To date, the program has given about $62 million in tax credits, with most of the write-offs coming from financial institutions and large corporations that include energy companies.
BISMARCK, N.D. (AP) A state income tax credit that helped subsidize construction of thousands of living spaces largely in western North Dakota's oil patch has outlived its usefulness with the downturn in drilling and a prolonged slump in crude prices, the chairmen of the Senate and House taxation committees say.
“Without a doubt, we need to re-evaluate this,' Sen. Dwight Cook, chairman of the Senate's Finance and Taxation Committee, told The Associated Press on May 18. “Times have drastically changed since we put that in place. It was sold as a crisis and we reacted. The crisis does not exist any more. It's a different market today.'
Approved by the Legislature in 2011, the North Dakota Housing Finance Agency's low-income housing development program gives individual and business donors a dollar-for-dollar tax credit to subsidize construction of affordable dwellings for the poor and seniors, teachers, law enforcement officers, emergency workers and others whose salaries weren't near equal to those working for oil-related companies.
To date, the program has given about $62 million in tax credits, with most of the write-offs coming from financial institutions and large corporations that include energy companies. Tesoro Corp.'s $5.3 million contribution is the program's largest, recently released state data show.
Individual donations over the past five years have come in from about 1,130 North Dakota residents and total only $12.8 million, or 20 percent of the total tax credits, data show.
The Legislature also has given the program $15.4 million from the state treasury, plus $10 million in profits from the state-owned Bank of North Dakota.
In total, the program has accepted nearly $90 million in tax credits that have leveraged more than $425 million in construction financing for 78 projects that contain some 2,450 units, Jolene Kline, director of the state's Housing Finance Agency, said.
Developers were slow to build more apartments when rapid energy development began occurring in earnest in 2007 in western North Dakota, largely because they got stung by the last oil bust in the 1980s. The lack of affordable housing displaced many from the region, and just two years ago, rents in several oil patch communities equaled or exceeded those in New York City and Los Angeles.
But rental prices for the state-subsidized units are now in line with those that are non-subsidized because of hundreds of new apartment units and the nosedive in oil activity, Kline said.
In Williston, the epicenter of the oil patch, rents at some apartment complexes have dropped by as much as two-thirds in the past several months, but are still twice the cost of when the boom began, said Ann Kvande, who works for the city's economic development group.
In Dickinson, hundreds of rental units have be added over the past few years and rents have dropped by more than half in recent months, city administrator Shawn Kessel said.
“We have finally achieved equilibrium,' Kessel said.
Still, Kline, whose agency heads the tax credit program, would like to see it continued to help fund repairs to low-income housing built decades ago.
“We need to get the program reauthorized at whatever level the state can afford,' Kline said.
It'll be a tough sell to the Legislature in times of declining state revenue, said Rep. Craig Headland, R-Montpelier, chairman of the House's Finance and Taxation Committee.
“Honestly, I've never been a big supporter of it in the first place,' he said of the program. “You're going to have to prove there are people who are not adequately housed now in North Dakota in order for us to support it.'