Loopholes for Low Income Housing

To stimulate low income housing availability, the US government provides a number of tax credits to the states to distribute to property developers at their discretion following certain criteria including development projects that cap rents for some of the units. However, under odd rules, the developers can sell these credits to banks or other investors. A 2000 study revealed the value of the rent savings to tenants amounted to approximately 35% of the total tax credits. A 2005 study revealed that about half of the units would have been produced without the tax credits. A 2010 study revealed 100% of the development subsidized by the tax credits came at the cost of other developments. In 2017, a Miami area business stole $34 million from 14 low income credit housing projects when they submitted inflated construction cost information to the government. Furthermore, NPR said there is very little public accounting of the costs are actually performed. A 2005 study revealed that increased housing regulations have doubled the costs of construction in many cities.

With all this information revealed, the Senate Finance Committee met this summer in an attempt to “expand” the program. Senators must be led by lobbyists rather than facts.

Is it time to “kill” the loopholes for public housing and try something else?

Source: WSJ, 9-19-2017, Page A17

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