Wednesday, August 2, 2017

Blogger Candidate Forum: Bipartisanship For Housing?

http://www.citylab.com


Hello Everyone:

#BloggerCandidateForum is back from an enjoyable beach trip and ready to go.  After the spectacular collapse of the Senate's effort to wholesale repeal and replace the Affordable Care Act (Obamacare), The Forum noticed a whiff of bipartisanship in the air.  It seems that Senate Majority Leader Mitch McConnell (R-KY) has decided that reaching across the aisle to his Democratic counterpart and try to stabilize the healthcare insurance market.  This may work better than just getting rid of ACA without anything to replace it.  The Forum will keep its eye on the matter.  The renewed spirit of bipartisanship may be a subtle rebuke to President Donald Trump and his incendiary ideology and chaotic administration.  Can the spirit of bipartisanship extend to other hot button issues, like affordable housing?

This is the question that Kriston Capps considers in his CityLab article "A Bipartisan Fix to the Housing Crisis?"  Interesting idea.  Instead of large-scale building program to add more units into the market, the members of Congress could work together to achieve stability in the housing market and preserve existing units.  It could work.

Kriston Capps reports, "In 2015, a quarter of renter households in the U.S. paid more than half their incomes toward their rent."  This is one of the defining statistics that characterize the affordable housing crisis, "a slow-motion catastrophe that, by. 2025, may consume 15 million Americans."  Amid the chaos of the healthcare debate, the Senate Finance Committee staged a hearing to figure out a strategy.

Senator Maria Cantwell (D-WA), a member of the Finance Committee, said during the hearing,

Several people mentioned the 25 percent increase in renters over the last 10 years...That is just unbelievable to me-unless you stop and think about the implosion of the economy during that time period,and realize, yes, those who ere on the last rung of the ladder literally fell off the ladder.

The hearing was centered on a bill proposed by Senator Cantwell, intended to jumpstart new affordable housing investment and construction.  The bill, S.548-the Affordable Housing Credit Improvement Act of 2017 (http://www.congress.gov; date accessed Aug. 2, 2017)-"would expand and reshape the Low Income Housing Tax Credit, which is responsible for 90 percent of new low-income housing built in American today."  If passed, it would create or preserve 1.3 million affordable housing units over a decade, approximately 400,000 above the current projects.

The Bill was introducact ed Senators Cantwell and Orrin Hatch (R-UT) last year, the Affordable Housing Credit Improvement enjoys the supports of more than 2,000 housing organization from all fifty states.  More important, it enjoys an increasingly commodity: bipartisanship.  Some of The Bill's eleven sponsors include: Republican Senators Dean Heller (NV), healthcare heroes Lisa Murkowski (AK) and Susan Collins (ME); Democrats Senate Minority Leader Charles Schumer (NY), Senators Cory Booker (NJ) and Patrick Leahy (VT).  Not many bills can brag about that.

CityLab recently sat down with Senator Cantwell to talk about affordable housing, political baseball in Senate, and the ways Seattle and Spokane get the job done.  Below are excerpts from that conversation.

CL: First things first: The Affordable Housing Improvement Act changes the name of the current credit mechanism, the Low Income Housing Tax Credit.  Why the change in the frame?

Senator Maria Cantwell: Part of the issue is that, in this moment, affordability is ripe in everyone's mind, but they don't know how it's affecting everyone.  There's a huge increase in the population that no longer is paying less than 50 percent of their income in rent-they're paying more than 50 percent in rent...If we want to address the demographic shift, we're going to have to do something increasing the tax credit.

CL: Can you explain the 50 percent basis boost, and how will that add to the value of the affordable housing credit?

SMC: In simplest terms-...-there are a lot of people who've gotten a lot richer in America, and are a lot of people who've gotten a lot poorer in America.  Those people who have lost out are now struggling with paying for housing.

Understanding the lack of supply and the shift in demographics is key to trying to figure out our way out of the situation.  One of the things that's most important to understand is this 90 percent issue.  The majority of affordable housing is built with the tax credit.  If you're not going to increase the tax credit, I don't know how we're going to build anymore...Amazon (http://www.npr.org; date accessed Aug. 2, 2017) and Paul Allen (http://www.usatoday.com; date accessed Aug. 2, 2017) in Seattle are trying to help...we're not going to get through this without increasing the tax credit.

CL: The bill aims to prohibit local approval, or really, disapproval, over where affordable housing credits can be used.  Can you discuss this problem and what's the bill solution 

SMC: It doesn't really prohibit it.  It basically says, if zoning allows it,it should take place.  The issue isn't whether locals still get to say.  It means they can't X it out once they've already approved it.

CL: So a housing credit can't be overturned when say, a neighborhood decides they don't want that affordable housing to be built there?

SMC:  [Neighborhoods] can't be a veto on something that already has zoning approval.

CL: Signals from the Republican leadership in Congress that they plan to dramatically ct the corporate tax rate have already diminished the value of housing tax credits. (http://www.citylab.com; Jan. 27, 2017; date accessed Aug. 2, 2017).  Will expanding the basis for the affordable housing credit work if Congress cuts the tax rate 5 percent to 20 or 15 percent?

SMC: ...I don't know how to predict what's going to happen with tax reform or the twists and turns in legislation.  I just know that by 2025 we're going to seen an even larger number of Americans in this situation-15 million...Clearly, there are discussions of tax reform that do suppress this.

CL: This bill describes "difficult-to-develop' areas, with a focus on Native American populations.  Is that a new category a new addition with this bill, or a change in the tax credit program?

SMC: ...You could have projects that are brought to the state commissions by Native Americans, and there are projects that have gotten approved.  This language allows for more flexibility and a higher rate of those projects being built.  I would...invest even more, just because we have such dilapidated conditions in parts of Indian Country, and this is what it would do push that forward and stabilize a lot of communities...

But , when you have this much demand, what's happening at the local level is that you have [for example] the YWCA pitted against the downtown mental health association-you're just pitted against a lot of people.  It's very hard to make this small amount of capital work across so many groups.  This is just one way of making sure those rural areas and more outlying are keep getting investment.

CL: Do you think the affordable housing credit basis should be expanded even further?

SMC: ...400,000 units would take care of maybe 20 percent of the problem.

CL: So there's more work to be done in expanding this credit?

SMC: I'm very convince this is a very big problem that is costing us money.  We're spending the money...

And if we could do so more cost effectively, then we also could give a boost to the economy because the housing investment and the development is a boost and a job creator in and of itself...you're helping put theses individuals on a better par with their income and opportunities for the future, too...

I was just home this past weekend, and somebody said to me at one of our forums, "My gosh, we could be so go-go, if we just had health care and housing."  This was in southwest Washington where the risks is so real...The other Barrie's to us, and challenges we face...don't seem so real or challenging.  My constituents...are fretting about how you take a population and make sure they get access to health care and housing.  They're like "If we take of these things, we're off to the races-..."

To me, on housing, we could do even more.  I'm just trying to be cognizant of where our colleagues are and how much they're willing to do.  The exacerbation of the problem is something peopl should not ignore...every one of my colleagues sees that when they go home and they walk around their states.  They hear about it in one form or another.

CL: In contrast with the health-care bill process especially,this affordable housing bill does seem to have a lot bipartisan support.  How close is this bill to being something workable that can go before the Senate?

SMC: The program itself has had bipartisan support for decades...we have something that we know is a known, bipartisan program that people believe in.  The question is, ca we deal with this problem?

I actually think [senators] see it a lot.  They just didn't know what was causing it, or they didn't know the numbers.  We were trying to get them to understand, this has been a huge shift in a 10-year period of time,both on the lack of production and on the increase in the population that has fallen out of affordability...It's only to get worse by 2025, and we're not going to get out of it, unless we do something.

In that regard I feel we made some good progress in getting people to understand that...

CL: I wonder though, with comprehensive tax reform looming in the future-which we know is a priority, even if we don't know when or if Congress will come to it-can a tax bill like move forward when there is a much larger tax to be settled?

SMC: I had a chance to meet with the Vice President [Mike Pence] earlier in the year, and I told him about this proposal.  He said, "Maybe that's something that can into tax reform."  I said, "With all due respects, Mr. Vice President, I believe in base hits..." Having a base hit is a good start to get where we need to go.

CL: This question is more philosophical.  I want to ask you how many think the incentive should be structured. Do you try to design the credits to only serve the most vulnerable families first-the extremely low-income households making below 30 percent of area median income?  Or should the incentive be staggered to build some new affordable housing at different income levels from the start?

SMC: The challenge is, right now we feel like the states have a very good framework for dealing with he problems.  We want them to figure out those issues and [we want to] not be as prescriptive at the federal level.  We do want people to understand the current emerging need of the very lowest sector.  In the state of Washington, we've seen great success here...

I'm very proud of Seattle.  I've seen unbelievable projects in downtown Seattle...Seattle has huge issues right now-huge.  I would want them to have as much flexibility as possible to deal with that population the way the want to.

Spokane might deal with a little differently...There's a big project that was just finished in Spokane. They took a dilapidated hope that ad been a landmark in the downtown area and turned it into a affordable workplace housing. (http://www.taxcreditcoalition.org; date accessed Aug. 2, 2017) It's different than what would happen in downtown Seattle.  They have a facility [downtown] dealing with the senior population with mental-health issues.  They wanted it to be right downtown, close to health care and other resources.  You got to give the cities a little flexibility, and use the state commission to figure out what they want to do.