Federal Programs for Addressing Low Income Housing Needs in America
Introduction:
The federal government began building subsidized Low Income Housing during the New Deal, and in the decades since, a complex tangle of federal programs has evolved to tackle the housing needs of low-income renters. Low Income Housing Tax Credits(LIHTC) provide an up-front subsidy to developers of rental housing (or their equity investors) in return for a commitment to charge below-market rent levels.
Rents for these units must be set at levels that are deemed affordable for households with moderately low income levels for the local area, and the units are set aside for residents at or below this income ceiling. All eligible residents pay the same rent; the LIHTC program does not require (nor does it provide sufficient subsidies to allow) every unit to be affordable for the family that lives in it.
Low Income Housing Tax Credits (LIHTC):
Low Income Housing Tax Credits (LIHTC) provide an up-front subsidy to developers of rental housing (or their equity investors) in return for a commitment to charge below-market rent levels. Rents for these units must be set at levels that are deemed affordable for households with moderately low income levels for the local area, and the units are set aside for residents at or below this income ceiling. All eligible residents pay the same rent; the LIHTC program does not require (nor does it provide sufficient subsidies to allow) every unit to be affordable for the family that lives in it.
Roles of State and Local Housing Agencies:
The administration of federal housing assistance is complex and confusing, with funds for various programs flowing independently of one another to state housing finance agencies (Low Income Housing Tax Credits), local public housing authorities, private owners (developments with federal subsidy contracts), and state and local departments of housing and community development. And cities typically have distinct agencies for the separate but overlapping tasks of housing finance, housing production, housing preservation, housing regulation, public housing administration, community development, neighborhood redevelopment, planning and zoning, and other special initiatives.
Current Public Housing Initiatives:
Two current initiatives give selected PHAs extra resources and flexibility to better meet the needs of the households and communities they serve. HOPE VI funds the demolition and replacement of severely distressed public housing developments, with the goal of improving outcomes for residents and revitalizing neighborhoods. Moving to Work (MTW) essentially deregulates participating PHAs so they can experiment with new subsidy formulas and occupancy rules that offer promise for encouraging and supporting work. Much of the current policy debate about Low Income Housing revolves around these two initiatives; both are controversial.
Critical Policy Challenges and Choices for Low Income Housing:
Until the onset of current foreclosure crisis, Low Income Housing received scant attention on the domestic policy agenda. Even today, the problems of housing availability, adequacy, and affordability facing low-income renters are largely neglected. Increasingly, however, practitioners, policymakers, and advocates outside traditional housing policy circles are recognizing that decent and affordable rental housing is a key ingredient essential to other priority goals, including family economic success, children’s well-being, smart growth, and equitable development.
New Vision for Federal Housing Policy for Low Income Housing:
Federal rental housing programs can claim credit for some important accomplishments, but they now suffer from serious failures of design, scale, and implementation. Their most significant shortcoming is reflected in the widening gap between housing needs and subsidy resources.
Housing Assistance and Family Economic Success:
A growing body of evidence suggests that living in decent, affordable housing may provide a “platform” from which low-income families can get jobs, build their incomes, and achieve financial security. Simply living in decent, affordable housing constitutes a critical support for work because families living in unaffordable housing are financially insecure, vulnerable to unexpected increases in other costs, and more likely to move frequently.
Conclusion:
In addition to mixed income strategies, some affordable housing developers are explicitly focusing on tools and incentives for incorporating principles of energy efficiency, conservation, and environmental sustainability into new projects. Enterprise Community Partners has led an effort to establish criteria for “green” affordable housing and has created a program of grants and low-interest loans to help offset the additional development costs associated with meeting these criteria.
Such engagement can occur at many different scales: targeting supplemental services and opportunities to residents of particular subsidized projects; helping voucher recipients make the best possible choices about where to relocate; expanding the stock of affordable housing options in opportunity-rich or revitalizing neighborhoods; promoting regionwide strategies for smart, sustainable, and affordable growth; and perhaps even reinventing the federal role in meeting the nation’s low-income housing needs.
Also Read: The Importance of Affordable Housing to Economic Competitiveness