Seven bills proposed for affordable housing
Mortgage relief, taxes, repair plans considered
A package of seven bills recently introduced aims to expand and protect affordable housing options in Delaware as the First State grapples with a housing crisis.
Delaware is over 19,000 affordable units short of accommodating demand, according to the Delaware State Housing Authority’s 2023 Housing Needs Assessment report.
That same report also found that 50% of renters and 20% of homeowners spend more than 30% of their income on housing, representing 109,000 households across the state.
Delaware Sen. Russell Huxtable said the bills he is sponsoring tackles the issue from multiple angles, including reducing the realty transfer tax on affordable housing developments; establishing protections for manufactured homeowners; and creating a workforce housing program, among others.
“It’s a potpourri of policies that we hope to hit somewhere to make some progress,” Huxtable said during a news conference ahead of the legislation introduced Thursday, March 21. “There’s no one bill, there’s no magic bill that solves it all, and that’s why there’s seven (bills) today.”
The housing needs assessment – completed by Colorado-based Root Policy Research and referenced in some of the bills proposed – laid out the state’s housing affordability shortage and the challenges residents face in accessing housing, offering steps Delaware can take to tackle its affordable housing crisis.
“There really isn’t one simple solution. I think we all wish there was, but it’s a very complex issue, as the senator stated, and I think this package of
bills is going to have a huge impact,” said state House Rep. Bill Bush, who is a cosponsor of a bill that would create a workforce housing program.
These are the proposed bills:
Workforce housing program
Senate Bill 22 creates a workforce housing program to increase the amount of affordable, quality residential houses across the state utilizing private capital.
Following the model for public-private partnerships in investment for downtown development districts, the program would offer qualified developers building workforce housing in an “Investment Level 1 or Investment Level 2” a grant in an amount up to 20% of the investment in excess of the $25,000 minimum threshold for said workforce housing development.
Accessory dwelling units
Senate Bill 23 amends state code to allow for accessory dwelling units, also known as in-law apartments, carriage houses, secondary dwellings, garage apartments or granny flats, and requires local governments adopt ordinances that allow for these types of dwellings.
It also outlines what the government can and cannot do when it comes to accessory dwelling approvals, as some communities have seen fit to limit these housing options through zoning restrictions.
Realty transfer tax reduction
Delaware has the highest realty transfer tax in the nation, a badge the First State has carried for years following the tax’s increase from 3% in 2017 to 4%.
Lawmakers at the time said the increase was supposed to be temporary to help solve the state’s budget deficit, but even during $1 billion budget surpluses, the 4% real estate transfer tax rate is still in place.
The transfer tax revenue is divided between the state, which receives 2.5%, and the county or local government which receives 1.5% for a total of 4%.
Senate Bill 25 would eliminate 2% of that tax on “any contract or agreement or undertaking for construction of affordable housing units,” according to the legislation.
Use of lodging tax for funding affordable housing
Senate Bill 244 allows counties to tap into their 3% lodging tax collected at hotels, motels and “tourist” homes for funding workforce and affordable housing.
Delaware authorizes counties with populations greater than 500,000 to impose a local lodging tax of no more than 3% of the rent, in addition to the 8% rate imposed by the state, on hotel stays located in unincorporated areas of the county.
Making mortgage assistance program permanent
Senate Bill 245 would permanently establish assistance for those facing foreclosure or default on their mortgage payments.
The Delaware Emergency Mortgage
Assistance Program, also referred to as the Delaware Mortgage Relief Program, ended in May 2020. But Huxtable’s proposal would remove the sunset clauses on the program and point those in need of financial assistance to the U.S. Department of Housing and Urban Development’s various programs and resources for help.
Housing repair program
Senate Bill 246 establishes a Housing Repair and Modification Fund, to be administered by the state housing authority, that would offer financial assistance to households making less than 80% of the area median income. It would split funding resources 50/50 between those making less than 80% of the area median income and households making less than 50% of the area median income.
Landlords “who own an interest in fewer than five rental units, or some combination thereof, who are leasing the unit to very low income tenants” would be eligible to receive low-interest loans for housing repairs. Up to 10% of the annual allotment to the statewide repair fund could go to landlords who fall under this criteria.
Manufactured housing
Senate Bill 247 creates protections for people living in manufactured housing – an affordable living option for many households in southern Delaware – by prohibiting community owners from raising rents if there are unaddressed issues that threaten “the life, health, or safety of a resident, visitor or guest” of the home.
Mobile homeowners rent the plot of land where their house sits, but it is much more difficult for them to relocate if rents rise or conditions at the park deteriorate.
The bill stipulates that rents couldn’t be increased if an “official notice of an unsafe condition” has been received “within the 12 months prior” to when rents were increased by the community owner. An official notice could be a building and code violation from a federal, state, county or municipal agency.
It also outlines a legal avenue for residents through the state Superior Court to have their grievances heard if there are unsafe conditions that the community owner knows about, but has not addressed.
The community owner would be prohibited from increasing rent until all hazards are fixed, according to the bill.