Oregon lawmakers are being asked to consider extending a tax credit designed to encourage the development of agricultural worker housing by allowing housing developers to obtain loans for projects completed by January 2030.
Outside the capital, advocates and providers of agricultural workforce housing disagree on one key point: whether the tax credit even works.
Agricultural entrepreneurs who provide housing say the loan doesn’t work for them because it requires upfront capital, which many farms don’t have.
Housing developers in the community say it’s working well.
The Statesman Journal took a look at the program to find out how it works.
Ahousing for agricultural workers tax credit?
Legislators created the Agricultural Workforce Housing Credit in 1989 to help offset housing costs for agricultural workers.
According to the Department of Revenue, the credit can be applied to corporate or individual income taxes to help pay for the construction, rehabilitation or acquisition of agricultural work housing in Oregon and can cover up to 50% of eligible project costs.
Loans are managed after the project is completed.
The program is managed by Oregon Housing and Community Services. In 2021, the Legislature voted to increase the amount of loans available from $7.25 million to $16.75 million per year.
Who for aHousing credit for agricultural workerss?
Any person, employer or organization that builds or restores housing for agricultural workers is eligible to apply for a loan. Conditions include: occupancy of the units is limited to agricultural workers and their families for 10 years, and OHCS monitors compliance through an annual certification process.
Units must not be occupied year-round so that agricultural employers can accommodate migrant or seasonal workers. No one except agricultural workers can occupy them at any time. Residents must not work in agriculture year-round, but they must work in agriculture for at least part of the year.
Agricultural workers in this case do not include direct relatives of farm workers who work on the farm.
How aHousing credit for agricultural workersused?
OHDC divides project applications into two buckets: one for farm housing, the other for public housing.
Farm housing is typically housing provided by an employer on or near an agricultural enterprise. Community-based housing includes projects such as Colonia Pas, an apartment complex in Lebanon built specifically for agricultural workers. According to OHCS records, the Farm Housing Development Corporation (FHDC), the project’s lead developer, applied for a $3.1 million tax credit to help finance the project in 2019.
Funds are not distributed equally. 80 percent of available tax credits are allocated to public housing. Twenty percent, or $1.67 million, is earmarked for farm housing because farm housing projects generally cost less, said Martin Jarvis, state tax credit program analyst for OHCS’s affordable rental housing division.
“We’re funding more farm projects, but the dollar amount is lower,” Jarvis said.
According to OHCS, home developers claim an average of $125,000 in tax credits. The highest amount requested by an on-farm housing provider was $625,000 for four housing units by Cherry Orchard in 2017.
Meanwhile, community-based projects have requested up to $3.5 million in loans. That makes sense, Jarvis said: community housing projects like Colonia Pas cost more to build and provide residents with than farm houses. It costs more to build 24 apartments with amenities than to build one apartment or buy “manufactured homes” or mobile homes.
Community housing providers, in turn, face a rigorous application process, Jarvis said. Applicants should identify other funding sources and provide more details about the scope of their project.
does aHousing credit for agricultural workers legislation work?
Jarvis said the tax credit is part of the state’s efforts to provide more housing for farmworkers. And if the government’s ultimate goal is to reduce dependence on farm housing and increase the ability of farm workers to settle in their communities, credit is “our tool” for that.
“[OHCS] Always remember, while there will always be a need for housing on the farm, and housing must be safe, well-maintained and healthy,” said Jarvis, “we think it’s more important how we build communities. »
Public housing providers agree.
“The Farmworker Tax Credit works very well for public and farm housing,” said Peter Heinley, executive director of CASA Oregon, a nonprofit that helps finance and build affordable housing, including public housing for farmworkers.
But agricultural workers and representatives are not so sure.
“Economics tells you: [farmers] are land-rich but cash-poor,” said Jeff Stone, president of the Oregon Nursery Association, at a recent meeting of the Agricultural Housing Assistance Group hosted by OHCS.
And, Stone said, “the loans really only work if you can show a profit.”
Stone said he and other grower advocates would like to see a model that provides more financial aid like the grant.
Housing developers and providers bear the upfront costs and construction costs. Getting a tax credit for money you’ve already spent isn’t beneficial if you don’t spend the money in the first place, he said.
“If you want to have housing as a result, how do you get it from the first step to building it?” Stone said.
Heinley isn’t sure. He thinks the legislation is working and has yet to see evidence of it.
“You guys have financed thousands of units using farm worker tax credits,” he said at a meeting of the advocacy group in January. “It really behooves us to celebrate what’s been done.”
The tax credit program has alerts to help you calculate upfront costs. Loans may be sold or transferred to other parties contributing to the construction costs.
Here’s how many community-based providers do it, Jarvis said: they find an investor or bank willing to buy the tax credit up front. Once the credit is issued, recipients can transfer it as long as they file a joint statement with the revenue department.
“It’s a way to make money upfront,” Jarvis said.
The transfer “should be easy,” he said, but he understands how it could put additional burdens on already stretched farmers.
What’s up with that? aHousing credit for agricultural workers this year?
The tax credit program will face the legislature for another round of approval this year, and its structure could change.
OHCS is exploring developing a grant program specifically for farm housing and using the tax credit only for community housing projects. The Farm Housing Tax Task Force, commissioned by former Gov. Kate Brown, also recommended a $5 million tax program to preserve existing farm housing.
The grant program is still just an idea. Jarvis said he hopes it will gain traction and be approved.
Stone said she is waiting to hear more about Gov. Tina Kotek’s vision for farm housing before making any detailed proposals. Kotek pledged to make housing a priority and declared a homeless emergency on his first day on the job.
“There are a lot of choices,” he said. “We want to give [Kotek] every opportunity to conduct this debate in the way he sees fit.”
Shannon Sollitt covers farm workers Report for Americaa program that aims to support local journalism and democracy by reporting on under-covered issues and communities. Send suggestions, questions and comments to it [email protected]