Middle-income housing program expanded

The construction of rent-to-own housing units in urban areas will qualify for state assistance under a bill approved by lawmakers May 28.

Under LB288, introduced by the Urban Affairs Committee, the construction of rent-to-own housing and the development of upper-story housing for occupation by a rent-to-own tenant are eligible for grants under the Middle Income Workforce Housing Investment Act.

A rent-to-own housing unit must be a tenant’s primary residence, and the tenant may not own a home or other residential real estate.

A rent-to-own housing lease must provide that at least $50 of the tenant’s monthly rent be set aside in an account maintained by the property owner.

When the lease ends, the owner is required to distribute money in the account to the tenant to use for a down payment and closing costs on the purchase of a home. The tenant will have the option to purchase the rent-to-own unit at fair market value one year after the lease begins.

As amended, LB288 includes provisions of four other measures considered by the committee this session.

The provisions of LB450, sponsored by Sen. John Fredrickson of Omaha, update the Property Assessed Clean Energy Act, under which municipalities may agree to provide financing for the installation of certain energy efficiency improvements in exchange for a property owner’s agreement to pay an annual assessment.

Under Fredrickson’s measure, grid resiliency improvements — including backup power generators, solar panels with battery storage and smart grid technology — also will qualify for the agreements.

The amended provisions of LB626, introduced by Norfolk Sen. Robert Dover, update the Community Development Law.

They allow a municipality to approve redevelopment projects that use tax-increment financing in areas where less than 20% of the housing is affordable housing — which the bill defines as workforce housing, low-income housing or housing intended for households earning less than 150% of the applicable county’s median income.

The provisions of LB622, also introduced by Dover, change how the state Department of Economic Development disburses grants under the Nebraska Affordable Housing Act.

Beginning July 1, 2026, the department will disburse grant funds equal to 80% of the housing development costs to the grant recipient upon approval and 20% upon the project’s completion.

LB288 was amended on select file to include amended provisions of LB531, sponsored by Sen. Kathleen Kauth of Omaha. They prohibit the state Department of Economic Development from requiring any new construction project or rental conversion project that receives funding from the Affordable Housing Trust Fund to comply with the 2018 International Energy Conservation Code.

Under Kauth’s measure, the department is not required to review building plans and specifications for compliance with the code if they have already been reviewed by a county, city or village enforcing a local building code that includes the international code’s requirements.

LB288 passed on a vote of 43-6.