AHTCC submitted the below letter to the editor in response to a flawed opinion piece (Sept. 19) published in the Wall Street Journal that painted a false picture of the Housing Credit.
To the editor:
“Kill the Loopholes, Including the One for ‘Low-Income Housing’” (op-ed, Sept. 19) draws on flawed decades-old data to draw false conclusions that could have disastrous consequences for millions of working families, seniors and veterans who live in homes made affordable by the Low-Income Housing Tax Credit (Housing Credit).
Signed into law by President Reagan, the Housing Credit finances nearly all affordable housing nationwide and has a long history of bipartisan support due to its success as a public-private partnership. It does precisely what a tax credit should – it encourages an activity that would not otherwise occur, and more efficiently than otherwise could be done.
The authors state the Housing Credit mainly subsidizes developers, investors and the financial industry, with little benefit to residents or society. While it is these private-sector groups that claim the credit in order to build affordable apartments, the real beneficiaries are the low-income residents who are able to live in them – many of whom are able to afford their rent for the first time. The Housing Credit also supports economic growth for the surrounding communities, supporting approximately 96,000 jobs per year. Several other studies have found that affordable housing saves government spending through reduced Medicaid/Medicare spending, criminal justice costs, and other social services.
The authors argue that the Housing Credit “mainly displaces private building that would have occurred without the program.” False. It simply costs too much to develop housing to charge rents low enough for low-income people without an incentive. Construction costs would have to be reduced by 72% of current averages in order to be affordable to renter households with incomes equivalent to the full-time minimum wage – which is impossible.
Finally, the authors assert that the Housing Credit is a misdirected federal solution for a local problem. While a federal credit, the Housing Credit is actually administered at the state level through a highly competitive allocation process, which ensures affordable housing developments most responsive to local housing priorities receive credits.
The Housing Credit’s pay-for-success, public-private partnership structure encourages federalism, minimizes bureaucracy, and harnesses the power of the private sector to ensure accountability. During a time when our national housing affordability challenges are growing, we must protect, strengthen and expand the Housing Credit as a proven economic and community development tool.
Anthony J. Alfieri
President, Affordable Housing Tax Credit Coalition