Community Impact Investment Tax Credit Act of 2017
Introduced: May 16, 2017
Co-introducers: Councilmembers Anita Bonds, Elissa Silverman, Robert White, and Charles Allen
Summary: To amend Title 47 of the District of Columbia Official Code to establish a tax credit program for local community development financial institutions to spur the creation of more affordable housing.
Councilmember Grosso's Introduction Statement:
Across the country, the shortage of affordable housing serves as a significant impediment to the improvement of quality of life and economic competitiveness. According to a report published by the National Low-Income Housing Coalition last year, there is not a single state in the U.S. where a minimum wage employee working full-time can reasonably afford a one-bedroom apartment at fair market rent.
Here in the District of Columbia, rents have risen by almost 30 percent over the past 10 years. While the city has made historic investments into the Housing Production Trust Fund, meeting the actual affordable housing demand would require an investment of around $5 billion according to the D.C. Fiscal Policy Institute; a figure that is untenable to achieve while still investing in other needs and priorities.
That is why today along with my colleagues, Councilmembers Robert White, Elissa Silverman, and Charles Allen, I am introducing the Community Impact Investment Tax Credit Act of 2017.
This legislation establishes a tax credit program for taxpayers making an impact investment through a community development financial institution or CDFI, to spur the creation and preservation of more affordable housing.
Under the bill, individuals, corporations and foundations—stakeholders that may not otherwise directly invest in affordable housing efforts, will be eligible to claim as a credit against their District income taxes, unincorporated business franchise taxes or corporation franchise taxes, 33 percent of their investment up to $1 million.
Impact investments serve to encourage responsible investing by mobilizing capital into mission-oriented entities that strive to make a positive impact in areas presenting social, environmental or infrastructural challenges while yielding a financial return.
Through this legislation we will accomplish the public policy goal of expanding affordable housing across the city by leveraging the private market to seed investments in affordable housing production and preservation.
Since just last year, Enterprise Community Partners, a local CDFI has been able to raise $11 million in impact capital to finance the preservation and production of local affordable homes.
Their ability to raise this amount of capital in less than a year demonstrates investor demand to support affordable housing. Unfortunately, we currently lack tax benefits and incentives for this sort of investment, which serves as a barrier to attracting many people that may be interested in making an investment of this kind.
Solving the affordable housing crisis is not something that will occur overnight and is not something that can be accomplished by any one entity or organization; however, through this legislation we will add another financing tool to the arsenal and partner with the private market to expand the amount of debt capital available for affordable housing projects.