New Tax Credits for Housing Development
Purpose
On October 16, 2019, after more than three years of in-depth research, staff facilitation, community engagement, and Council deliberation, the City Council officially adopted the Housing and Economic Development Strategic Plan (Resolution 2019-47). This comprehensive plan outlines the Council’s strategic vision for guiding the city’s growth and development over the next decade.
The overarching themes of the Housing and Economic Development Strategic Plan:
The overarching themes of the Strategic Plan are to:
- Preserve existing businesses and affordable housing in Takoma Park, including revitalizing areas.
- Produce more housing and opportunities for businesses to start and grow across the income spectrum and in neighborhoods across the City to meet the diverse housing and economic needs.
- Protect renters, homeowners, and local businesses from discrimination and displacement; and protect our environment from destruction.
Next Steps
The City has established a new series of tax credits designed:
- to incentivize the construction of new rental housing,
- the development of missing middle housing,
- the preservation of affordable housing,
- and the reinvestment in existing multifamily properties.
These credits will support several key strategies outlined in the Housing & Economic Development Strategic Plan.
A brief summary is in the table below:
| New Rental Construction | Missing Middle Housing Construction | Affordable Housing Preservation | Housing Reinvestment | |
|---|---|---|---|---|
| Goal/Purpose | Encourage the creation of new rental housing. | Incentivize smaller scale/achievable homeownership opportunities. | Subsidize deed-restricted affordable housing for specific populations. | Incentivize reinvestment in existing multifamily housing. |
| By-Right/By-Application | By-Right | By-Right | By-Right | By-Application |
| Eligibility Criteria* | 10+net new rental units | – 1+ net new homeowership units – Buyer makes 120% AMI or less | Provides 30% AMI, Transitional or Units for specific groups (Individuals with Disability, Seniors) | – Investment meets HUD definition of substantial – Multifamily rental building |
| Credit Amount | Incremental difference between current tax bill and reassessed amount. (10 years full credit with 5 year scale up) | Incremental difference between current tax bill and reassessed amount. (10 years full credit with 5 year scale up) | Percentage Discount equal to the share of qualifying units, capped at 50% of the tax bill. Annually renewed/verified | 50% off tax bill for 10 years |
Program Manager
Devin McNally
Housing Manager
Housing and Community Development
Email: housing@takomaparkmd.gov
Quick Links
- Housing
- Housing and Economic Development Strategic Plan
- Rental Housing Programs
- Home Stretch Down Payment Assistance
- Financial Assistance for Tenants and Homeowners
- Partnerships
- New Tax Credits for Housing Development
- Tenant Opportunity to Purchase
- Tenant Resources
- Grants
Blogs:
August 26, 2024
What are Tax Credits
A tax credit is a reduction in the tax bill. Other names include a tax abatement, PILOT, or tax rebate. The credit is added to the annual property tax bill and reduces the amount the property owner owes the City. The City is proposing 2 tax credits which would forgo the increased tax revenue (the incremental assessment discussed above) created by a property owner’s investment in their property as part of the City’s Proposed Housing Tax Credits.
August 19, 2024
Multifamily Development Basics
Multifamily development is a costly and complex endeavor. Developers must demonstrate that their project can be financially self-sustaining while offering a return on investment to both equity investors (individuals or entities providing upfront capital for ownership stakes) and lenders (banks or financial institutions providing loans with a set annual return). These projects often compete for funding against other housing developments and various investment opportunities.
August 13, 2024
Housing & Strategic Plan
The guiding document for Housing Policy in the City of Takoma Park is the City’s Housing and Economic Strategic Plan, adopted in October 2019. The Strategic Plan is designed to cover the period from 2019 through 2030 and help guide the City Council when setting policies and adopting budgets. It also assists City staff in developing annual implementation plans.
Project Timeline
- New Construction Credit Work Session:
https://takomaparkmd.gov/meeting_agendas/city-council- meeting-agenda-wednesday- february-28-2024/ - Housing Framework Council Session:
https://takomaparkmd.gov/meeting_agendas/city- council-meeting-agenda- wednesday-july-1-2024/ - July 24, 2024, Council Work Session:
https://takomaparkmd.gov/meeting_agendas/city- council-meeting-agenda- wednesday-july-24-2024/
Links&
Notes
City Council Meeting – July 24, 2024
- Work Session Agenda: Presentation on Proposed Housing Tax Credits.
- Housing Tax Credit Program Proposals – Presentation
View: Prior City Council Meetings and Presentations
