begin at $2 million a year and ramp up to $20 million by the 2029-30 fiscal year.
Last year, the state Housing and Finance Development Authority conducted a needs assessment — the first since 2002 — that found a shortfall in affordable housing.
According to the report, 72,000 units exist statewide, enough for one out of every five low-income renter, and people in 41 out of the state’s 46 counties can’t afford a two-bedroom apartment without overextending their budget.
The Low Income Housing Tax Credit, launched in 1986, has been responsible for the development of more than 700 projects in South Carolina between 1988 and 2018, according to S.C. Housing statistics.
Bryan Grady, S.C. Housing’s chief research officer, said the economic impact of unaffordable housing in the state totals $8.4 billion for expenses such as onerous rents, deferred utility bill payments and other costs.
“Excessively high housing costs cause 32 percent of S.C. households, including over half of renters, to come up short in meeting their most basic needs (food, fuel, etc.)," the report said.
State Sen. Darrell Jackson, D-Hopkins, who works with a nonprofit that builds senior housing, said one project in a rural part of Richland County that would serve 500 people is ready to break ground — but the financing doesn’t work without the extra tax credits.
“I've worked with some developers and they've said, with this bill, they will immediately go in certain areas,” Jackson said. “There are pending deals in certain areas, I know in Richland County, that the moment this is signed by the governor, these deals get executed.”