Senate Bill 898 aims to increase Texas housing tax credit cap to $3 million

During a recent meeting of the Texas Senate Committee on Local Government, lawmakers discussed a significant proposal aimed at addressing the challenges faced by the state's housing tax credit program. Currently capped at $2 million per development, the program has not seen an increase since 2011, despite rising inflation and construction costs. The proposed Senate Bill 898 seeks to raise this cap to $3 million, a move that supporters argue could facilitate the construction of more affordable housing units across Texas.

The committee heard from various stakeholders, including builders and housing advocates, who highlighted the pressing need for more affordable housing options. Bobby Bolling, a developer from El Paso, emphasized that the current cap limits the number of units that can be built, citing a dramatic drop in average units per development in El Paso—from 94 units in 2019 to just 40 in 2024. He argued that increasing the cap would allow for larger developments, which could ultimately reduce costs per unit due to economies of scale.

Catherine Saar, an executive with the Brownstone Group, echoed these sentiments, noting that the rising costs of land and construction have made it increasingly difficult to deliver affordable housing. She pointed out that the proposed increase in the cap aligns with a broader federal initiative that could further enhance funding for affordable housing projects.

However, not all stakeholders are in favor of the bill. Some expressed concerns that raising the cap could lead to fewer overall projects being funded. Critics argue that while individual developments might receive more funding, the total allocation of tax credits would remain the same, potentially resulting in fewer communities benefiting from the program. For instance, Robbie Meyer, a representative from the National Church Residences, warned that major metropolitan areas could lose out on funding if the cap is increased, as fewer projects would be awarded credits.

The committee's discussions highlighted the delicate balance between increasing funding for individual developments and ensuring that a broader range of communities can access affordable housing resources. As the meeting concluded, Senate Bill 898 was left pending, with further deliberations expected in the coming weeks.

This proposed change reflects ongoing efforts to adapt Texas' housing policies to meet the growing demand for affordable housing, a critical issue for many residents across the state. The outcome of this bill could have lasting implications for housing availability and affordability in Texas, making it a topic of keen interest for both lawmakers and the communities they serve.