Fewer new low income housing units: an unintended consequence of the tax law?

By Dennis Archambault
Few are likely to complain about a tax cut, even if it so obviously favors wealthy populations over the rest of society. But aside from increasing the wealth disparity in the country, there are consequences of the new tax law, unintended as they may be: low income housing.

It’s bad enough that many cities like Detroit with large numbers of low income and homes people are living in cars or under cardboard shelters – waiting for their names to rise on the waiting list for vacancies in public housing. Now, prospects for new low income housing have dimmed due to the loss of incentive for affordable housing developers to cover the fiscal gap in these projects, usually compensated for through low income tax credits. According to an article in the New York Times (https://www.nytimes.com/2018/05/12/upshot/these-95-apartments-promised-affordable-rent-in-san-francisco-then-6580-people-applied.html) thousands of low income housing projects will not be built due to the loss of tax credit options,  leaving many to wait on a list until an opening arises.

Municipalities have responded by creating funding pools to replace the loss of federal commitment to financing housing. For example, the City of Detroit earlier this year announced plans to raise $250 million to help underwrite the construction of 2,000 new low income housing units. (https://www.freep.com/story/news/local/michigan/detroit/2018/03/12/detroit-affordable-housing-fund/415749002/). Low income housing developers, housing advocates, and others are challenged to create new social enterprise models to get people off the street and into a stable habit. The new tax law isn’t helping.

Dennis Archambault is vice president for Public Affairs at Authority Health.