Community Developments: DC Impact Investment Bill, Predatory Lending Lawsuit
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- Today, Washington, D.C., Councilmember David Grosso introduced the Community Impact Investment Tax Credit Act of 2017 to spur the creation and preservation of more affordable housing in the District of Columbia. The legislation encourages impact investments in affordable housing through community development financial institutions (CDFI) by providing investors an income tax credit of up to 33 percent. “It is clear investors want to support affordable housing,” Grosso said. “In just the last year, a local CDFI, Enterprise Community Partners, has been able to raise $11 million in impact capital to finance the preservation and production of local affordable homes. We can make that impact even greater by incentivizing this type of investment.” Councilmember Grosso was joined by Councilmembers Charles Allen, Anita Bonds, Robert C. White, Jr. and Elissa Silverman in introducing this legislation. (Councilmember David Grosso, May 16)
- As previously reported in Community Developments, the Supreme Court ruled earlier this month that cities have the right to sue banks over predatory lending practices, allowing the city of Miami to proceed with its lawsuits against Bank of America, Wells Fargo and Citigroup. Yesterday, the city of Philadelphia announced that it is suing Wells Fargo for what it alleges are predatory lending in violation of the Fair Housing Act. The lawsuit claims that the bank targeted minority borrowers for high-cost loans, though their credit qualified them to apply for better loans. According to the city of Philadelphia, an analysis found that more than 23 percent of loans to minority customers were high-cost and high-risk, while only 7.6 percent of loans made to white customers fell into that category. The city of Philadelphia is seeking monetary damages from lost taxes, lowered property values and increased segregation. However, the Supreme Court has cautioned cities that meeting the burden of proof could be difficult to achieve. (The Atlantic, May 15)
- New data by the Commerce Department show that housing starts dropped by 2.6 percent month-over-month to 1.2 million units in April 2017, marking the lowest level since November 2016. The data also show that housing completions and building permits dropped by 8.6 and 2.5 percent month-over-month, respectively. In addition, multifamily starts and completions fell by 9.2 and 19.8 percent month-over-month, respectively, suggesting a slowdown in the housing market recovery. (Reuters, May 16)
- In an analysis of the Trump Administration’s brief tax proposal released last month, Ralph McLaughlin of Trulia and Prashant Gopal and Joe Light of Bloomberg examine its potential impact on homeownership. While the proposal does not do away with the mortgage interest deduction, it doubles the standard deduction and eliminates the ability of filers to deduct state and local taxes, including property taxes. As a result, this plan would cause some of the financial advantages of buying a home over renting to erode. The analysis found that the tax plan’s biggest impact will be on homebuyers making between $68,500 and $129,400 to buy homes priced between $358,000 and $676,000. (Trulia, May 16) Additional articles in The Atlantic and The Wall Street Journal examine the benefits and drawbacks of the mortgage interest deduction and its role in national housing policy.
An article in The New York Times looks at the growing support for accessory dwelling units in California, especially in expensive markets such as Los Angeles and San Francisco. According to a recent survey of Bay Area homeowners, nearly a quarter of the surveyed homeowners stated that they were open to building accessory dwelling units, which typically take the form of garage studios or backyard cottages that can be rented or used by an elderly relative. In September 2016, California approved legislation (AB-2299), which supports the creation of accessory dwelling units by relaxing certain utility connection and additional parking requirements for second units. (The New York Times, May 16)
Segregation in New York City schools cannot be dismissed as an unsolvable problem, writes The New York Times editorial board. Though segregated schools are often a reflection of historical housing patterns, the editorial board argues that decades-old educational policies have reinforced inequality and placed many students of color on the road to second-class citizenship. Although the city does offer school choice to eighth graders, many low-income black and Hispanic children have limited access to high-quality schools early in their education. As a result, they have already fallen behind by the eighth grade, making it more difficult to enter into high schools that would best prepare them for college or careers. (The New York Times, May 15)
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