CLEVELAND, Ohio — An amendment in the Ohio Senate’s version of the state’s biennial budget would require county auditors to disregard federal subsidies awarded to low-income housing when conducting appraisals, a move that housing advocates say could lead to financial woes for those property owners that could ultimately lead to fewer homes for the needy.
The amendment, which appeared in the Senate version of the budget unveiled June 1, says that federally subsidized rental properties must be appraised based on the market rate for units in that area instead of accounting for those subsidies and using the amount of rent actually paid. Residents in low-income housing often pay rent capped at lower rates, as mandated by the federal government as part of the subsidies it awards.
The change could result in more tax revenue for local government agencies if it passes and goes into effect July 1. An analysis of the amendment included in the Senate’s version said how much more revenue it will result in “is uncertain but could be substantial.”
That chamber of the Republican-controlled legislature passed its version Wednesday along partisan lines. It will now go to the House, where representatives will likely send it into negotiations with the Senate over their differences. The House’s session is expected to start Thursday afternoon.
Senate President Matt Huffman said that the amendment was aimed at making sure for-profit companies pay their fair share of property taxes, something he felt other taxpayers who don’t get breaks based on federal subsidies should support.
But housing advocates said that is not how the measure would play out for the owners of 200,000 units for low-income residents across the state. Instead, they said the measure could, on average, double the property tax bill for the owners of apartments and homes for lower-income residents, as well as raise operating costs.
Since the federal government usually stipules that property owners cannot increase rents if they receive federal subsidies to build low-income housing, there are few ways for the owners to make up for the extra tax income they would have to pay. That, in turn, could result in deferred maintenance, missed mortgage payments and, eventually, foreclosures.
“It’s not good for anybody,” said Tony DiBlasi, an executive with Ohio Capital Corporation for Housing, a nonprofit that arranges for investments into affordable housing projects. “It’s not good for the residents, it’s not good for the banks that hold the notes on these properties.
“If this became the way we do things in the state of Ohio, it’s going to reduce the number of units being built.”
Kevin Nowak, executive director of CHN Housing Partners in Cleveland, said the amendment, if passed, would also severely weaken the ability for nonprofits like the one he leads to negotiate with county auditors…