Reinvest. Repopulate. Revitalize.

Our Proposal

Neighborhood Homes Investment Act


Is the Neighborhood Homes Investment Act an actual legislative proposal?

Yes. The Neighborhood Homes Investment Act, also known as H.R. 3316, was introduced as a bipartisan bill by Reps. Brian Higgins (D-NY) and Mike Kelly (R-PA) in June 2019. The legislation is currently under review by the House Committee on Ways and Means. (You can track the bill’s progress via the official website of the U.S. Congress.) If passed, the NHIA would formally establish a new federal tax credit to fuel rehabilitation of deteriorated single-family homes and attract $100 billion in development activity to distressed communities across the country.

Click here to view NHIA as legislative text (H.R. 3316)


What specific problem will the Neighborhood Homes Investment Act address?

Across the country, thousands of once-thriving urban and rural communities now struggle with stagnating or distressed neighborhoods and low homeownership rates. In many of these communities, single-family homes comprise most of the housing stock and many of these homes need substantial rehabilitation or replacement. Dilapidated homes have been abandoned, undermining neighborhood stability and the local tax base. At the same time, a shortage of starter homes in good condition is thwarting the American dream of homeownership, as well as the primary means of building wealth and financial security. The dilemma is that these neighborhoods cannot retain or attract working families without quality homes, but property values there are too low to support the cost of building or substantially rehabilitating quality homes.

The Neighborhood Homes Investment Act (NHIA) is a federal proposal to break this stalemate. NHIA would offer tax credits to attract private investment for building and rehabilitating owner-occupied homes, creating a pathway to neighborhood stability through sustainable homeownership.

Click here to download an executive summary of the nhia proposal


Do federal financing sources already exist to help with these issues?

In short, no— and that’s why NHIA is so critically important. The NHIA builds on the success of the Low Income Housing Tax Credit (LIHTC) for affordable rental housing and New Markets Tax Credit (NMTC) for economic development. Like LIHTC and NMTC, the NHIA harnesses the creativity and discipline of the private market, but it addresses a specific purpose – developing owner-occupied homes – that LIHTC and NMTC cannot.

The goal of the Neighborhood Homes Investment Act is to create a financing tool for single-­family housing, as powerful as Low-­Income Housing Tax Credit (LIHTC), to help transform neighborhoods across the country. This new financing tool will not only drive much­ needed resources to investment­-starved communities, but it will also enlarge and elevate the nascent affordable­, single­-family­ housing­ development industry that was catalyzed by events like Hurricane Katrina and the mortgage foreclosure crisis.

Since the creation of the LIHTC in 1986, the community development movement has concentrated the bulk of its resources (political power, talent, and funds)­­ on multi-family, low-­income rental housing. LIHTC was an easy fit with the thousands of empty, hulking apartment buildings that dominated the urban landscape at that time. When community development corporations and investors realized that thousands of new and rehabbed units could be entirely financed through this reliable and reoccurring program, much of the community development movement began to shift toward low­-income rental housing production.

In under a decade, LIHTC became the most productive affordable housing finance tool in urban America. To date, LIHTC has created 2.5 million affordable rental units, and the program accounts for the vast majority (approximately 90 percent) of all new affordable rental housing built in the US today. A vast ecosystem of lenders, syndicators, designers, lawyers, and builders has developed to facilitate this program which consistently receives bi­partisan support at the local, state and national levels.

CLICK here to See how NHIA compares with other housing tax credit programs (e.g., LIHTC and NMTC)


How would the Neighborhood Homes Investment Act work?

States would allocate and administer the NHIA, as they currently do for rental housing with LIHTC. The process would start with states writing plans for allocating their NHIA tax credits based on set criteria, including the prospect that a proposed project will contribute to neighborhood stabilization and revitalization, and the strength of project sponsors. States could also add their own allocation criteria. States would then select NHIA project sponsors (e.g., developers, investors, lenders, local governments) through a competitive process.

Sponsors would use the tax credits to raise equity capital from investors and oversee the development and marketing of the homes. Investors – not the federal government – would assume construction and marketing risk. Investors would receive tax credits only after the construction or rehabilitation work is completed and the property is occupied by an eligible homeowner. 

Tax credits will provide a powerful incentive for the private sector to build and rehabilitate homes to lift up struggling neighborhoods. Unlike a grant program, the NHIA tax credit would pay only for “success” because the credit is only applied after construction is completed and a qualified homeowner occupies the house. In addition, the NHIA tax credit will fill only the actual value gap, as determined by the market. If a home sells for more than the cost of the development, no tax credits will be used. The private sector shoulders the key risks, such as the possibility that project does not get completed or a qualified homeowner does not purchase it.

Click here for a simple visual description of NHIA in action


Will the Neighborhood Homes Investment Act benefit existing homeowners?

Yes. NHIA will benefit existing homeowners and residents of distressed neighborhoods in two key ways. First, NHIA will enable program sponsors to create programs for qualified, existing homeowners to substantially rehabilitate their own homes. Second, NHIA financing will enable the purchase, renovation, and resale of vacant properties that would otherwise not be marketable, providing essential leverage to raise the value of neighboring occupied homes. Here’s a fictional scenario illustrating these benefits:

The neighbors on Putnam Street are concerned about the vacant house on their block. The neighborhood children have been climbing into it through a broken basement window, a homeless man appeared to be seeking shelter there during the winter, and on Halloween some teens lit a fire on the overgrown front lawn. Mrs. Torres owns the adjacent property and is particularly concerned. Her children have left home and she wants to move into a condo closer to her daughter. All the other houses on the block are relatively tidy, but the vacant house next to hers has been scaring off potential buyers. Desperate to sell her home, Mrs. Torres looked into buying and renovating the blighted house herself, but the numbers simply didn't work.

With NHIA financing, a developer could purchase the vacant house for $30,000 and renovate it for $150,000— incurring a total development cost of $180,000. The developer could then sell the beautifully renovated home to a qualified homebuyer for the full market value of $120,000 (slightly higher than current appraisals of occupied but un-renovated houses), and the NHIA tax credit would cover the difference. This sale would provide a critical "comp" that would help establish a new value for Mrs. Torres' home, as well as those of all of her neighbors.


Will the Neighborhood Homes Investment Act benefit municipalities?

Yes. NHIA will have the potential to benefit many U.S. cities and towns. Here’s a real example of how NHIA could support one city’s efforts to eradicate blight, create desirable new housing stock, attract working families, and reduce municipal expenditures:

The City of Hartford is serious about fighting blight. In 2018, the City hired a Director of Blight Remediation, who quickly discovered that the City was paying around $20,000 for each house demolition. With over 400 blighted structures and hundreds of vacant lots, the City was spending hundreds of thousands of dollars (CDBG and general funds) each year to fight blight... Yet still losing the battle.

Hartford’s Blight Director determined that the best way to permanently eradicate vacant and blighted properties was to get these structures renovated and into the hands of homeowners. To that end, the City created a Land Bank that can receive foreclosed properties, bundle them, and sell them to developers— who can then rehab and sell them to new homebuyers. There is ample demand in Hartford for moderately priced homes, but property values are low and developers need modest subsidies to make the project numbers work.

NHIA could be that subsidy. Hartford’s Land Bank would apply to the State HFA for an allocation of NHIA tax credits and then distribute them to local developers, as needed, when they obtain blighted properties from the Land Bank. If the Land Bank were to transfer 50 homes per year for redevelopment, Hartford would be relieved of tens of thousands of dollars in maintenance costs and could collect more than $150,000 in new taxes annually. NHIA will also create new homeownership opportunities in neighborhoods like Frog Hollow, a once stable owner-occupant neighborhood where 98 percent of today’s residents are renters.