Senator Bayh on Disaster Housing

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Offers Plan to Spur Housing Construction in Indiana Disaster Areas; Legislation would free up $230 million to create jobs, rebuild Hoosier communities devastated by floods

June 23, 2009 -- Washington -- Senator Evan Bayh today proposed legislation that would make $230 million in funding immediately available to begin work on shovel-ready affordable housing developments in flood-ravaged areas of Indiana.

According to the National Association of Home Builders, the Bayh legislation could create up to 1,728 new jobs in Indiana.

The country is facing an affordable housing financing shortage because of the economic downturn. Housing starts, the number of new residential construction projects initiated each month, have fallen 80 percent since their 2006 peak. Current home construction is at a 13-year low, down more than 60 percent from the peak in early 2006.

Due to the turmoil in the financial markets, developers have found it increasingly difficult to utilize the package of low-income housing tax credits that Congress approved in 2005 and 2008 to speed the rebuilding of affordable housing in designated disaster areas. The tax credits were approved by Congress after Midwestern states were hit by devastating floods and Gulf Coast states were impacted by Hurricanes Katrina and Rita and last year’s Hurricane Ike.

The economic recovery program enacted in February created an opportunity for states to convert a portion of their housing tax credits into federal cash grants. However, the legislation did not specify that the extra housing credits allocated to Indiana and other states would be eligible for the exchange, hindering efforts to rebuild following floods and other natural disasters.

Bayh’s Disaster State Housing Recovery Act clarifies congressional intent. His bill ensures that states that were provided with disaster credits—including Indiana, Alabama, Arkansas, Illinois, Iowa, Kansas, Louisiana, Michigan, Missouri, Minnesota, Nebraska, Texas and Wisconsin—will be able to take advantage of construction benefits that Congress intended when it provided credits to aid in natural disaster recovery.

“The economic downturn is making tax credit financing hard to come by, which has hindered the recovery effort in some communities,” Bayh said. “By allowing our state to immediately convert these tax credits to cash, Indiana could take advantage of $230 million in federal assistance to spur construction of quality, affordable houses. This will help families trying to rebuild their homes and their lives, while also creating jobs and boosting our state’s housing sector.”

The Disaster State Housing Recovery Act is bipartisan and bicameral. Bayh introduced the legislation with Senator Richard Shelby (R-AL), the ranking Republican on the Senate Banking Committee. The bill is co-sponsored by Senators Richard Lugar (R-IN), Mary Landrieu (D-LA), David Vitter (R-LA), Dick Durbin (D-IL), Kit Bond (R-MO), Tom Harkin (D-IA), Mike Johanns (R-NE), Roger Wicker (R-MS), Thad Cochran (R-MS) and Ben Nelson (D-NE).

“We commend Senator Bayh for his leadership in introducing this bill to spur the construction or rehabilitation of affordable multifamily housing in Indiana,” said Sherry Seiwert, Executive Director of the Indiana Housing and Community Development Authority. “If passed, Indiana could see almost $230 million of additional funding for areas of our state hit hardest by nature and, subsequently, the economy.”

An identical bill was introduced by Congressmen Artur Davis (D-AL) and Charles Boustany (R-LA), both members of the House Ways and Means Committee.

The legislation is supported by the Council for Affordable and Rural Housing, the National Association of Home Builders, the National Council of State Housing Finance Agencies, the National Leased Housing Association, and the National Affordable Housing Management Association.

Source: Senator Evan Bayh