The Threat to Affordable Housing
By Albert B. Kelly
Affordable Housing has always been the point of a sharp
spear when it comes to communities and poverty and stability. Too many
associate “affordable housing” with inferior housing, inferior people, and a
host of other characterizations that serve to divide.
The issue has taken on urgency, both because of growing
gentrification and expanding income inequality, but also because of the
proposed policies with the current leadership in Washington.
As for gentrification, it generally happens a lot in our
larger communities and while I could be wrong; it seems like one of those
unintended consequences of growth. It could be growth related to a certain
industry like tech, an interest such as the arts, or the result of an area
becoming the next trendy place to be.
Regardless of the cause, it follows a predictable pattern
and it usually ends with those on the lower end of the spectrum being priced
out of neighborhoods and communities they’ve lived in for years or even
generations. We all want growth, but it should aim to be smart growth that
makes room for all residents.
But that’s part of where affordable housing and low income tax
credits come in. As it stands, the tax code allows banks, insurance companies,
and other investors to receive an offset to their corporate taxes through low
income housing tax credits or LIHTC
These entities would invest in affordable housing intended
for lower income families and in return, they would receive credits that would
lower their tax obligations by a certain amount. These investments were part of
what made projects “doable” from a financial standpoint- they provided the
necessary capital to make up funding gaps that allowed affordable housing
projects to get completed.
With a rewrite of the tax code being kicked around by
Congress, a rewrite that could mean lowering the corporate tax rate to 20% or
even 15% from its current level of 35%, the tax credits would have much less value
and if that happens, investors in these projects will be very hard to come by.
That means that a lot less affordable housing will get built
and if that happens, the inequality gap will just get wider and that widening
will happen a lot more quickly. Even where gentrification is not necessarily an
issue, the lack of affordable housing will still have a negative impact on many
communities.
I say that because affordable housing is a basic pillar of
community and neighborhood stability. Even in smaller urban communities like
Bridgeton, providing affordable housing is connected to any number of other
issues and challenges at the local level.
Overcrowding is one example. In our area, fair market rents
run anywhere from $878 for a one bedroom unit to $1,688 for a four bedroom
unit. While these numbers can vary, they serve as anchor for rents.
It’s no secret that many individuals and families in our
area are at the lower end of the spectrum when it comes to income and earning
power and for those lacking a college education, in minimum wage jobs, or
agricultural workers, renting is what there is and fair market is simply not affordable.
It’s not about availability, it’s about affordability.
Surviving often means splitting the rent and utilities among
larger numbers of people and that causes overcrowding and unhealthy living
situations for all involved. Affordable rents (i.e. housing) that is pegged to
income, means less overcrowding and more stability for neighborhoods and
communities.
Some affordable housing is aimed at homeownership. While
getting approved for a mortgage was always hard for those of limited income,
after the financial crisis in 2008, getting a mortgage got much harder with a
minimum of 20% down just to be considered.
Building new affordable housing allows lower income families
to live decently, whether renting or owning. It also means improvements like landscaping,
sidewalks, curbing, and other things that make for stability. And while the
revenue is not what full market would bring, it’s not nothing.
We can debate the merits of corporate tax cuts and go back
and forth over how much. But any overhaul of the tax code should take into
consideration how it will impact affordable housing because affordable housing,
whether owning or renting, is a pillar for safer and more stable communities.
More than that, it lets people live with some sense of
security and dignity. With inequality growing in so many areas, housing is one
place where we need to hold the line.