- Tennessee, Georgia, and Michigan have launched state-level programs to support affordable housing development.
- These initiatives build on federal tools like the LIHTC to close financing gaps and reduce project risk.
- The programs focus on underserved areas, including rural communities and middle-income households.
States Launch New Programs to Ease Housing Crunch
According to GlobeSt, affordable housing remains out of reach for many families as construction costs rise and financing becomes more difficult. In response, several states are stepping in with new tools—most notably tax credits—to make housing development more viable. A recent Urban Land Institute report highlights three examples of these efforts.
Tennessee Targets Rural Areas
In 2024, Tennessee introduced the Rural and Workforce Housing Tax Credit. This program supports developments that already receive federal Low-Income Housing Tax Credits (LIHTC). At least 50% of the state credits go to projects in rural areas. Developers can apply these credits to various state taxes and carry them forward for up to 25 years. As a result, the program gives projects more financial flexibility and long-term security.
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Georgia Offers a Dollar-for-Dollar Match
Georgia boosts affordable housing by matching every dollar of federal LIHTC with state tax credits. This one-to-one match makes projects far more attractive to developers, especially in lower-income and rural communities where rents are low. The state also uses tax-exempt private activity bonds to finance additional rental units. The Georgia Department of Community Affairs oversees the process, ensuring projects set aside units for low- to moderate-income families.
Michigan Uses Future Tax Revenue
Michigan created a Housing Tax Increment Financing (TIF) program to help cover project costs. Under this model, local Brownfield Redevelopment Authorities reinvest future property tax gains into housing projects. The program focuses on serving households earning up to 120% of the area median income. It also targets the “missing middle”—families who earn too much for subsidies but not enough to afford market-rate housing. By tapping into future tax revenues, the state funds new development without cutting into current budgets.
Why These Efforts Matter
These new tools show how states can step up when federal funding isn’t enough. By offering financial incentives and reducing project risk, they can move stalled developments forward. More importantly, they help bring affordable housing to areas that often get overlooked.
What to Expect Next
As housing shortages persist, more states are likely to follow suit. Programs that fill funding gaps, support rural areas, and serve middle-income earners will play a key role in solving the crisis. With strong local leadership and targeted policy, these efforts can make a meaningful impact.
