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Coupons for More Than Just Housing

David M. Stembel, III, AIA, LEED AP, NCARB

Tax credits and the expanding need for affordable housing in the time of COVID-19

Everyone likes using coupons to save money.  And while Monopoly is only a game, have you ever picked up that ‘income tax refund’ coupon from the Community Chest stack?  Now that’s a nice one when you need it.  Low-Income Housing Tax Credits (LIHTC) are just like that Monopoly card as they say “You don’t have to pay taxes” . . . redeemable at the IRS.  Competition for, and investment in, these Low-Income Housing Tax Credit coupons fuels the construction of affordable housing in this country.

It’s hard to believe that a national program, little known beyond community development circles, is now the central tool to promote the creation of affordable housing and economic mobility for the poorest Americans.  The dollar-for-dollar program was created by the Tax Reform Act of 1986 to provide incentives for the investment of private equity in the development of affordable housing for low-income Americans.  With Congress’ insightful creation of this investment incentive tool, Low Income Housing Tax Credits have financed just about every privately developed affordable rental housing unit in the country.  Since their inception, LIHTCs have leveraged more than $100 billion in private capital to build 2.7 million affordable rental housing units in urban, rural and suburban areas.  By any measure, it has been a tremendous public policy success in addressing the urgent need for affordable housing in the United States.

Torti Gallas + Partners is dedicated to designing quality affordable housing communities.  Under this innovative LIHTC Program we have been the Planners and Designers of over 60 communities funded, or partially funded, with either 9% or 4% LIHTCs.  Including HOPE VI and other funding sources, in total we have designed over 40,000 affordable and workforce housing units in neighborhoods and communities throughout the country.

While the creation of quality affordable housing is critical, the multi-dimensional investments in housing tax credits also have an anti-poverty impact that goes well beyond the number of housing units built.  These investments also spur economic development that engages the private market in communities long-starved for capital. In addition to providing quality affordable housing, they lay the groundwork for new businesses, health centers, schools, parks, and jobs in deserving communities. Because of this, a dollar of LIHTC investment capital has a much greater leveraged impact in low-income areas than it does in other places.  It is not only the residents that benefit, but also the nearby neighbors and business owners in stabilized low-income areas.

Economic Recovery

As COVID-19 has gripped the country, the urgent issues of being able to afford to pay rent and the long-term impact on the real estate market have become paramount. The National Low Income Housing Coalition (NLIHC) has estimated a need for no less than $100 billion in emergency rental assistance as millions of Americans presently are having trouble paying rent to stay in their homes. In response to the rapidly escalating challenges related to COVID-19, many cities and states are creating or expanding rental assistance and renter protection programs to support individuals and families whose incomes have been impacted by the pandemic.

Policies that help guarantee rent and mortgage payments will be instrumental in supporting this complex economic crisis.  Large-scale government interventions that would have seemed unimaginable just a few months ago are now necessary.  Even before COVID-19 the Bi-partisan Policy Center recognized the value of the LIHTC investments and recommended a 50 percent increase in federal tax credits to help meet existing demand.  Now with COVID-19, this vital program is even more critical.  

Expanding the LIHTC program will add full-time jobs and stabilize communities, while continuing to increase and preserve affordable housing across the country. Investments through LIHTC credits help to create much needed quality housing at the same time that they help attract new customers to local businesses, while also reducing high concentrations of poverty and crime.  Ultimately, these incentives help to improve nearby property values and expand tax receipts to support city services. A WIN-WIN for all!  It is time to expand the effect of these coupons and help fight the economic crisis created by COVID-19.

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