Community Developments: Housing Credits + Tax Reform, HOTMA Implementation
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- If Congress reduces the corporate tax rate, writes Dirk Wallace, Michael Novogradac and Peter Lawrence, the equity raised for affordable housing through the Low-Income Housing Tax Credit (Housing Credit) could shrink by $2.2 billion annually, leading to a loss of 16,000 affordable homes per year. Given that more than 11 million families pay more than half their income on rent, the impact of the lower corporate rate alone could worsen today’s affordable housing shortages. According to the three authors, Congress could take two steps to make up for the loss of Housing Credit equity under a lowered corporate tax rate. First, Congress could increase the amount of Housing Credits allocated. Second, it could update the formula by which the annual Housing Credit rate is determined to ensure that developments remain financially feasible. (Novogradac & Company, April 17)
- An article posted to the NAHRO Blog summarizes the provisions of the Housing Opportunity Through Modernization Act (HOTMA) that take effect today. HOTMA, which provides updates and improvements to statutes that authorize and prescribe requirements for multiple HUD programs, passed Congress and was signed into law by President Obama in July 2016. According to NAHRO, implementing some of these new provisions might require public housing agencies to change their administrative plans. (The NAHRO Blog, April 18)
- A new study looks at the connection between youth homelessness and human trafficking. According to the study, one-fifth of homeless youth in the United States and Canada are victims of human trafficking, including those trafficked for sex, labor or both. “One of the ways we will end criminal exploitation of children and youth is to make sure there is a robust safety net for homeless issues,” said Kevin Ryan, president and chief executive of Covenant House. “To end human trafficking, we must end youth homelessness.” (The New York Times, April 17)
- A recent report by the Massachusetts Community & Banking Council shows significant racial disparities in lending for home purchases and in the location of the purchases. In 2015, five Massachusetts cities accounted for 46 percent of the home-purchase loans to black borrowers, and seven cities accounted for 42 percent of the home-purchase loans to Hispanic borrowers. However, black and Hispanic households did not receive any home-purchase loans in a number of neighborhoods that primarily house white households. In addition, a study by the Metropolitan Area Planning Council in Boston shows that households of color in metro Boston tend to live in less affluent neighborhoods than white households with comparable incomes. (The Boston Globe, April 17)
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) dropped by three points to 68 in April; however, builder confidence in the market for newly-built single-family homes remains strong. The HMI measure of current home sales conditions has remained healthy for five consecutive months, showing a continued demand for new construction. (NAHB, April 17)
In Case You Missed It
- As previously reported in Community Developments, a report released by Enterprise and the University of Southern California’s Bedrosian Center on Governance calls attention to the nation’s small and medium multifamily housing stock. The Understanding the Small and Medium Multifamily (SMMF) Housing Stock report emphasizes the formidable size of this segment of the market and its importance as a source of naturally occurring affordable rental housing. One goal of the report is to encourage policy makers to support the development of financial tools to preserve existing properties as they age and reduce barriers to produce new SMMF properties. (Urban Land Magazine, April 14)
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