Community Developments: The Impact of Tax Reform on Affordable Housing Production
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- An op-ed by The New York Times editorial board highlights the significant threats to affordable housing production following the adoption of last year’s tax reform legislation. The Tax Cuts and Jobs Act reduced the top corporate tax rate from 35 to 21 percent, which has reduced pricing and subsequent production for the Low-Income Housing Tax Credit (Housing Credit) - the nation’s primary tool for developing new affordable housing. An analysis by Novogradac & Co. estimates that, without congressional action, the lower corporate tax rate will reduce affordable housing production by 235,000 affordable homes over the next decade. The editorial board notes that the Affordable Housing Credit Improvement Act (S. 548), bipartisan legislation in the Senate, would expand the Housing Credit by 50 percent, resulting in a sorely needed 400,000 additional affordable homes over the next decade. (The New York Times, February 2) See the ACTION Campaign’s Advocacy Toolkit for resources to advocate for the Affordable Housing Credit Improvement Act.
- A draft budget document obtained by CityLab reveals new proposals from HUD that would institute work requirements for public housing residents and raise rents for about 4 million recipients of federal housing assistance. The proposed changes would allow public housing agencies to introduce minimum employment requirements for determining eligibility, which housing advocates argue would impose substantial burdens on low-income households. The changes would also require households who receive federal housing assistance to pay 35 percent of their gross income for rent, up from 30 percent. Though HUD would not confirm or deny these provisions, the changes are in line with similar federal efforts that aim to transform the social safety net, including allowing states to establish work requirements for Medicaid recipients and families who receive food assistance. (CityLab, February 2)
- In 2017, California adopted a bill (SB 35) that requires cities to allow more housing development or risk temporarily losing control of some of their permitting and entitlements processes. The new law was designed to address a statewide housing shortage and escalating home prices and rents. Last week the California Department of Housing and Community Development released a report that shows that only 13 cities made sufficient progress toward accomplishing their housing production goals, while 526 cities have failed to meet their housing targets. The cities that fell short of their housing targets will be required to streamline approvals for proposed housing developments with at least 10 percent affordable units. (Curbed, February 2)
- Mayor Bill de Blasio of New York City has announced a new plan to allocate $5.7 million for bringing illegal basement apartments in East New York up to code while keeping rents below market rate. Mayor de Blasio notes that the program could create or preserve 5,000 affordable units citywide, encompassing about 11 percent of the basement units across the city’s five boroughs. Details on the plan remain scarce, but East New York was one of the communities targeted for rezoning and subsidies under the mayor's call to construct or preserve 200,000 units of below-market housing by 2024. (Crain's New York Business, February 2)
- The Opportunity Zones Program was enacted as part of tax reform to provide private investors certain tax benefits on long-term investments made in rural and low-income urban communities throughout the nation. On Wednesday, February 7, Enterprise is hosting a webinar to provide an overview of the program and demonstrate our mapping tools to help states with Opportunity Zones designation. Register here for the webinar.
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