Advocates urge Senate lawmakers to spend on housing infrastructure loan fund

Affordable housing advocates say a new housing infrastructure loan fund would be a transformative game-changer – if it’s adequately funded.

And some add that the program needs more guardrails to ensure low-income communities get the help they need.

Proposed legislation, HB 1005, would allow local governments to apply for money to help pay for infrastructure costs with new housing, such as streets, sidewalks and utility lines.

Gina Leckron, Habitat For Humanity of Indiana state director, said builders are currently bearing those costs and passing them on to homeowners. She said on two current projects, infrastructure costs are adding about $62,000 onto the price of each home.

“That is pricing out many of our families,” Leckron said.

The legislation prioritizes money for communities based on several criteria. That includes those that have done a housing study, have a demonstrated housing shortage and that have waived or relaxed local building and zoning regulations.

It also ensures 70 percent of the money in the fund will go to communities of less than 50,000 people.

READ MORE: House approves housing infrastructure loan fund, with funding still to come

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Prosperity Indiana Policy Director Andrew Bradley said there’s a key criterion missing: prioritizing housing for very low-income Hoosiers, who have the biggest affordable housing shortage in the state.

“Without specifying that bracket in the priority criteria of this bill, we are likely to increase those disparities and bake them in further,” Bradley said.

The House Republican state budget proposal included $75 million for the new fund. The Senate Republican budget plan will be released in the coming days.

The Senate Appropriations Committee added a wrinkle to the measure Thursday before sending it to the full Senate.

The language of a separate bill, SB 300, was added into the loan fund legislation. SB 300 relaxed rules surrounding residential TIF, or tax increment financing, districts.

Tax dollars generated in a TIF district are diverted and typically used to pay for the infrastructure costs in that geographic area. Under current law, residential TIFs can only be used in areas with low new housing growth. And they must be approved by school boards in districts affected by the TIF.

SB 300 – and, now, the language in HB 1005 – would remove those guardrails.

Ryan Hoff, Association of Indiana Counties director of government relations, cautioned lawmakers about doing so.

"New homes mean new residents who require services, including constitutional-level services like courts, jails and elections," Hoff said. "Under residential TIF, any increment that would help to pay for those services is diverted to development costs."

Hoff suggested that if lawmakers remove the current guardrails for residential TIFs, they should add a county-level approval mechanism that helps ensure "another set of eyes" on whether it's the appropriate policy.

But Jenna Bentley, Accelerate Indiana Municipalities government affairs director, said the shackles need to come off residential TIFs. She pointed to a local community – Covington, Indiana – that needs such help.

"But the local school board won't approve it unless they give them $1 million for football fields or lighting," Bentley said.

SB 300 has not received a hearing in the House this session.

Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.

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