A years-long effort to spur more affordable housing development across the state came to Bloomington-Normal on Tuesday morning.
The Illinois Housing Council and the Illinois Manufacturers' Association organized a panel highlighting an ongoing, statewide lack of affordable housing — and how a legislative effort pending in the General Assembly could ease that crisis.
"It's a very needed bill. But just a warning, though, this is going to be a tough budget year," state Sen. Dave Koehler, D-Peoria, told attendees. "So we're going to count on all of you to lobby this bill."
Two bills — SB 3233 and HB 4909 — are aimed at establishing the Build Illinois Homes Tax Credit, a program that would mirror a federal tax credit program that helps developers fund affordable housing projects.
Created by the federal Tax Reform Act in 1986, the Low-Income Housing Tax Credit [LIHTC] program funds the majority of affordable, rental housing development each year across the country. In exchange for their agreement to reserve a portion of their units for low-income renters, project developers receive federal tax credits to offset construction costs.
The $13.5 billion federal program depletes its funding each year, leaving some projects undone — which is where advocates say Illinois' proposed legislation would come in: The two pending bills propose the state create its own version of LIHTC and offer developers state tax credits for affordable housing projects.
Karlee Macer, the executive director of Laborers' Home Development Corporation [LHDC], a nonprofit affordable housing developer affiliated with the Laborers' International Union of North America, said that's what happened to the LHDC's plans for a 51-unit rental development in downtown Bloomington.
LHDC had planned to develop apartments at the old Coachman Motel at Washington and Gridley streets near downtown, but ultimately scrapped the plan.
"It was really as simple as saying we had that financing issue. We were a few million dollars shy of reaching the goal that we needed so that project didn't happen," Macer said Tuesday. "We could not figure out the gap in financing."
LIHTC has two options for developers: A competitive 9% tax credit option that subsidizes 70% of costs and a noncompetitive 4% tax credit that subsidizes 30% of costs.
The Build Illinois Homes Tax Credit, according to proponents' literature, would draw down from 4% federal tax credits to, ideally, spur more housing development for developers who would otherwise have seen gaps in project funding.
"The bottom line is the dollars. Being able to really have the financing for the project is everything," said Macer. "Having this opportunity will definitely enhance more opportunities for... people who are doing the work that we're doing."
Workers living far from their jobs
Town of Normal City Manager Pam Reece and Bloomington City Manager Jeff Jurgens were both on the panel to discuss how a lack of affordable housing had impacted their respective municipalities.
Jurgens said he'd heard of workers at candymaker Ferrero living hours away from Bloomington because it was cheaper.
"They have people driving from the Chicago area every day to work there — and back. It's more economically feasible to drive from Chicago than to buy a house here locally," he said. "If that doesn't tell you there's a problem, there's a problem."
Reece said she believed the state needed to "close the loop" on its success story of economic development in the region by investing in additional housing.
"We need the state's help. It's beyond the capability of municipalities to solve," Reece said. "We're doing our best to try to solve it in partnership with developers, but the state has to help as well for us to really close the gap."
Additionally, a white paper produced by the McLean County Regional Planning Commission [MCRPC] last year noted McLean County was poised to lose some of its rent-subsidized units in 2027: LIHTC agreements for property owners to offer rent-subsidized units are typically 30 years.
Some property owners of LIHTC-financed developments indicated to the MCRPC they planned to put those units back at market-rate value, thereby reducing the number of housing options for the lowest-income renters.
The most recent data from the National Low-Income Housing Coalition indicates a shortage of nearly 290,000 units of housing for the lowest-income renters in Illinois.
The proposed, six-year state program would require funding of $20 million each year for a total of $120 million. Proponents say the resulting housing would generate more than $653 million in economic benefit to the state and local communities over 10 years, based on modeling projections used by the National Association of Home Builders.
Versions of the Build Illinois Homes Tax Credit plan have been proposed in the state legislature since at least 2020.
