Reaffirming its commitment to affordable housing in Ohio, Huntington Bank is adding $150 million to its substantial investment in new and refurbished affordable housing properties. Northeast Ohio is slated to receive $60 million. The remaining $90 million is allocated for other projects statewide. The bank has invested $513 million in the Ohio’s affordable housing market since 2010.
Huntington receives federal tax credits, issued by the Ohio Housing Finance Agency, for investments in affordable housing. The program is coordinated by the Ohio Capital Corporation for Housing (OCCH). The OCCH and its affiliates chiefly operate as capital fund raisers for affordable housing developments, acting as syndicators for the Low-Income Housing Tax Credit (LIHTC).
Created by the Tax Reform Act of 1986, the federal Low-Income Housing Tax Credit (LIHTC) is a dollar for dollar tax credit that highly incentivizes banks and other agencies to invest in affordable housing. Unlike a tax deduction, which only reduces taxable income, a tax credit provides an actual reduction in federal income tax. The business benefits of this tax credit are obvious as close to 90% of all low-income housing in the United States is created with the LIHTC.
Huntington Bank is the largest tax credit investor in Ohio according to Hal Keller, the president of the Ohio Capital Corporation for Housing. “We believe it is vital to continuously support adequate housing for those who require it most,” said Steve Steinour, Huntington’s chairman, president and CEO, in a March 2017 press release. This is the third time since 2010 Huntington Bank has invested large amounts in Ohio’s affordable housing system.
Fears concerning potential changes to the federal tax code have stalled investment in Ohio’s affordable housing market. Steinour himself characterizes Huntington’s financial commitment to affordable housing as “not a great investment.” The bank recognizes, however, that stable communities result in measurable economic development. Huntington Bank has had a presence in Ohio for over 150 years and doesn’t mind playing the long game.
Investor’s fears are not unfounded. The Trump administration has signaled that it will reduce the corporate tax rate. This reduction is welcomed news to many corporations but would significantly reduce the benefit of the Low-Income Housing Tax Credit. When tax rates go down, there is much less demand for tax-saving credits.
The hesitation to invest through the LIHTC could exacerbate the housing crisis for low income residents. No other federal program has come close to creating the amount of housing that the LIHTC program has. According to a 2016 Harvard University study, the popular federal tax credit has encouraged the construction of 2.8 million rental units since 1986. By comparison, the National Housing Trust Fund was only allocated $173 million in 2016, just over 3 million per state.
Looking beyond the fiscal benefits of their investment, Huntington Bank notes that this latest venture is expected to help as many as 5,600 Ohio residents and fund almost 4,000 new or refurbished housing units. Huntington Bank’s long-term commitment and partnership with the OCCH is estimated to have helped 15,000 low and moderate income Ohioans in the past seven years. In addition, the current investment is expected to support 2,800 construction jobs.
Huntington Bank hopes other financial institutions will follow their lead. “Investments like Huntington’s are critical to maintaining affordable housing developments,” said Cuyahoga County Executive Armond Budish. With the growing skittishness about investing in affordable housing, Huntington Bank’s unwavering commitment to invest in infrastructure that benefits Ohio’s most vulnerable citizens represents the best in pubic private partnerships. “We believe it is vital to continuously support adequate housing for those who require it most,” said Steinour.