House committee advances bill to expand down-payment assistance and support workforce housing

House Bill 1519, titled Down Payment Assistance and Workforce Housing, was advanced out of the House Financial Institutions Committee on a roll-call vote of 11-1 after testimony from representatives of housing providers, builders, banks and housing advocates.

Representative Rosemary Miller, who presented the bill, told the committee: "In full disclosure, there's really 2 things going on in this bill. 1 is the continuation of the down payment assistance fund and growing the available market through that by increasing the AMI to 160%." Miller said the higher AMI would raise the price point eligible for assistance “from say $200,000 up to $300,000” in current market conditions, and that the bill also would create opportunities for multifamily housing developers to use tax-credit financing tied to bond volume.

The bill was amended in committee. Representative Miller offered two amendments: one struck the appropriation language originally in the bill and corrected a drafting error, and the second inserted language to allow the program to work with low-income housing providers on down-payment assistance. Both amendments were adopted by consent before testimony began.

Supporters said the bill would help first-time buyers and expand housing supply. Maggie McShane, senior vice president of government affairs for the Indiana Association of Realtors, testified she was neutral on the bill but urged care so an existing down-payment program administered by IHCDA would not be diluted. "Without the new source of funding in it moving forward, we have 1 program that exists in the state right now for down payment assistance through the IHCDA," McShane said, noting the authority issued about $32,000,000 in assistance in a recent year.

Builders, lenders and housing organizations described how the proposal would operate in practice. Carly Hopper of the Indiana Builders Association said the bill would help remove barriers to first-time homebuyers, including down payments and interest-rate buydowns. Mark Schublak of the Indiana Affordable Housing Council explained the bill seeks to "optimize 2 existing programs. We have a down payment assistance program, and we have a tax credit program," and described moving bond allocation to support tax-credit financed multifamily development if state appropriations allow.

Industry witnesses and bankers said a revolving loan fund could make down-payment assistance sustainable over time. Mike Petrie, CEO of Merchants Bancorp, said his bank provides larger down-payment grants in-house and reported a near-zero default rate for those programs: "Our default rate on those loans are 0 because they're underwritten to Freddie Mac, Fannie Mae, or FHA standards." He urged that larger assistance amounts (he cited $10,000–$20,000 examples) are necessary to affect home purchases at current prices and that increasing AMI eligibility to 160% would permit new-construction opportunities in rural areas.

Committee members sought clarity on program structure, default rates and geographic effects. Representative Lucas asked whether the bill would create another program in addition to an existing $32 million program; witnesses and Representative Miller explained the bill would adjust AMI for down-payment assistance and create a mechanism to reassign bond volume toward the tax-credit program if the new revolving fund receives an appropriation.

The committee voted to advance the bill to ways and means; the roll call showed 11 yeses and 1 no (Representative Lucas cast the lone no vote).

The bill will next be evaluated by the budget process for potential appropriations and for technical refinements raised by committee members and witnesses.