A bipartisan plan to tackle housing insecurity

Lenders and financial institutions play a critical role in creating and preserving affordable housing, and they could see an increase in business if the Affordable Housing Credit Improvement Act introduced last week is enacted. The bipartisan, bicameral legislation would expand and strengthen the Low-Income Housing Tax Credit, a proven public-private investment in our nation’s housing infrastructure.

With this legislation, affordable housing developers — and the investors who utilize the Housing Credit — would be able to deepen their impact in serving some of the hardest-to-reach areas nationwide, including rural, tribal and high-cost communities, as well as extremely low-income and formerly homeless residents. Investors, financial institutions, and housing advocates should work side-by-side to make sure this bill becomes law.

Even before the COVID-19 pandemic, there was a serious and growing housing crisis in the United States. Nearly one in four renter households in the U.S. — roughly 11 million — were spending more than half of their income on rent, leaving too little for other necessities like food, medical care, and transportation. The effect of housing insecurity — or worse, eviction — on families’ health and educational outcomes was already well known. The pandemic has only made the disparities in our housing markets more severe and more apparent — and made it more obvious that affordable homes are a vital part of the nation’s infrastructure.

Since its creation in the Tax Reform Act of 1986, the Low-Income Housing Tax Credit, has been the primary financing source for the production and preservation of affordable rental housing. It has financed nearly 3.5 million apartments since 1986, providing affordable homes to approximately 8 million low-income households, including families, seniors, veterans, and people with disabilities. The Housing Credit brings together private-sector resources and oversight by state agencies, resulting in a durable solution to the need for affordable housing. Banks have been crucial to the program’s success, accounting for approximately 85% of the capitalinvested.

The proposed legislation would expand each state’s Low-Income Housing Tax Credit, allocation, as well as make it easier to use the credit to acquire and rehabilitate existing affordable homes using Private Activity Bonds. It also increases the maximum Housing Credit allocation to projects in rural and tribal communities to help stimulate affordable housing development in those areas.

Together, these increased resources are estimated to finance more than 2 million affordable rental homes over 10 years than would otherwise have been possible — creating nearly 3 million jobs over the same period.

The Affordable Housing Credit Improvement Act also includes over two dozen other provisions that would, among other things, make serving extremely low-income and homeless families more financially feasible, preserve existing affordable housing and provide allocating agencies new tools to strengthen program administration.

When the COVID-19 pandemic shuttered businesses, slashed jobs, and made public spaces feel unsafe, our country was forcibly reminded of how essential it is to have access to a stable, affordable home.

The communities most heavily impacted by COVID-19 include many who are also disproportionately impacted by rental housing affordability and availability. Black, Indigenous, and people of color, senior citizens, and rural communities were hit hard by the pandemic. Crowded and unstable living conditions placed people at increased risk. In addition, medical expenses due to illness and loss of income has exacerbated the problems faced by individuals and families who are rent burdened.

The legislation is sponsored by Sens. Maria Cantwell, D-Wash., Todd Young, R-Ind, Ron Wyden, D-Ore., and Rob Portman, R-Ohio, in the Senate and Reps. Suzan DelBene, D-Wash., Jackie Walorski, R-Ind., Don Beyer, D-Va., and Brad Wenstrup, R-Ohio in the House. Its passage would strengthen and expand the nation’s ability to tackle the considerable affordable housing infrastructure challenges our nation faces now and in the future.

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