Tax Breaks Boost Affordable Housing Near Military Bases: New Bill Excludes Allowances from Income Limits

This new bill, called the "Low Income Housing for Defense Communities Act," aims to tackle the housing crunch faced by many military families. It does this by offering tax incentives to developers who build affordable rental housing near major military installations. Basically, it's making it easier and more profitable to build housing that servicemembers can actually afford.

Sweetening the Deal for Developers

The core of the bill revolves around changing how income is calculated for low-income housing tax credits (LIHTC) and tax-exempt bonds. Here's the deal:

• Basic Housing Allowance (BAH) Doesn't Count: The bill excludes a servicemember's Basic Housing Allowance (BAH) from their income when determining eligibility for these affordable housing options. (Section 2(a)(1) & (2)). This is a big deal because BAH can sometimes push a military family's income over the limit, even if they're struggling to find affordable housing. Now, their BAH won't be held against them.
• Bigger Tax Credits Near Big Bases: If a developer builds housing within 15 miles of a "large military installation" (defined as having a replacement value over $2,833,000,000), that housing automatically qualifies as being in a "difficult development area." (Section 2(b)(1)). This means the developer gets a larger tax credit, making these projects more attractive.
• Not Just for Military: The bill clarifies that these tax-credit-boosted buildings don't have to be exclusively for military families. (Section 2(b)(3)) This opens up more housing options and helps integrate military families into the wider community.

Real-World Impact

Imagine a young enlisted family stationed at a large base. Their BAH helps, but housing costs in the area are sky-high. This bill means:

• More Options: Developers are more likely to build affordable units near the base, increasing the supply of available housing.
• Easier Qualification: The family's BAH won't disqualify them from moving into one of these new, affordable units.
• Less Financial Strain: With more affordable options, the family can spend less of their income on housing and more on other necessities.

This change could be a game-changer for military families who often face frequent moves and tight budgets. It also benefits the communities around bases by providing more housing for the local workforce, as these units aren't limited to just military personnel.

Potential Pitfalls

While this bill has clear benefits, there are a few things to keep an eye on:

• Inflated Values: Developers might try to inflate the "total plant replacement value" of a military installation to get over that $2.83 billion threshold and qualify for the bigger tax credit. (Section 2(b)(1))
• Quality Concerns: There's always a risk that some developers might cut corners on quality to maximize profits from the tax credits. Strict oversight will be important.
• Location, Location, Location: That 15-mile radius could include areas that aren't really convenient or practical for military families. It will be important to ensure that new housing is actually built where it's most needed.

These changes apply to income determinations and buildings placed in service after the bill is enacted, so the effects will start showing up in the near future (Section 2(a)(3) and 2(b)(2)).