Affordable housing advocates will have their work cut out for them under the incoming federal administration, according to representatives of the National Low Income Housing Coalition.
Arguments could be made that many affordable housing programs actually align with the goals of the administration and conservative members of Congress, however, they said. And if those making the arguments are successful, then affordable housing programs might be saved from cuts and even expanded.
“One thing that didn’t change from the election is the need,” Diane Yentel, president and CEO of the coalition, told those attending a Dec. 2 webinar. “There is a gap of 7.2 million units of housing affordable and available to the lowest-income people. Seventy-five percent of the lowest-income families — these are families with kids, they’re vets, elderly people, people with disabilities — they’re paying half their income on rent, leaving little left for food, medicine and other necessities. And only one out of every four poor people in need of housing assistance receives any help at all.”
President-elect Donald Trump’s transition team has indicated that his spending priorities include cutting federal spending for everything but defense over the next 10 years, said Elayne Weiss, the National Low Income Housing Coalition’s senior policy analyst. But here are six areas where affordable housing advocates, the president-elect and conservative lawmakers might be able to reach agreement:
1. Housing Trust Fund. The fund could be under significant threats from many angles, Weiss said. “One of the things that I think would be good for especially more conservative members of Congress to know is that this program really fits snugly with what they look for in programs,” she said. “It operates as a block grant. It allows for a lot of local control in terms of deciding which projects to fund. And it’s highly targeted to serve people who have the greatest and most acute housing needs that the private sector just can’t reach.”
2. Mortgage interest deduction. Trump and Republicans in Congress have made it clear that tax reform is a top priority for them, Yentel said, and reforms to the mortgage interest deduction are on the table.
“It’s pretty remarkable how much the conversation around reforming the mortgage interest deduction has changed from at one point being kind of a third-rail, untouchable kind of program to it very solidly being part of the negotiations to reform in comprehensive tax reform,” she said.
Among the potential changes, Yentel said, is reducing the maximum size of a mortgage on which one could deduct interest, from $1 million to $500,000. That change would affect less than 5% of mortgage holders nationally and would save $95 billion over 10 years, she added.
Another possibility, changing the deduction to a nonrefundable tax credit worth a percentage of annual interest, would make the tax benefit of home ownership available to 15 million more lower-income homeowners who currently don’t see any tax benefit from the mortgage interest deduction, and it would result in additional savings, Yentel said. “The two changes together save $241 billion over 10 years,” she added.
3. Infrastructure spending. If Congress and the administration decide to move forward with an infrastructure package, the coalition “strongly believes” that it should include funding to increase resources for affordable housing infrastructure, Weiss said.
“Like roads and bridges, affordable housing is a long-term investment that really helps communities, economies and families thrive,” she said, noting that construction and preservation efforts create jobs. “Specifically,” Weiss said, “we think that among other spending, any infrastructure bill should include an expansion of the Housing Trust Fund, additional vouchers, money to repair public housing, as well as access to any infrastructure bank, if one is created.”
4. Anti-poverty efforts. Parts of House Speaker Paul Ryan’s A Better Way plan — including a move to impose work requirements and time limits on housing assistance — are “troubling,” Weiss said, also saying: “There are certainly areas of opportunity for the NLIHC to work with Speaker Ryan and House Republicans around this [plan], primarily around increasing mobility, helping families move to areas of opportunity, where they have better access to schools and jobs and transit.”
5) Fair housing. Some conservatives want to roll back the U.S. Department of Housing and Urban Development’s efforts to implement the Affirmatively Furthering Fair Housing rule, Weiss said, because they view it as social engineering and government overreach.
“That means it’s really important for us to start educating members of Congress about why they should see these fair housing rules as furthering their goals,” she said. “Many Republicans, including Speaker Ryan, are interested in promoting economic mobility, and the Affirmatively Furthering Fair Housing rule and the tools that they put out are really going to help communities think more about how they can increase that economic opportunity locally.”
6) Low-income tax credit. This credit could be at risk as some Republicans pursue tax reform as a way to lower the corporate tax rate, Weiss said.
Support for S 3237, the Affordable Housing Credit Improvement Act of 2016 introduced earlier this year by Sens. Maria Cantwell (D-WA) and Orrin Hatch (R-UT), could help, she said.
“The bill would expand the low-income tax credit and include a number of reforms that help developers better serve people who have the greatest need,” Weiss said. “Republicans are always looking for ways to make programs more effective and efficient, and those certainly would help that.”