State tax generates millions for affordable housing, but state law prevents it from generating millions more

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(Pittsburgh) – A small change in Harrisburg could help generate more money to deal with Pennsylvania’s affordable housing crisis. Last year, the state’s real estate transfer tax generated $ 40 million in support of Pennsylvania housing improvement and rehabilitation or PHARE program, but he could do a lot more.

PHARE helps people across the state access safe, decent and affordable housing, said Bryze Maretzki, director of policy and planning for the Pennsylvania Housing Finance Agency, which administers the program.

Unlike tax credit financing or other tools used to create affordable housing, Maretzki described PHARE as comprehensive, flexible and dynamic enough to meet the needs of communities in the 67 counties.

“He can do a small new building project, he can make a down payment and help with closing costs for first-time homebuyers,” he can pay to acquire and demolish abandoned structures, or help elderly people in the city. rural communities to pay for home repairs, says Maretzki.

The program was created in 2010, and received some funding in 2012. But it is only 2015 that the legislature directed part of the State’s tax revenues on real estate transfers to PHARE. Originally capped at $ 25 million, the limit increases to $ 40 million in 2019.

This change in state law limits program funding to the lesser of the two: $ 40 million or 40% of tax revenue between the previous fiscal year and the amount collected in 2014.

Since property transfer rights began to finance PHARE in 2015, revenues have increased by more than 10%. If that cap were relaxed or the calculation changed, the amount of money paid to PHARE could keep pace with the growth of the real estate market, which has boomed in parts of the state in recent months.

State Representative Sara Innamorato, whose district includes parts of the city of Pittsburgh, said she wanted to encourage discussion about increasing that limit.

“Directing more funds raised through the transfer of properties across Pennsylvania to help people access affordable housing or end homelessness or provide other housing stability is a win-win.”

Maretzki said his agency administers the program, but questions of whether the level of funding should change are best addressed to the legislature. However, he said that PHARE is a popular and successful program.

“On average over the past five years, we have received approximately $ 37 million in more requests than we were able to meet in recommended approvals. “

Maretzki said the allocations made this year have leveraged nearly $ 300 million from other sources of funding.

Innamorato acknowledges that while it is keen to look at funding levels, it is unlikely to happen this year. Instead, lawmakers are focusing on the state budget and what to do with the billions of federal dollars in federal COVID aid.


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