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State and Local Policy
Create EAH tax credits. A number of states, including Connecticut and Illinois, offer tax credits for EAH contributions, with similar legislation pending in other states. Although significant local EAH activity typically precedes state participation, state EAH tax credits provide incentives to encourage more employers to create EAH programs.
Provide dedicated matching funds. Municipal and state governments can dedicate funding streams to match employer contributions to EAH programs. In 2007, the Nevada legislature allocated $1 million to the Department of Business and Industry to provide grants for employers offering housing benefits. Maryland and Illinois also have matching fund programs (the Maryland program requires that employees use their own mortgage product). The cities of Baltimore and Philadelphia offer matching funds as well. Such matching funds can augment and extend EAH programs.
Earmark affordable housing trust funds. State governments can earmark some portion of affordable housing trust funds to go toward EAH programs. This strategy allows state agencies to provide matching funds, giving incentives for employer participation and leveraging significantly more resources. As with other public funding of EAH, this strategy should be evaluated in terms of the trade-offs: What else could be funded with those dollars?
Make EAH part of a comprehensive housing strategy. State and local governments can prioritize EAH as part of an overall affordable housing strategy. As part of this, they may dedicate some funding for EAH efforts from sources such as HOME, CDBG, TIF, general revenue, affordable housing bonds, and other sources.
Federal Policy
Housing America’s Workforce Act. Introduced into the U.S. Senate and House of Representatives in 2005 and again in 2007 (S. 1078 and H.R. 1850), the Housing America’s Workforce Act provides a 50 percent federal tax credit to employers for housing assistance targeted to low- and moderate-income employees. Rental assistance could be used toward security deposits or rental payments, while homeownership assistance could be used to subsidize down payments, closing costs, or contribute to employee homeownership savings accounts. The legislation treats housing assistance as a nontaxable benefit to ensure employees receive the full value of the housing benefit. To help employers that lack the knowledge and expertise needed to undertake an EAH initiative, the act would establish a competitive grant program so that nonprofit housing organizations can assist employers. This legislation has not yet made it out of committee.
Make housing benefits tax-exempt. Unlike other benefits, such as health insurance, housing assistance is taxable for beneficiaries. Adding EAH to the list of federal tax-exempt benefits would make the benefit more cost-effective for workers.
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