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House panel debates CHIPS TIF incentive, sets drafting instructions to tighten affordability definitions
Summary
On May 1 the House General & Housing Committee reviewed CHIPS tax-increment finance language, discussed adding clearer low/moderate-income definitions and a targeted incentive to raise the education property tax increment from up to 70% to 80% for qualifying affordable projects, and asked counsel to draft specific changes for the next session.
The House General & Housing Committee on May 1 debated changes to CHIPS, a tax-increment financing approach for development, including adding formal definitions for “low” and “moderate” income and a possible incentive to increase the share of education property tax increment that developers may retain.
Committee members said the draft would keep the bill’s flexible intent but add numeric definitions — renters capped at 80% of area median income (AMI) and homeowners at 120% AMI — and discussed tying a higher TIF share to projects that meet an affordability test. "The definitions... are not particularly stringent in the sense that they really are quite inclusive," the committee chair said when describing the proposed income cutoffs. The chair added that the committee would prepare a consolidated list of drafting changes and send them to counsel for redraft before a formal vote.
Why it matters: The provision would change how much local education tax increment municipalities could retain to support infrastructure tied to housing development. Members framed the debate as a trade-off between stronger affordability guardrails and protecting the education fund that receives property-tax increments.
Key details discussed - Income definitions proposed: renters up to 80% AMI; homeowners up to 120% AMI. Committee members gave examples from the draft showing 80% AMI could translate to roughly $2,000 monthly rent for a two-bedroom and about $2,300 for a three-bedroom in some markets. - Existing draft language already allows municipalities to keep up to 70% of the education property tax increment for up to 20 years. Committee members discussed adding a sentence that would raise that cap to 80% for projects that meet the bill’s low/moderate-income definition; the 80% change would be written as an incentive rather than a floor. - Alternatives discussed: raising the incentive (70%→80%) or lowering the baseline (for example, universal 60% with a bonus for affordability). Committee members said the committee did not take outside testimony on the precise 10-point spread and that modeling was not available to show whether 70→80 would materially change developer behavior. "We did not," Edy Granning, vice chair of Commerce, said when asked if the committee had taken testimony on the 70/80 spread. "We decided against both because we were looking at how do we create a simple program that is easy to use." - Adaptive reuse and project eligibility: members asked counsel to ensure the bill’s gross-floor-area test would not unintentionally disqualify adaptive-reuse projects (for example, schools with gymnasiums or auditoriums that remain public amenities). The bill includes a second qualifying path: if a project does not meet the residential percentage threshold, the CHIPS board can decide whether the project meaningfully addresses local housing needs.
Debate and concerns - Protecting the Education Fund: several members said raising the TIF share could prompt opposition from lawmakers and stakeholders who prioritize the education fund. Others argued that a higher incentive might be needed to induce private developers to include affordable units. - Simplicity vs targeted incentives: some members pushed for a simpler, easily administered program to encourage use; others wanted targeted carrots for projects that commit to affordability.
Committee action - The committee did not take a final vote. Members instructed counsel to draft language that would: (1) add the low/moderate-income definitions already discussed, (2) include an optional incentive clause raising the education-property-tax-increment share to 80% for projects that meet the bill’s affordability definition, and (3) add clarifying language for adaptive reuse and the board’s discretion when a project does not meet the residential-floor-area threshold. The chair said he would circulate a consolidated list of drafting changes and meet with counsel the next morning to finalize drafting instructions.
What’s next: Counsel will redraft the bill language based on the committee’s instructions; the committee plans to review the redraft at a follow-up session and take a formal vote later.
Ending: Committee members repeatedly framed the changes as an attempt to balance practical, administrable incentives for developers with protection for education funding streams; no final statutory change was adopted at the May 1 meeting.
