1,500 Affordable Housing Units Headed for Baltimore Could Multiply

Originally published in Next City on October 24, 2017.
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The state of Maryland announced in October it would provide 1,500 new affordable housing opportunities in high-opportunity parts of the Baltimore region, a victory for fair housing advocates who filed a federal complaint with HUD in 2011.

The complainants alleged that Maryland administered its Low Income Housing Tax Credit (LIHTC) program in a discriminatory way, steering families with children into high-poverty, black neighborhoods, while building a disproportionate number of affordable units for seniors, especially white seniors, in the predominantly white suburbs.

This legal settlement not only requires Maryland to build new units, but also to offer incentives to developers to build affordable family-size housing, and to consider subsidizing transportation alternatives in areas that lack quality public transit.

Fair housing advocates say that getting 1,500 affordable units off the ground will make it significantly easier to build even more units in high-opportunity areas going forward.

“Once you knock down these barriers, once the development community starts changing its business model to incorporate looking for sites in high-opportunity areas, once the units get built and the sky doesn’t fall — the political opposition tends to lessen,” says Barbara Samuels, a fair housing attorney with the ACLU of Maryland. “It builds up its own momentum, and we see these 1,500 units as a step that will lead to other future steps.”

The coalition that filed the complaint, the Baltimore Regional Housing Campaign (BRHC), didn’t expect their efforts to take as long as they did, but they did expect an administrative complaint to move faster than filing a lawsuit.

In 1995, the ACLU of Maryland filed a federal suit taking aim at Baltimore’s racially segregated public housing. Though the court eventually ruled in favor of the plaintiffs, and as part of the legal remedy Baltimore has established one of the most successful housing mobility programs in the U.S., the case didn’t settle until 2012; the lawsuit approach took 17 years.

Meanwhile, the last two decades have brought about increased attention to segregation in the LIHTC program. Florence Roisman, a law professor at Indiana University, published a law review article in 1998 arguing that the LIHTC program, which is run by the Treasury Department, not HUD, was operating outside the confines of civil rights law. As LIHTC is the largest federal program to subsidize place-based affordable rental housing, Roisman urged corrective action.

In 2002, the Connecticut ACLU sued the state’s housing finance agency, arguing that LIHTC units in Hartford led to increased racial segregation, in violation of state law. In 2004, fair housing advocates in New Jersey sued their state, saying its LIHTC policies encouraged racial segregation, in violation of the Fair Housing Act. These and other developments influenced advocates in Maryland, who convened in early 2006, to explore what barriers prevented LIHTC units from being developed in higher-opportunity areas of their state.

It became clear then that one of the largest impediments standing in the way was Maryland’s policy of requiring local officials to sign off on LIHTC development, effectively empowering politicians with a pocket veto, no matter how important the affordable housing project was. A HUD study published in 2015 and conducted by New York University’s Furman Institute singled out Maryland’s local approval policy as one that led to notable increases in LIHTCs being deployed to develop housing in poor neighborhoods. Advocates tried to pressure Maryland to abandon this policy, but when efforts at voluntary persuasion failed, the BRHC filed its complaint.

In 2014, in response to the complaint and increased local advocacy, Maryland’s legislature opted to get rid of its local veto requirement. As part of the new legal settlement announced this month, the state has agreed to never reinstate it.

“If we can accomplish all this here, we can do it anywhere,” says Samuels. “You don’t need to go back far to remember when Baltimore was known as the city that killed [the] Moving to Opportunity [program].” Moving to Opportunity was a housing experiment that ran from 1994 to 1998 and involved moving individuals out of high-poverty areas with vouchers into low-poverty census tracts, to see how this would improve their lives. But politicians and racist homeowners in suburban Baltimore County rebelled early on, and U.S. Senator Barbara Mikulski of Maryland led the effort to kill funding to expand the program nationally.

Now, though, Maryland has a well-regarded mobility program, revamped LIHTC policies as a result of the BRHC fair housing complaint, and in 2016, Baltimore County settled another fair housing complaint, agreeing to spend $30 million over the next decade to support developers building 1,000 affordable units in higher-income neighborhoods. Baltimore County also agreed to establish its own mobility program, to assist families in predominantly black, poor neighborhoods in relocating to more affluent suburbs.

In 2015, a team of Harvard researchers published a study examining the long-term impacts of the Moving to Opportunity program. They found that poor children who moved to better neighborhoods were more likely to attend college and earned more in the workforce when compared to similar adults who hadn’t moved. The researchers also found that of the nation’s 100 largest counties, Baltimore ranked last in terms of facilitating upward mobility — partly due to its high degree of racial and economic segregation. Fair housing is no silver bullet, but Maryland’s renewed commitment to integrated housing is a bright spot for civil rights.

Should a New Tax Credit From Washington Subsidize Housing for the Middle Class?

Originally published in Next City on November 8, 2016.
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As voters head to the polls to vote on their next president, they will likely encounter a campaign ad or two promising that the candidate in question will deliver a better future for America’s middle-class.

But while presidential elections have long been about playing to the middle-class — or those who consider themselves to be in that hallowed American demographic, the question of how to build housing for them is now coming to Congress.

An Oregon senator has introduced a bill to create a new federal program that would incentivize developers to build and preserve housing accessible to those families earning up to 100 percent of the area median income. In Portland, where the senator lives when he is not in Washington, the 2016 AMI for a family of four is $73,300.

The “Middle-Income Housing Tax Credit” proposed by Sen. Ron Wyden (D-OR) is modeled after the 30-year-old Low-Income Housing Tax Credit, the largest federal program to support placed-based affordable rental housing, which requires that units must target those earning 60 percent or less of the AMI. Wyden’s idea is to create a program for middle-class families who struggle to afford housing, but who earn too much to qualify for federal subsidies restricted to the poor. Sounds pretty good, right? Well, as the housing industry — including powerful lobbying groups such as the National Association of Home Builders— lines up behind the bill, a growing number of advocates for low-income populations and affordable housing organizations are saying no — and urging the Senator to focus on those with the most several housing needs instead.

National Low-Income Housing Coalition president Diane Yentel says Wyden’s bill is a misguided and wasteful use of federal resources. In an email to Next City, Yentel said that data clearly shows that for households in the 80 percent to 100 percent income band, there’s little to no need for a federal solution. Just 101,623 of those renters are severely cost burdened, compared to the 7.8 million extremely-low income households that have severe cost-burdens.

“There are literally more children living in homeless shelters than there are severely cost-burdened middle-income renters,” Yentel wrote.

For households earning 61-80 percent of AMI that are severely cost-burdened, Yentel says you’ll find them clustered in just a few cities and a better solution to address those problems would be through a different bill co-sponsored by Wyden. That bill would allow some LIHTC developments to target households up to 80 percent of AMI, and to construct more low-income housing through the National Housing Trust Fund. This, she says, would create a “reverse filtering effect” that would help move extremely-low income individuals into affordable housing, and out of housing that would otherwise be affordable to households higher up the income scale.

Defenders of the middle-income tax credit proposal point to data released by the Harvard Joint Center for Housing Studies that found that in the 10 highest-cost metro areas, 75 percent of renter households earning $30,000-44,9999, and half of those earning $45,000-74,999 were cost burdened in 2014. In the Oregon cities represented by Wyden, more and more renters are feeling the pressure of a hot housing market.

“One of the arguments the LIHTC people brought up is that if the MIHTC passes, it will take funding away from the LIHTC,” says Carol Ott, an affordable housing advocate in Baltimore. “I’m concerned about this, but I firmly believe if we work hard enough, we can have both.”

Low-income housing advocates are skeptical. In the next Congress there will be major pushes to increase the LIHTC, to create a renters’ tax credit for the lowest-income families, to increase spending for family homelessness, to expand the Section 8 voucher program, and to increase funding for the National Housing Trust Fund. The National Low-Income Housing Coalition estimates that Wyden’s MIHTC proposal would cost $4.5 billion annually when fully implemented, and that to pass such a large housing subsidy for the middle class would very likely crowd out the political will for even larger investments for the poor.

A spokesperson for Wyden’s office told Next City that they’re not worried this would crowd out funding for low-income households, and that if state housing authorities want to use their Middle-Income Housing Tax Credit dollars to bolster their Low-Income Housing Tax Credit pool, they can do that.

Wyden is the Ranking Member of the Senate Finance Committee, and if Democrats regain control of the Senate after Election Day, his office says that pushing forward the Middle-Income Housing Tax Credit would “absolutely” a top legislative priority.

Why Subsidizing Teacher Housing with Tax Credits Is Bad Policy

Originally published in The American Prospect on October 24, 2016.
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Late last month California Governor Jerry Brown signed the Teacher Housing Act of 2016—a bill (as its preamble states) that will “facilitate the acquisition, construction, rehabilitation, and preservation of affordable housing restricted to teachers and school district employees.” Critically, the legislation allows California to use its federal Low Income Housing Tax Credits (LIHTC) to finance teacher housing—making it the first state in the country to do so.

The law has been sold as a win-win for everyone, and certainly on its face, it sounds appealing. There’s broad recognition that housing is increasingly expensive —especially in exorbitantly pricey cities like San Francisco. Americans strongly support their public school teachers—77 percent say they continue to “trust and have confidence” in them. Moreover, California is grappling with teacher shortages, and champions of the new law believe that providing housing assistance could help attract and retain quality educators, strengthening local communities to boot.

But make no mistake: There are some real losers here.

The LIHTC was established as part of the Tax Reform Act of 1986, and today it is the country’s largest federal program to support place-based, affordable rental housing. The Internal Revenue Service runs it, but individual states get considerable freedom to decide how to distribute their tax credits, so long as they meet federal requirements. One such requirement is that units must target households earning 60 percent or less of the area median income.

This 60 percent threshold is notably higher than other federal affordable housing programs, like Section 8 vouchers and public housing. While LIHTC units built in high-poverty neighborhoods house extremely poor tenants, plenty aren’t built there, which is why tax-credit tenants tend to have higher incomes than recipients of other federal rental assistance programs.

Given that federal housing subsidies are in limited supply, the allocation of tax credits to fund teacher housing merits more scrutiny that it’s received.

“The low-income housing tax credit is meant for single mothers who didn’t graduate from high school, not those people with college degrees and masters degrees,” says Keren Horn, an economist at University of Massachusetts Boston who studies the LIHTC. “Tax credits are targeted at 60 percent of AMI, and if teachers in your metropolitan area are earning less than that, I think the answer is you have to raise their income.”

And then of course, how do we justify giving housing subsidies to some public workers but not others? Why subsidize teachers’ housing but not nurses’? Or trash collectors’?

“It’s a bad idea, and it gets people competing with each other over who is the most oppressed,” says Peter Dreier, an urban policy professor at Occidental College. “A lot of colleges provide housing subsidies for their employees, and if an employer wants to do that as a benefit, or something negotiated through collective bargaining—sure. But the government shouldn’t be in that business.”

Nationally, nearly 20 million renter households have incomes low enough to qualify for federal subsidies, but fewer than one out of four of these households receive anything at all. The Center on Budget and Policy Priorities reports that the number of unassisted renters with “worst case” housing needs—meaning they pay more than half of their incomes for housing, or live in severely substandard conditions—rose by 30 percent between 2007 and 2013.

These trends hold broadly true in California as well. In 2016, more than 1,590,000 poor California households paid more than half their incomes on rent, a 28 percent increase from before the recession. The budget for public housing in the state shrank by more than $56 million between 2010 and 2014. More than 113,000 Californians live in shelters, or on the streets.

California’s new teacher housing law does not make more money available for developers of affordable housing; it allows developers to amend the list of eligible recipients. The result is potentially fewer resources available for deeply impoverished families.

The law also carries racial implications. During the 2014-2015 school year, 65 percent of California public school teachers were white; four percent were black, and 19 percent were Hispanic. By contrast, a 2012 HUD report says that roughly 56 percent of the residents in California’s tax credit units were black or Hispanic, and only 28 percent were white. It’s realistic to worry that this new law will facilitate the transfer of resources away from poor people of color to (oft-struggling) middle-class white professionals.

The federal government used to prohibit states from awarding LIHTC to specific occupations. There’s an IRS rule that all residential units have to be available for “general public use.”

But in 2008, as Congress was working on a new housing bill in the wake of the housing market collapse, a group of developers who build housing for artists successfully lobbied for a “general use” exemption. Since then, LIHTC-funded housing complexes restricted specifically for artists have increased considerably.

In May, the Prospect covered a new report on these artist housing complexes, which were found to have far whiter and comparatively more affluent tenants than one typically finds in LIHTC projects. Coining these developments “Politically Opportune Subsidized Housing”—or POSH—the report’s authors noted that such projects carry great political appeal, since using tax credits to support redevelopment and urban revitalization—in this case, supporting the arts—is far less divisive than building new housing for poor black and Latino families.

Myron Orfield, the director of the Institute of Metropolitan Opportunity, which published the artist housing report, says teacher housing feels an awful lot like artist housing. (In fact, California’s new teacher housing law was passed precisely to legislate the same kind of statutory exemption that Congress carved out for artists in 2008.)

Orfield also notes the lucrative opportunities these projects offer developers, who often struggle to use affordable housing tax credits in more affluent communities. The prospects for LIHTC construction in suburban areas become much more favorable if the developments would go towards housing middle-class public school teachers, who are disproportionately white.

“If you build housing in whiter, suburban neighborhoods, those projects would be worth more to the developer, they would appreciate faster, and there also would be more incentives for developers to turn the units into market-rate rentals as fast as they can,” says Orfield. “There’s nothing wrong with wanting to build higher-value housing, but what you should do is build true affordable housing for low-income people, instead of taking a political short cut by making it only for teachers.”

The teacher housing idea is already spreading to other states, including areas that do not face acute struggles to afford housing. In Baltimore, where some teacher housing developments recently cropped up, developers say they built it not because affordable housing was hard to find, but because they wanted to reward educators with “Class-A apartments.” In Newark, developers touted the urban revitalization potential of teacher housing. Others say teacher housing will lead to stronger relationships between students and educators, fortifying communities more broadly.

It’s worth noting that while a growing number of researchers have explored how housing instability negatively impacts student achievement, there is no real evidence that says teachers living in the same school district where they work improves public education, student-teacher relationships, or local communities. And as The Learning Policy Institute, a Palo Alto-based education think tank noted last month, housing incentive programs have never even been studied to determine if they’re effective at recruiting or retaining teachers. (An LA Times investigation found that local teachers earned too much to even qualify for the affordable housing complexes the Los Angeles Unified School District recently built for its educators.) Plus, while research does suggest that teacher turnover negatively affects student learning, plenty of workers take on longer commutes in exchange for higher salaries.

Evidence of a national teacher housing crisis is also thin: A report issued last month by the National Housing Conference found that high school teachers earning median wages could rent a two-bedroom home in 94 percent of the 210 metro areas they studied, and teachers could purchase a median-price home in 62 percent of the metro areas. The report did not even take into account whether the teacher had a second income-earner in their household, suggesting the homeownership statistics are likely much higher.

Rather than carve out exceptions for certain jobs, Dreier says his state must tackle the housing crisis afflicting all middle class Californians, which means building more permanently affordable mixed-income housing, and protecting and preserving the affordable housing that already exists. In an era of tight resources, the public must find ways to prioritize supports for the most disadvantaged families, while also identifying new ways to improve the lives of the middle class. That’s the only real win-win.