Shaun Donovan
Secretary
Department of Housing and Urban Development
What the LIHTC program means to him I've worked in rental housing my whole career—I even wrote my first case study in graduate school on the low-income housing tax credit (LIHTC). So I'm able to speak from some experience when I say that I think the LIHTC is essential, not just to the low-income people it serves directly, but to the future of housing policy in America. In the recent crisis, we saw all too painfully the results of pursuing homeownership at all costs, and a stronger LIHTC is a core component of a more balanced housing policy that recognizes the benefits of rental housing for both families and our economy.
Biggest misconception about the program I think there's an underappreciation of just how important the LIHTC and private capital are in driving the financing and production of affordable housing. The tax credit was responsible for about half of all multifamily production in the 1990s, and for all the great work HUD's Sec. 202 program does to build affordable housing for seniors, seven times as many units for the elderly and disabled are produced under the tax credit. The ability of the LIHTC to unleash that private capital is one reason we're proposing a rental assistance demonstration to extend its use to our public housing stock, as well.
Where the LIHTC is headed In the short term, the Obama administration's proposed budget for 2012 includes two important reforms to the LIHTC: a basis boost proposal to increase the tax credits available to preserve federally assisted housing and allowing for income-averaging, which will be especially helpful for tax credit properties in regions with high rents and rural areas.
In the long term, a strengthened LIHTC can help ensure that rental housing has access to the capital and credit it needs to meet rising demand, and to stay affordable for the families who live in it.
Deborah De Santis
President and CEO
Corporation For Supportive Housing
What the LIHTC program means to her The LIHTC program has been a crucial source of capital to house the country's most vulnerable families and individuals. I have no doubt that without the LIHTC program we would not have achieved a 30 percent reduction in chronic homelessness over the past several years.
If there were no LIHTC There would be many more homeless people living on the streets and in shelters.
What surprises her most about the program The LIHTC program is one of the most effective government programs, if not the most effective, yet it continues to come under attack year after year.
What change she would make to the program I believe the federal government should require those using the LIHTC program to set aside a portion of the housing units funded for very low-income populations, especially people with special needs.
Lowell R. Barron II
President
The Vantage Group
What the program has meant for rural communities The bottom line is that the LIHTC program is the main reason there is ANY recently constructed affordable housing in rural America.
Following the functional defunding of the USDA Rural Development 515 program in the early 1990s, the LIHTC was the only program that could step up and fill the gap.
The construction of rural housing using LIHTC funding also provides much-needed jobs and economic activity in small town America.
What people don't know about the program Anything ... and typically that is a good thing. No one has ever heard of the oil wells that didn't leak, the planes that didn't crash, or the federal programs that work well.
Most people don't know about the program because it provides a great benefit to a myriad stakeholders and does not have any headline-grabbing problems.
The biggest threat to the program Short-sighted budget hawks who have rebranded the program from “tax credit” to “tax expenditure"
in order to facilitate cuts. In these perilous economic times, we can ill afford the destruction of a government program that actually works as intended and is providing investment opportunities for corporations, economic and job activity for the extremely depressed construction industry, and safe, decent, affordable housing for citizens when they need it most.
Trudy McFall
Chair
Homes for America
Why the program works It uses the expertise and involvement of the private sector more than any previous affordable housing program. It decentralized the allocation of federal resources to state governments who make smarter, more informed local decisions. It doesn't require direct federal subsidy outlays.
If there were no LIHTC We would not be able to develop affordable housing. It is very rare when we can develop housing using resources that do not include tax credits.
What the program means to her It has been the cornerstone of my professional life in housing development. I was privileged to be the head of the Maryland state housing finance agency when the program started, and we established how the state would administer it and attract developers and syndicators. Later as chairman of Homes for America, we have been very active users of the program, and it has been absolutely critical to our ability to produce our 67 affordable rental communities.
Patrick Clancy
President and CEO
The Community Builders, Inc.
What the program has meant for struggling neighborhoods Tax credit investment has been a key part of bringing capital to improving struggling neighborhoods for a quarter century now. It is a leading tool that often enables commercial and other business investments to follow in a cycle of improvement to a previously deteriorating neighborhood.
What people don't know about the program The microscopic failure rate of LIHTC developments—a 0.15 percent foreclosure rate in 2010, for example—in a sector of the economy, real estate, where troubles have afflicted virtually every other product type is compelling and not widely known evidence of the program's extraordinary success.
The biggest threat to the program Is the risk of a misunderstanding of the tax credit and it being lumped together with “corporate tax loopholes” that get eliminated in an effort to improve our tax system—when in fact it is a key provision to counterbalance and increase the progressivity of generally regressive tax incentives for housing, where large mortgage interest and tax deductions benefiting the wealthy represent the largest component of favorable tax treatment for housing.
Sharon Lee
Executive Director
Low Income Housing Institute
What the LIHTC program means to her Twenty-seven out of 48 properties owned by the Low Income Housing Institute are financed by tax credits. We have a portfolio of 1,845 units, and we have been able to serve the poorest of the poor. Over 80 percent of our units are affordable to households making less than 30 percent of the area median income.
What people don't know about the program I know that some people are critical and claim that the LIHTC program does not serve the neediest households who are extremely low income or homeless. On the contrary, we have worked successfully with the city of Seattle and the Washington State Housing Finance Commission to make sure that homeless families, homeless veterans, the mentally ill, and other special-needs populations can live in tax credit-financed units and that these projects are prioritized for an allocation.
If there were no LIHTC Affordable housing production would grind to a halt ... or a pitiful crawl. I think our productivity would be cut by more than 60 percent as we would be unable to leverage private financing as well as other competitive sources of federal and state funds. For the past 20 years, we have been highly successful at obtaining tax credits for 27 separate partnerships or LLCs.
Vicki Lundy Wilbon
President and COO
Real Estate Development Division
The Integral Groupa
On the program lasting 25 years The fact that the program has lasted for 25 years is outstanding.
The outcomes achieved by the program, such as the number of affordable units produced, attraction of a stable base of developers into the space, and the volume of private capital invested into LIHTC development, are testament to the program's success.
What impact the program has had on Atlanta Atlanta has benefited greatly from the use of the LIHTC program, as a resource to leverage federal grant dollars and private investment, to support the Atlanta Housing Authority's revitalization of in-town communities, through partnerships with private developers, such as our firm. These revitalization efforts have breathed new life into neighborhoods, placed parcels back on the tax roll, deconcentrated areas of poverty, greatly improved the quality of housing options available to Atlanta's citizens, and spurred a vast amount of adjacent development activity.
The change she would like to see The demand for the LIHTC resource is consistently greater than the level that can be met. I'd like to see an increased allocation to the state agencies, allowing the agencies to meet the growing demand for affordable housing.
