Bill seeks additional ARPA funds for affordable housing

A bill that would direct millions in federal ARPA funds toward tackling the state’s affordable housing shortage was considered by the Appropriations Committee Feb. 20.

LB1079, introduced by Sen. Mike McDonnell of Omaha, would appropriate $10 million in federal American Rescue Plan Act funds to the state Department of Economic Development to contract with the Nebraska Investment Financing Authority. Funds could be used by NIFA for the development of units eligible for federal 4% and 9% low-income housing credits.

McDonnell said the ARPA funds appropriated to NIFA two years ago have resulted in grants to more than 600 units. Additional funds could be used to supplement projects that no longer meet NIFA’s financial feasibility requirements because of increased construction costs, he said.

“I’m asking that we continue to move forward and grow the work that we set forth to accomplish last year,” McDonnell said. “We need to make housing a priority as we move forward with both General Fund [dollars] and ARPA money.”

Shannon Harner, executive director of NIFA, testified in support of the bill. The funds allocated would be structured as loans to developers rather than as grants, she said, so as not to reduce any available tax credits.

“Tax credit unit owners agree to charge rents at rates that are affordable to people who earn 60% of the area median income or less,” she said, which helps Nebraskans maintain their independence.

Housing developer Ward Hoppe spoke in favor of the proposal. He said the bill would facilitate affordable housing development on a large scale as the “last dollars in” to make a project work.

Hoppe said that without tax increment financing or municipal or nonprofit grants, the kind of large projects that he develops would not happen because of the financing gap between “unprecedented” construction costs and the proceeds of tax credits.

Justin Brady also supported the bill, speaking on behalf of the Nebraska Realtors Association, Homebuilders Association of Lincoln, Metro Omaha Builders Association and Nebraska State Homebuilders Association. He said the proposal would be an opportunity for the state to invest in housing and leverage both federal funds and private equity to create more affordable housing statewide.

“You’re going to get a lot more than $10 million worth of housing on the back end,” Brady said.

Testifying on behalf of Disability Rights Nebraska, Brad Meurrens also spoke in favor of LB1079. Affordable housing is especially important for the 13% of Nebraskans with disabilities, he said, because more of them live in poverty — in part because they earn approximately $10,000 less per year if employed and because accessible housing, if needed, is “extremely scarce.”

“Poverty limits housing options,” Meurrens said, “and disability limits them even further.”

No one testified in opposition to LB1079 and the committee took no immediate action on the proposal.