The Workforce Housing Tax Credit program from the Iowa Economic Development Authority incentivizes developers to provide housing in Iowa communities by offering tax benefits, with emphasis on projects using abandoned, empty, or dilapidated properties.
Eligible projects within the 88 least populous counties in Iowa can access a Small Cities set aside for this program. The total program benefits are limited to $1 million per project.
Tax incentives for developers include a refund of sales, service, or use taxes paid during construction. Furthermore, developers may be eligible for a state investment tax credit of up to 10% of the investment directly related to the construction or rehabilitation of the housing. If they qualify under the Small Cities set aside, they may receive an investment tax credit of up to 20% of the investment.
Federal, state, or local grants, tax credits, forgivable loans, or other forms of assistance that do not require repayment cannot be included in the calculation of a new investment.
The tax credit is based on the new investment used for the first $150,000 of value for each home or unit, and it is earned when the home or unit is certified for occupancy. The tax credit can be carried forward for up to five additional years or until depleted, whichever comes first. Additionally, the state investment tax credit is fully transferable.
To qualify for this program, projects must meet one of four criteria:
building housing on a grayfield or brownfield site
rehabilitating dilapidated housing
developing upper-story housing
constructing new housing in a greenfield (only for communities or projects qualifying under the Small Cities set aside).
Developers must build or rehabilitate at least four single-family homes or at least one multi-family building containing three or more units or at least two upper-story units. The program has a per-unit cost cap to ensure that units created under the program are affordable for the workforce.
For the fiscal year 2024, project costs must not exceed the following per-unit cost caps:
$298,021 for a single-family unit in an urban area or small city
$241,643 for a multi-family unit in an urban area or small city
The cost may not exceed 125% of the maximum per unit cost for historic preservation projects based on the project's type and location.
Finally, the housing project must be completed within three years from the date of award.
Photo by Rene Asmussen