New York’s recent primary elections made one thing clear: our next mayor will make a significant investment in affordable housing.
The Democratic candidate, Bill de Blasio, promises an ambitious plan to build or preserve 200,000 affordable units over the next eight years. Saying that “it's not right for the Democrats to own affordable housing,” Joe Lhota, the Republican candidate, supports a 150,000-unit housing plan created by a broad-based coalition we lead called Housing First!
Washington lawmakers might scratch their heads at this bipartisan consensus. But the proven benefits of affordable housing – safe, vibrant neighborhoods, lower healthcare costs and increased economic activity, not to mention jobs – are difficult for any mayor to ignore. In New York City, where a third of renters spend over half their incomes on rent and 50,000 people sleep in homeless shelters, investing in affordable housing is a no-brainer.
If only Republicans in Congress got the message. While the mayoral candidates promised to invest in housing, they can’t do it without federal dollars. Yet just about all federal housing programs are currently at risk. The current budget showdown, comprehensive tax reform proposals, and changes to the way Fannie Mae and Freddie Mac operate, together threaten the ability of Americans at all income levels to be safely and affordably housed.
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The attack on federal housing programs is as mindless as it is mystifying. Housing remains one of the primary drivers of the national economy — and, like it or not, housing has rarely been built in the past 80 years without some sort of federal subsidy or tax expenditure.
And it’s not like affordability isn’t a national problem: according to a recent National Low Income Housing Coalition report, there are no longer any states where a full-time minimum wage worker can afford a two-bedroom apartment at fair market rents.
The federal programs created to help low-income renters are an especially effective answer to these challenges. The Low Income Housing Tax Credit, sometimes used with federally-authorized tax-exempt bonds, is structured so that government only pays for success: private developers and investors take on the risk and receive tax breaks only after well-constructed buildings are maintained in top condition for years. Federal homeless programs save taxpayers enormous sums by funding supportive housing for individuals who would otherwise shuttle between expensive shelters, jails, emergency rooms and psychiatric hospitals.
{pullquote}The attack on federal housing programs is as mindless as it is mystifying.{/pullquote}
Despite tangible success, federal housing programs have been slashed by 30 percent since 2010, a loss of about $400 million for low-income New Yorkers. The most recent “sequestration” cuts have been particularly damaging to Section 8 rental vouchers, nearly half of which help the elderly and disabled remain housed.
Even LIHTC, the bipartisan bedrock of affordable housing finance created under President Reagan, is now under attack by many of his admirers. This tax expenditure accounts for about 50 percent of multifamily construction starts nationwide. If tax reform eliminates the housing credit, affordable housing will, quite simply, cease to be built.
Lastly, some Congressional proposals threaten the critical, but behind-the-scenes, role played by Fannie Mae, Freddie Mac and FHA in supporting not just single-family homes, but almost all financing of affordable multifamily rentals. There may be viable alternatives that allow a greater private sector role, such as those recently proposed by the Bipartisan Policy Center Housing Commission. But experts agree that solutions must address not just homeownership, but also affordable rental needs that are critical to the long term health of our communities.
As Washington lawmakers address the budget this month and consider overdue reforms, they need to leave party politics aside and make affordable housing a bipartisan priority, as it is in New York.
Three actions can be taken before the new year: 1) Exempt HUD homeless and housing programs from the sequester and further cuts, 2) Protect LIHTC and tax-exempt bonds in tax reform, and legislate minimum and permanent fixed LIHTC rates, and 3) Provide government guarantees for low-income rental housing in GSE reform, including a dedicated revenue source for the National Housing Trust Fund.
While low-income housing programs represents chump change next to the rest of the federal budget and other tax expenditures, the housing and economic activity generated by these programs is substantial. The tax credit alone has leveraged nearly $100 billion in private investment and creates 100,000 affordable units and 95,000 jobs annually. Given our nation’s extraordinary housing and employment needs right now, one would think members of Congress would agree on the importance of expanding affordable housing investment. Just like Bill de Blasio and Joe Lhota do.
Ted Houghton, executive director of the Supportive Housing Network of New York, and Todd A. Gomez, senior vice president, Bank of America Merrill Lynch, are co-chairs of the Housing First! affordable housing campaign.
