Negotiators ask fiscal office to model alternatives as Ontellus housing-cap debate continues

Members of the Senate-House conference on the Ontellus housing bill on Jan. 27 asked the Joint Fiscal Office to run new financial modeling after several negotiators said the current $40 million cap on infrastructure financing could be insufficient to reach housing goals across rural and urban communities.

The request was part of an hours-long negotiation over how the bill should treat a funding cap and whether affordable and moderate-income housing should be counted against it. “I think it's time to ask the JFO to do some new work for us,” Participant 3 said during the session, pressing for numerical analysis of different cap levels and retention assumptions. Participant 3 later added, “But I think until that time, the last best offer still stands.”

Why it matters: conferees said the cap determines how many projects can access retained education tax increment dollars for infrastructure and that the same dollar amount can support very different numbers of housing units depending on local costs and density. Participants argued that without modeling, percentage-based retention assumptions make the cap “arbitrary” and could quickly exhaust available funding.

What negotiators debated: conference participants discussed at least three approaches. One group urged keeping a hard cap near $40 million while expanding a governor- and Joint Fiscal Committee–controlled add-on now set at $5 million to give the program flexibility if demand exceeds the cap. Another group proposed exempting affordable and moderate-income housing from the cap to avoid the risk of the cap “ballooning” if moderate-income units are included. A third proposal floated a substantially higher cap — figures of $75.85 million and $80 million were mentioned in discussion — but negotiators did not settle on a new statutory figure.

Technical mechanics discussed included how changing retention percentages affects the education tax increment column in the bill’s spreadsheet, and how tax-increment financing (TIF) mechanics and education-fund splits would interact with any cap. A participant explained that altering the retained percentage primarily changes the education tax increment line, which then changes funds available for debt financing versus allocation to the education fund.

Direction and next steps: negotiators asked the Joint Fiscal Office and JFO staff (Pat) to model scenarios that show how different cap levels and retention percentages would affect the number and size of projects that could be funded. Participants agreed to meet again with the fiscal office to review the numbers before finalizing a cap. No formal motion or vote on the cap occurred during the session.

Points of contention and context: several speakers emphasized the policy goal of supporting both affordable and moderate-income (middle-income) housing, with at least one negotiator saying that moderate-income housing had been dropped repeatedly from prior drafts and should be retained in the bill’s intent. Others warned that including moderate-income units under the cap could cause the cap to be a binding limit that prevents moderate-income projects from moving forward.

The conferees also discussed rural-versus-urban differences in infrastructure costs, noting that the same infrastructure dollar can support widely varying unit counts depending on local conditions. Participants repeatedly said that infrastructure costs per unit can range broadly and that a dollars-driven cap may be more practical than trying to set a single statewide units target.

What was not decided: there was no final agreement on a new statutory cap, whether affordable and moderate-income housing would be exempt from the cap, or on the size of any governor/JFC add-on beyond the $5 million mechanism currently in the draft. The conferees scheduled follow-up work with the Joint Fiscal Office to inform the next round of negotiation.