An Approach That Deserves Emulating

A recent report in the Indianapolis Star focused on the lack of affordable housing in Indianapolis and the state.

The research had been done by SAVI, a program of The Polis Center at IUPUI that partners with United Way of Central Indiana. SAVI is an online community information system that provides data to government agencies and organizations, and maintains a website making that data freely accessible. (The paper no longer has the resources to independently research such matters.)

In Indianapolis, there are only six affordable rentals for every 10 extremely low-income households, and .there are virtually no vacancies in that category units, making it hard–if not impossible– for extremely low-income households to find an available unit.

Since 2017, the city has supported the construction of 3,842 units of affordable rental housing and 887 permanent supportive housing units by private and nonprofit developers, according to an IndyStar analysis of city data. Permanent supportive housing units are a type of housing for formerly homeless people that includes social services and often cover rent with housing vouchers.

Of the affordable rental units, no more than about 744 are reserved for and required to be affordable to very low-income individuals, who are those making $32,000 for a one-person household or $41,000 for a three-person household.

The city has also supported the creation of 333 affordable homes for lower-income households to own.

That still leaves a shortage of 33,600 homes.

Indiana’s legislators evidently took time out from their obsessions with women’s reproduction and CRT to pass  a bill last session creating a new statewide affordable housing tax credit. The city believes that will boost local government’s ability to build low-income housing using the federal low-income housing tax credit program.

The lack of low-income housing and the growth of homelessness are hardly new problems, here or elsewhere. Municipal governments and CDCs (Community Development Corporations) all struggle with the issue, recognizing that the lack of housing feeds into a number of other social ills, especially crime, so I was fascinated to read about an approach being taken by Kansas City that seems promising.

Kansas City began with an intervention aimed at the most dire manifestation: homelessness.

In order to help alleviate homelessness—and to improve the cleanliness of the city—Kansas City’s Public Works department is collaborating with local nonprofits to create new jobs for some people who are unhoused. The employees of the Clean Up KC initiative were paid to pick up litter from underserved inner-city areas for three months. It’s been crucial—not just for keeping the city cleaner, but for improving chances that they find housing, for which employment is a major criteria. At the end of the program, many have moved into housing, and a new cohort of workers will start a new pilot soon.

The approach being tried by Kansas City recognizes the inter-relationship of social problems, and of the challenges faced by folks who have fallen on hard times–or never known any times that weren’t hard.

Crucially, finding housing is often easier with employment, as it’s more appealing for private landlords and sometimes on a list of criteria for public housing. As part of the program, the nonprofits also helped the workers navigate the housing system. “A goal of this is helping them to create a sustainable, successful life,” Parks-Shaw says. “And you can’t do that without housing.”

Research has shown that investments in programs to help people who are unhoused reduces spending for cities—and taxpayers—on healthcare and emergency department visits.

The obvious question about this particular approach is: what happens to these people when the program–and employment–end?

For the program graduates, there may the opportunity for full-time employment. Kansas City’s Full Employment Council will provide the additional training and certification needed to work for the city on a permanent basis. “I see this as a win-win for our unhoused individuals, and a win-win for the city at a time when we’re struggling to fill positions and meet the needs of our community,” Parks-Shaw says.

That paragraph reminded me of long-ago proposals addressing joblessness by making government the “employer of last resort.” 

In Kansas City, providing employment through government addressed much more than homelessness; not only did formerly homeless people find housing, but workers removed litter and piles of trash from city streets, enhancing the municipal environment.

If America ever emerges from the cold civil war and focuses on solving public problems, Kansas City may provide an approach to emulate. 

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More Bad News About The Tax “Reform” Bill

I have a feeling I should keep the title of this post for repeated future use.

It’s hard to know which of the damaging provisions of the tax bill were intentional, and which were the result of the unseemly haste and secrecy that marked its passage. As I have previously noted, scholars of philanthropy have predicted that it will cause a significant decline in charitable giving. (And yes, it would be nice if people gave money because they simply felt generous, but in the real world, deductibility that makes the gift less costly to the giver is a pretty important factor.)

Now we have reports that the tax bill will dramatically reduce the production of (much needed) low-income housing and the preservation of historic structures.

According to the New York Times

SAN FRANCISCO — The last time that Congress approved a sweeping overhaul of the federal tax code, in 1986, it created a tax credit meant to encourage the private sector to invest in affordable housing. It has grown into a $9 billion-a-year social program that has funded the construction of some three million apartments for low-income residents.

But the Republican tax plan approved last month amounts to a vast cutback, making it much less likely that such construction will continue apace. Because the tax rate for corporations has been lowered, the value of the credits — which corporations get in return for their investments — is also lower.

“It’s the greatest shock to the affordable-housing system since the Great Recession,” said Michael Novogradac, managing partner of Novogradac & Company, a national accounting firm based in San Francisco.

According to an analysis by his firm, the new tax law will reduce the growth of subsidized affordable housing by 235,000 units over the next decade, compounding an existing shortage.

Then there’s a report from Shelterforce about the effect of the tax bill on a Chicago neighborhood revitalization project and other projects like it.

Urban and rural communities throughout the country have historic buildings that can be preserved and repurposed for multiple community needs. 

In addition to revitalizing communities such as Uptown and spurring local economic growth, the HTC returns more to the U.S. Treasury than it takes. According to a study commissioned by the National Park Service, since inception, $25.2 billion in federal tax credits have generated more than $29.8 billion in federal tax revenue from historic rehabilitation projects. The credit generates new economic activity by leveraging private dollars that not only preserve historic buildings but also create jobs; through 2016, the rehabilitation of 42,293 historic buildings has created more than 2.4 million jobs, according to the Historic Tax Credit Coalition.

Though HTCs were preserved in the tax bill passed by Congress, its value was diminished. Instead of allowing investors to take the full value of the credit when a building opens, as they can now, it parcels out the credit over five years. Historic preservationists fear this change will decrease the attractiveness of the credit and consequently negatively impact its pricing. A project seeking $2 million of Historic Tax Credit investments could lose as much as $400,000 in valuable capital. Historic rehabilitation projects frequently have higher costs, greater design challenges, and weaker market locations—all of which can already cause lender and investor bias against such investments.

Another casualty of tax reform is the demise of tax credit bonds. While Private Activity Bonds survived the final assault, new key tools such as Qualified Energy Conservation Bonds (QECB) did not.

Yessir. Some tax “reform.”

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