photo by: Lauren Fox

The Poehler Lofts building is pictured on Oct. 15, 2020. It was an affordable housing project funded through low income housing tax credits, a program that could be limited by a bill proposed in the Kansas Legislature.

A bill in the Kansas Legislature that would limit state tax credits for affordable housing projects would “severely hinder” the city’s housing goals, officials in Lawrence said.

The Kansas House of Representatives recently adopted House Bill 2119, which would discontinue the state’s match on tax credits for affordable housing. The Senate’s Committee on Commerce amended the bill March 18 to allow for affordable housing developments that “receiv(e) 9% federal tax credits,” but the state would not provide additional tax credits to developments “receiving a 4% federal tax credit” on and after Nov. 15. Those developments that receive the 4% federal tax credit are defined as “financed by tax-exempt bonds.”

Even with the edits to the bill that would not fully eliminate the state’s matching of federal tax credits for affordable housing projects, the reduction of projects eligible for state Low Income Housing Tax Credits will “greatly reduce” the amount of new affordable housing developments in Lawrence, Lea Roselyn, the city’s affordable housing administrator, told the Journal-World.

Roselyn said “the vast majority” of the city’s affordable housing projects built over the last five years were partially funded through those tax credits. Some projects that fall into that category include a trio of apartment buildings in the Warehouse Arts District — Flint Hills Holding Group’s Poehler Lofts, Penn Street Lofts and 9 Del Lofts — and the New Hampshire Street Lofts project, which will add nearly 50 units of rent-controlled affordable housing in downtown Lawrence for people 55 and older.

Restricting the number of projects that can be eligible to receive the state and federal tax credits will make it harder for the city to achieve its goals of adding more housing options, especially for new affordable rental housing.

“It will severely hinder our ability to reach our affordable housing development goals,” Roselyn said.

Many of the affordable housing projects the city has rewarded were partially funded with Industrial Revenue Bonds, which exempt sales taxes for the purchase of construction materials. Because those are tax-exempt bonds, those projects would no longer be eligible to receive the state’s low income housing tax credits if the legislation were to pass.

As an example, city commissioners approved an application for the IRBs for 9 Del Lofts II, a proposed project at 716 East Ninth St. that would include 36 one-bedroom apartments with 24 of those being rent-controlled units. A city memo acknowledged that if the proposed legislation became a law, developers would be less able to “take advantage of the State’s affordable housing tax credits.”

The legislation is still under consideration by the Senate and would still have to be signed into law by Gov. Laura Kelly.

The bill would not eliminate the city’s Affordable Housing Trust Fund or impact any projects that are currently under development, but Roselyn said the passage of any bill would have an impact in affordable housing growth in Lawrence.

“We can confidently state that the (reduction) of state LIHTCs will significantly reduce the growth and progress we’ve made in affordable housing development and availability locally,” Roselyn said.