Pennsylvania Tax Incentives to Build More Affordable Housing on the Horizon

By Anthony Hennen | The Center Square

(The Center Square) – Housing prices across Pennsylvania have been rising, putting more pressure on workers to rent and own, and cities may soon have a new tool to make low-income housing more appealing to build.

HB2937, sponsored by Rep. Jared Solomon, D-Philadelphia, would allow local taxing authorities to offer tax exemptions to repair deteriorating housing and build affordable housing. Authorities could exempt property taxes for up to 10 years.

“At a time when housing is increasingly insecure thanks to the pandemic and the economic shutdown, we as a Legislature need to give local policy makers all the tools and resources possible to help people secure a home for themselves and their families,” Solomon said in a legislative memo.

Broadly, the bill creates a constitutionally allowable break with Pennsylvania’s tax uniformity clause, boosts new housing creation if 30% of units are for affordable housing, and allows local authorities to implement a tax freeze for low-income residents, Solomon said.

Housing prices rose in Pennsylvania by 14% from 2020 to 2021, and rose the most in urban areas. In central Pennsylvania, apartment rents have increased by 40% since 2017.

“Completely addressing the affordable housing crisis requires many steps. This is an essential step,” Solomon said. But there’s so much more that we have to do to make sure that housing is affordable.”

As more population gains are made in the eastern part of the state, rents and housing prices will continue to rise with demand unless supply catches up. By removing barriers to new construction, cities and counties could approve more housing construction and, Solomon said, give local economies a boost with new economic activity.

“What’s nice about this bill is that it provides City Council a lot of flexibility in how they would implement this program,” Solomon said. Local control would remain in place. 

In places like Philadelphia, where a person earning the average income is considered rent-burdened and spending at least 30 percent of their income on rent, the need for more housing is acutely felt.