The first month of Virginia House Bill 806 is nearly over as local governments and public finance attorneys are still unpacking the possibilities.
"A new Virginia law could make it easier to finance affordable housing by allowing local industrial and economic development authorities to issue bonds for housing projects even in cities and counties that already have housing authorities,"
EDAs often play a crucial role in public private partnerships by serving as the owner of land controlled by the municipality and having the ability to issue private activity bonds.
HB 806 changes the rules that blocked EDA's ability to issue housing bonds in Virginia.
Prior to the change, EDAs could finance residential rental projects only in localities where a housing authority had not been activated.
Larger Virginia cites and urban counties began establishing housing authorities in the 1940s, which up until this month, limited EDA's role in the housing bond market.
Affordable housing developers looking for tax-exempt residential rental project bonds were forced to deal with housing authorities.
"This limitation had practical consequences," said Forbes.
"Housing authorities, while possessing broad statutory powers, including eminent domain and the ability to operate public housing, do not always have the institutional infrastructure or appetite to serve as frequent conduit issuers for modern, privately developed Low-Income Housing Tax Credit transactions."
LIHTCs rely on bond sales and are a vital chip in the capital stack frequently used to finance affordable housing.
The new legislation pairs well with HB 854 which creates a tax exemption for affordable housing projects where the managing member of a limited liability company is a nonprofit entity.
"For bond counsel, this creates a more favorable underwriting environment and a stronger revenue base supporting bond repayment, particularly where the conduit issuer is a local EDA acting under its newly expanded HB 806 powers," said Forbes.
According to numbers from the U.S. Economic Development Administration, which nests within the U.S. Commerce Department, EDAs were responsible for over $153 million of investments in Virginia through 153 awards, as measured from 2018-2024.
EDAs provided $7.45 billion in investments through 5,823 awards in the entire country for the same time period.
Both bills were signed into law in April by the state's Democratic Gov. Abigail Spanberger who ran for office using affordability as a campaign pillar.
In addition to HB 854 and 806, Spanberger signed seven other pieces of legislation related to housing affordability and streamlining the home ownership approval process in the same legislative session.
Last month, the Governor signed three more housing related bills including one that requires localities to treat manufactured homes equally as site-built homes by including them in the same zoning district.
Virginia's focus on housing mirrors what's
The ROAD act is aimed at expanding manufactured housing and changes the rules on Community Development Block Grants.
It also raises the cap on public welfare investments which limits how much banks can invest in community development projects.
