The Only Realistic Path to Affordable Housing: Government

May 12, 2017
By Neil Cosgrove

In a supply-and-demand-based housing market, low-income families lose; landlords set rent-levels that will provide them with the profits they desire, or offer sub-standard housing at affordable rents, neglecting basic maintenance in order to obtain similar profits.

The only way to ensure adequate and affordable housing in such an economy is to provide government assistance. But, as 2017 NewPerson awardee Carl Redwood points out, our current political climate features a “type of capitalism that has implemented the shutting down of government support for the people.” Many families have to negotiate the housing market themselves, regardless of how far below the Area Median Income (AMI) their annual pay may fall.

With a need for more than 17,000 additional units of affordable housing, and with many low-income people who perform essential work within the city seeking affordable housing in nearby suburbs, Pittsburghers generally agree the city is experiencing a “housing crisis.” As certain neighborhoods “gentrify,” many poor, elderly and disabled residents find themselves uprooted from places where they have spent much of their lives. (See article below by Thomas and Hortens.)

How do you reverse or at least slow trends that make some neighborhoods affluent enclaves and others low-income ghettos? How do you ensure that essential low-income workers live close enough to jobs to have access to frequent, convenient public transit, and that the elderly, and people with disabilities, have reasonable access to the services they need? The city’s Affordable Housing Task Force (AHTF), and a variety of service organizations, have considered several tools, all of which they know are inadequate without greater federal and state support.

One tool is to build new units of affordable housing. However, “the primary funding … for 90% of the newly constructed affordable housing in the United States,” according to Lena Andrews, an affordable housing developer with ACTION-Housing, is the IRS-administered Low Income Housing Tax Credits (LIHTC). No other federal program offers enough incentives to developers, since multifamily buildings can cost at least $250,000 per unit to construct. “In Pittsburgh,” Ms. Andrews continues, “this program creates only about 200 units per year,” which barely dents that 17,000 affordable unit deficit.

Pittsburgh’s AHTF recommends expanding use of the LIHTC but also the inclusion of affordable units in new developments with otherwise market-rate units. The Task Force would push for affordable units in any project with 25 or more units that is receiving public benefits such as tax abatements or height and density bonuses, to “a level commensurate with the amount of public subsidy.” The Task Force, incidentally, defines a housing unit as affordable if the cost is feasible for “households at or below 50% AMI [approximately $28,500 for a family of two] for rental units and households at 80% AMI or below for home ownership.”

Another move is to replace or renovate existing housing. For example, the city’s Housing Authority recently issued $75 million in bonds, which will allow the Authority to obtain another $54 million in LIHTC money and consequently make 460 affordable homes available.

The AHTF also wants to preserve “the more than 15,000 deed- or income-restricted affordable housing units” and to protect existing homeowners and tenants.   It recommends controls over spikes in property reassessments. Another program would provide “just cause eviction protections and notification requirements for tenants of developments receiving direct public subsidy.” When tenants are evicted, finding affordable housing for them becomes increasingly difficult.

The recently created Housing Trust Fund would supposedly assist in all these efforts by distributing as much $10 million a year, but only if it manages to obtain a steady stream of funding. Some of the suggested sources—such as a ½ mill increase in the real estate tax or a 1% increase in the realty transfer tax—have drawn little political support. Contributions of $10 million each year from the city’s largest non-profits would no doubt be more popular.

Pittsburgh must do what it can, but federal rental assistance programs are crucial to increasing the city’s available affordable housing. Rising demand for rental housing over the past decade, across the country, and consequent jumps in rents have made such assistance more necessary than ever.  “The number of  families that paid more than half their income for rent or lived in severely substandard housing rose by 53% between 2003 and 2013, to nearly three million,” says the Center on Budget and Policy Priorities (CBPP).

Douglas Rice of the CBPP observes that 85% of the federal Department of Housing and Urban Development’s (HUD) budget goes to rental assistance. Under President Trump’s proposed budget, Rice says, “it’s mathematically impossible to implement the Administration’s proposed  HUD funding cuts without making deep cuts in rental assistance.”

Yes, government assistance is necessary to provide citizens with adequate and affordable housing, and not just for poor or otherwise marginalized citizens. Lest we forget, most federal housing assistance goes to higher-income households, in the form of mortgage interest and property tax deductions when yearly tax returns are filed.

Neil Cosgrove is a member of the NewPeople editorial Collective and of the Thomas Merton Center board.

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