As the National Equity Fund (NEF) turns 30, LISC CEO Maurice Jones and NEF president Joe Hagan take the measure of all that has been accomplished thanks to the Low Income Housing Tax Credit. That includes three million affordable homes since the credit was created in 1986, and 90 percent of all affordable housing being built today. Ensuring that more low-income people can keep a roof over their heads demands safeguarding—and refining—the tools that make affordable homes possible.
Imagine what the world would look like if President Reagan and Congress had not created the Low Income Housing Tax Credit (LIHTC) in 1986. Without it, three million affordable rental homes might not have been built. Some 6.7 million people would have had to look elsewhere to have a roof over their heads—people who were struggling to make ends meet, many of them seniors, veterans, people with disabilities, or parents whose kids needed a safe place to grow up.
We’ve been thinking a lot about that lately, as the country begins to discuss tax reform, and as National Equity Fund (NEF)—our nonprofit LIHTC syndication arm—marks its 30th anniversary this year. We hope lawmakers will agree on how effective the housing credit is, and enhance it.
Harvard’s Joint Center on Housing Studies has described the credit as “the most successful affordable housing production and preservation program in the nation’s history.” Yet, we would not be surprised if you had never heard of LIHTC. After all, it’s just a tax credit, right? It’s practical, not flashy—a bit like a minivan, not a sports car.
Except it’s not. It’s a powerful weapon in the fight to make life better for many of America’s most underserved and vulnerable. There are some analyses that say the credit has made possible 90 percent of the affordable housing built in this country in the last generation. It’s attracted tens of billions of dollars to communities otherwise overlooked by the private market. Nothing else has had nearly as much impact.
NEF was one of the earliest drivers of the housing credit and, over the years, has tapped the program to invest $13.3 billion in 157,000 affordable homes nationwide, creating 140,000 jobs in the process.
The housing credit program is complex, and demands an intense collaboration among nonprofit, for-profit, institutional and governmental organizations. It marries private-sector performance to a clear public purpose. Even when it succeeds, some may question the costs of affordable housing and where it should be built.
But it has allowed for flexibility and diversity, giving states and local builders the resources either to help people move to higher-income neighborhoods, or revitalize low-income communities. The numbers show that they’ve done both, using the housing credit as a tool to fight the corrosive practice of redlining. New York University’s Furman Center says new homes are built in low-poverty neighborhoods as often as in high-poverty neighborhoods. And a 2016 study from Stanford’s Graduate School of Business found that new housing under the credit program “leads to decreased segregation in lower income areas.”
In many cases, new developments have transformed communities. In East Oakland, California, for example, NEF invested $25 million to build Tassafaronga Village, replacing an aging, crime-ridden public housing site with 177 new apartments and townhomes, and linking them to new parks and greenspace.
Or take a look in rural Pike County, Kentucky, where NEF has invested $9 million in Pikeville Scholar House, a 45-unit project designed to help break the cycle of poverty for single parents. Opened in 2014, it provides affordable housing and helps parents pursue higher education so they can move into good-paying jobs. Residents have access to counseling and workshops, and onsite childcare run by the YMCA so they are able to go to school and work.
At LISC, we are working with the Department of Veterans Affairs to get underutilized land for projects, and with housing authorities to transform crumbling public housing nationwide. We fund the cleanup of toxic manufacturing sites and rehab shuttered department stores, replacing them with homes that are connected to health clinics, schools and child care, and job training centers.
The results are gratifying. But they aren’t nearly enough.
The $14 billion in total capital unleashed in the United States by the credit each year is really just a drop in the bucket compared to the need. Nearly 11.5 million people pay more than half their income to put a roof over their heads, and rising construction costs eat away at the housing credit’s ability to help fill the gap. It is a true national crisis that affects every county in the country.
We also know that housing alone will not solve all our social problems. If we are serious about giving every American a chance, we need to invest more broadly in our communities, addressing everything from employment skills to public safety and business growth. We need to break down barriers that keep families from new opportunities.
Given all of that, this 30th anniversary isn’t so much a milestone as it is a down payment on a better future. We’re going all-in on economic opportunity for the people and places we serve, and we need a robust, flexible LIHTC program to help us succeed.
Maurice A. Jones, President & CEO, LISC
Prior to joining LISC, Maurice was the Secretary of Commerce for the Commonwealth of Virginia, where he managed 13 state agencies focused on the economic needs in his native state. Before that, he was second in command at the U.S. Dept. of HUD, serving as deputy secretary in charge of operations. He has also been Commissioner of Virginia’s Dept. of Social Services and Deputy Chief of Staff to then-Gov. Mark Warner. At the U.S. Treasury Dept. during the Clinton Administration, he managed the CDFI fund. His private sector experience includes top positions at the Virginian-Pilot in Norfolk, a Richmond law firm and a private philanthropy investing in community-based efforts to benefit children in Washington, D.C.
Joe Hagan, President & Chief Executive Officer, National Equity Fund
Joe is President and CEO of National Equity Fund, Inc., an affiliate of LISC that organizes funding for affordable housing through LIHTC.