BILL NUMBER: S1280
SPONSOR: BAILEY
 
TITLE OF BILL:
An act to amend the public housing law, in relation to creating a middle
income home ownership subsidy program
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to provide financial assistance to middle
income families under certain conditions as to increase home ownership
among communities of color.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 establishes the criteria for eligibility for application to
this program, and specifies what qualifies a household to receive
assistance. Section 1 also establishes the procedure by which this
program will assist homeowners, and how it will secure funding in order
to do this.
Section 2 defines the effective date of this act.
 
JUSTIFICATION:
As we continue to identify ways to increase home ownership among commu-
nities of color, especially those in the middle income threshold who we
wish to encourage their returning to and staying in urban communities,
we recognize the importance of such efforts. We have rental subsidies
and concurrently federal tax subsidies for ownership so we should estab-
lish a subsidy for middle income home ownership up to $125,000 to
increase the likelihood of ownership by persons of color in urban commu-
nities.
In a report entitled, Using Tax Policy to Subsidize Homeownership by
Richard K. Green and Andrew Reschovsky, the following is stated: "Since
the 1950s the homeownership rate in the U.S. has exceeded 60 percent. In
2004 it reached a peak of 69 percent, and in the first quarter of 2010
stood at 67.1 percent. Despite the relatively high overall rate of
homeownership in the U.S., there are large disparities among racial and
income groups (U.S. Census Bureau, 2010). The homeownership rates among
African Americans (46.1 percent) and among Hispanics (48.5 percent) are
both less than two-thirds the rate among non-Hispanic whites (74.5
percent). Despite the relative economic gains of minorities over the
past few decades and government efforts to reduce housing market
discrimination, there has been little reduction in the racial dispari-
ties in homeownership. Between 1989 and 2008, the percentage difference
in homeownership rates between black and non-Hispanic white households
remained virtually unchanged. In 2009, however, the gap grew by one
percent. Hispanic homeownership rates showed a modest two percent
increase relative to rates among non-Hispanic whites over this period
(U.S. Census Bureau, 2009)."
Moreover, it indicates the following that there is, "clear evidence that
federal income tax incentives for homeownership do in fact influence
families' housing tenure-choice decisions (Rosen, 1979a; Rosen, 1979b;
Green and Vandell, 1999). This research presupposes that homeownership
is a decisionòbased on a set of characteristics. Such characteristics
include income, household size, marital status, race, and what econo-
mists call the user cost of owning relative to renting: the amount of
money a household must spend if it owns rather than rents an identical
house or apartment...tax policy can be used to reduce the user cost of
owning relative to renting and thus potentially influence households'
decisions to purchase a home. For homeowners the before-tax user cost is
the sum of the mortgage interest, the property tax, the net depreci-
ation, and the overall maintenance (which includes insurance and utility
costs). As demonstrated by Green and Vandell (1999), the ability of
homeowners to deduct their mortgage interest and property tax payments
from their gross income reduces the user cost of owner-occupied housing
relative to renter-occupied housing by an amount equal to the federal
marginal tax rate times the deductible portion of total
user cost. Alternatively, giving taxpayers a fixed tax credit for their
payment of mortgage interest and property tax reduces the user cost of
owner-occupied housing relative to renter-occupied housing by the amount
of the credit". There is sufficient data backed rationale to indicate
that tax subsidy support to promote home ownership would increase the
likelihood of persons of color not just renting but owning in urban
communities. The effect of this legislation would further inspire young
adults and middle income residents to live in these communities and
further lay a foundation for positive economic development in these
communities.
 
PRIOR LEGISLATIVE HISTORY:
2021-22: S.3369 - Referred to Housing, Construction and Community Devel-
opment.
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.