Illinois is facing a housing crisis, and many say the solution is to build more housing.
In Illinois, there is a shortage of 289,000 homes for low-income families, according to the National Low-Income Housing Coalition.
So, lawmakers are reviving an effort that’s been tried several times before.
The Building Illinois Homes Tax Credit Act started its first push in 2020 when it was first filed by now U.S. Rep. Delia Ramirez.
The bill would provide a tax credit for private developers who build low-income housing developments. The program would cost $20 million annually if passed but the credits wouldn’t be distributed until a development is completed and occupied, which limits the state's financial risk, according to advocates.
Democratic state Rep. Dagmara Avelar of Bolingbrook took the lead as the chief sponsor after Ramirez left the Illinois House in 2023.
Avelar said the bill has not passed in prior sessions due to budget constraints and getting lost in the shuffle. But she said the program is financially beneficial since it could produce jobs and private investment. The current version is a scaled-down package compared to previous efforts.
“The economic impact of creating this tax credit, it's huge,” Avelar said. “It would support the development of over 1,000 affordable homes and apartments throughout the state of Illinois.”
Alevar came to the state legislature from the nonprofit sector where grants were a lifeline. As a former director of programs at the Illinois Coalition for Immigrant and Refugee Rights, she said grants are more likely to be band-aid solutions than long-term policy.
“I truly think that we need something that provides us with the stability in the long term, to be able to bring more investment towards affordable housing,” Avelar said.
An organization that lobbies for affordable housing, the Illinois Housing Council, helped Avelar shape the bill. The organization has been part of the bill since Ramirez introduced it originally in 2020.
Executive Director Allison Clements said the organization joined because its mission is making affordable housing more accessible.
Clement said the bill is modeled after the Federal Low Income Housing Tax Credit [LITHC]. The LIHTC is different in scale, a $10 billion federal program compared with a $20 million program and a tax credit claim of 9% rather than 4%.
Clements said LIHTC is efficient, but state programs could fill in any gaps where the federal program misses.
“[The LIHTC] is the most important resource we have available to build and preserve affordable housing throughout the state and country,” Clements said. “But that resource always needs additional gap funding to make developments really cross the finish line. So, we have gotten behind this model that has already been implemented in over 25 other states around the country and has proven to be a successful tool to build and preserve affordable housing.”
In a panel with the Illinois Manufacturers Association a few months ago, Clements said she talked with manufacturing leaders across the state who have said the lack of affordable housing has made it harder to hire.
“They have signed on as a supporter of the bill because they're seeing amongst their members or employers around the state, they're struggling with attracting stable workforce because of lack of affordable housing. And work worker retention as well,” Clements said.
Republican state Rep. Ryan Spain of Peoria is the chief co-sponsor of the bill. Spain said the bill could bring business to Illinois while also addressing the housing shortage.
“We have a state population pattern where we're not exactly bursting at the seams with economic growth,” Spain said. “We need to make sure that we're providing opportunities to make the development of housing more successful, and it's been slow in Illinois for many years now in terms of new housing starts. And so, we've got to do something to change the calculation for developers and for families so that we can bring more housing solutions forward."
The request comes at a time when the state faces a projected $3 billion deficit.
Spain said regardless of a deficit year; housing is a major need.
“We have a lack of affordable housing to the tune of over 300,000 units,” Spain said. “And we need to make some investment and indicate our priorities so that this can be corrected. And if we do it well, we can facilitate population growth in Illinois that would greatly improve our current fiscal situation.”
Spain said the bill has bipartisan support, adding the bill had Republicans behind it but never got a vote.
“I'm very proud that it continues to be a bipartisan initiative. In the last General Assembly, it was supported with many co-sponsors on both sides of the aisle," Spain said. "And I expect as we ramp up the legislative session for 2025 the same will continue this year."
Democrat state Rep. Sharon Chung of Bloomington said she sponsored the bill because of Bloomington-Normal's housing shortage.
“There’s no one magic bullet that's going to help the issue get solved,” Chung said. “So, this is we need any number of tools in our pocket to help with it. So, this is one of those things that I think could really help attract developers, investors, into trying to build more affordable homes.”
Chung said she became interested in the bill when representative Avelar introduced it to her. She also attended a panel on tax credits for housing development in October at Heartland Community college.
Chung said getting the bill passed will be difficult, but the housing shortage is a complex problem. She said the culmination of COVID, slower supply chains, higher interest rates and the rapid expansion of the Rivian electric-vehicle plant in Normal all contributed to Bloomington-Normal's housing shortage.
Chung said revenue streams such as regulating fireworks and legalizing gaming terminals in Chicago could help offset the cost of the program.
The Build Illinois Homes Act has been assigned to a legislative committee.
