Ohio bill would incentivize cities to encourage affordable housing

The proposal

The yearly grant program would be funded, Isaacsohn said, by taking away an existing tax reduction “that probably never should have been there in the first place: The non-business tax credit for property owners who don’t live in the property.”

“If it’s a property you don’t live in, then it’s probably not a non-business, and shouldn’t utilize a tax incentive that was meant to boost homeownership,” Isaacsohn said.

Aside from creating the pool of money, the proposal also lists 12 pro-housing policies approved by the state. If a local government has, or adopts, three or more of those policies into law, it would be eligible to receive a share of what the bill’s sponsors expect to be about $100 million to $150 million per year.

Grants would be doled out based on the number of residents living within that municipality. So, the bigger the city, the more money it would receive.

If the incentive program were to take hold, Ohio could bolster its housing supply, increase the number of homeowners by gradually bringing new home prices down and keep renters in their home by stabilizing rent, the bill sponsors said.

“By creating that type of incentive structure, we can help guide a path for these types of pro-housing policies, whether it’s removing red tape to make permitting easier, creating ways for developers to get in better, as well as making sure that those who need starter homes or homes after they’ve become empty nesters (can afford them),” said Mathews, who noted that Ohio’s homeownership rate fell below the national average for the first time ever in 2022.

A recent decline in new home starts in the Dayton area due to rising costs of materials and labor, industry experts told the Dayton Daily News.

Total permits for new home starts dropped 14.8% last year, from 1,992 in 2022 to 1,697 in 2023, according to Home Builders Association of Dayton.

Charles Simms Development, which has been in Dayton since 1957, is working on multiple projects throughout the region, including The Gables of Huber Heights. Site work started there in September 2022 for the 74 market-rate home project with homes available now. The first phase of the project is expected to be completed by the end of 2025 and the second phase by a year or two after that, said co-owner Crosby Simms.

The new construction residential market has seen “a leveling out,” but some commodities remain high following the rise in cost that was seen in 2020-2022 due to high demand and supply chain issues.

“There are some things that continue to go up, and then there’s some things that just continue to go down,” Simms said. “I’m not sure if we’ll ever see what it cost back in 2020, but that’s something that we’re working towards.

“We’re starting to see more standard inflationary cost increases that had been seen in past years before 2020.”

Elizabeth Breitenstein, market president for Fischer Homes Dayton Division, said employment is “super strong” in the Dayton area, resulting in a great deal of investment coming into the region. That, in turn, has sparked the need for more homes.

The pro-housing policies

Mathews and Isaacsohn said they determined their list of 12 pro-housing policies after deliberations with local governments, housing advocates and developers.

Here’s the list of policies local governments can choose from:

• Adopting minimal parking requirements for residential units;

• Increasing new housing permits by at least 20%;

• Acquiring and readying sites for housing developments;

• Allowing accessory dwelling units;

• Providing incentives for modular housing;

• Incentivizing increased density in “low-incoming housing and workforce housing” in areas that are at or above the area’s median income;

• Having policies that preserve existing moderate and low income housing;

• Allowing quadplex housing in at least 75% of the municipality;

• Reducing the total area of the municipality that is zoned only for single-family housing;

• Create a preapproval process to speed up permits for developers;

• Subsidizing or decreasing costs related to water or sewer connection for major workforce housing projects;

• Having a 10-year housing plan that tracks the needs and strategies for increasing housing availability across all income levels.

The proposal, which has not yet been assigned a bill number nor a committee, is subject to change as it moves forward, according to its sponsors.

Tackling the soaring cost of housing has long been on the legislative horizon here in Ohio, but the legislature has been hesitant to make any major moves. The state has, however, recently approved housing tax credits to encourage development and the Senate is expected to drop legislation soon after finishing holistic deliberations from its Select Committee on Housing.

On that committee sits Sen. Louis Blessing, R-Colerain Township, who gave a full approval of Mathews’ and Isaacsohn’s plan, noting that the incentive-based approach is “the most readily apparent and responsible approach to fostering a healthier house market.”

Eric Schwartzberg contributed to this story.

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