Arlene Conn, PHADA Policy Analyst
Novogradac, the tax advisory firm, previously estimated that a hard four percent Low Income Housing Tax Credit (LIHTC) rate could result in the production of 66,000 additional affordable homes over the next decade. In late April Novogradac revised this estimate upward by 60,000 units for a new projection of 126,000 additional affordable rental units from 2020 to 2029. The estimate is higher because Novogradac updated the baseline it uses for this research to account for the sustained increased use of private activity bond authority. The record-low floating rate, 3.08 percent in May, down from 3.12 percent in April, for bond-financed housing tax credit properties also contributes to the large difference between the current and previous estimates of the impact of a minimum rate. This analysis can be viewed here. Novogradac estimates that a hard four percent would also result in 157,400 jobs created as well as $7 billion in federal, state and local taxes.
The Need for Additional Affordable Housing
We know from many sources such as HUD and the National Low Income Housing Coalition that only one in four households eligible for federal housing assistance receives it. That situation is sure to grow worse as the COVID-19 crisis, which has resulted in over 30 million Americans filing for unemployment, continues.
A nationwide survey conducted in late April by GoSection8.com (which offers web-based services to landlords, tenants, and housing authorities who participate in the Housing Choice Voucher Program) found that 95 percent of 10,475 respondents are concerned with their ability to pay rent during the COVID-19 pandemic. This concern is understandable given that in a larger sample of approximately 30,000 respondents, two-thirds stated that they had experienced a loss of income. The fact that 64 percent of respondents receive some form of rental assistance such as public housing or Section 8 does not seem to mitigate this concern. Of those who responded, about half had incomes below $15,000 per year.