Can Two Lame US Public Housing Substitutes Limp Effectively Together?

three legged race contestants lurch to the finish line
three-legged race photo by tadekk is licensed under CC BY 2.0

Neoliberal “small” governments over the last 50 years have developed low- and no- income housing support that was designed to replace “big government” hands-on public housing.

These solutions have, by and large, not measured up to the public housing service they were meant to replace. But that’s somewhat beside the point when it comes to patching up a mess of problematic schemes dreamed up to entice the private sector into building housing needed to support low-and no- income tenants from drowning in the endlessly rising tide of free market housing prices.

Low Income Housing Tax Credits (LIHTC) are one enticement (or has it been bribery?) that encourages public housing-level rents in a free market housing project.

LIHTC funded private housing projects are ultimately revealed to suffer two significant weaknesses. First, they are “bubble under the wallpaper” solutions that are time-limited. In order to continue the benefits when the LIHTC agreement expires, further costs must be incurred.

Secondly, public housing neatly pegged rents to the actual income of the tenant. LIHTC projects use a far more complex formulation for determining rents that can actually exclude some or all of those low- and no- income tenants from any support.

As a wave of LIHTC projects with a 30-year expiry arrive at their “game over” moment, what next?

One possible solution is to use the shaky Section 8 rental assistance program to prop up the shaky LIHTC solution, by funnelling voucher holders to expiring LIHTC projects.

This vastly underfunded HUD voucher program was meant to allow participants to rent in any neighbourhood, not just facilities-poor low income neighbourhoods. It has been something og a failure in this regard.1

The Department of Housing and Urban Affairs (HUD) is funnelling voucher holders towards its “demonstration” program of privatized existing public housing and channelling guaranteed voucher dollars to its new owners, for at least a period of time. If voucher holders are funnelled back towards refurbished public housing, why not towards expired LIHTC projects?

These and other questions, are discussed in a new Shelterforce article, together with explanations of why LIHTC ignores individual ability to pay in favour of average market computations. These financial computations offer little to lower the enormous need for truly affordable housing (the best examples of which have been provided by now-discredited public housing).

Read more in Shelterforce: LIHTC Preservation and the Need for Rental Assistance

Footnotes

  1. Landlords don’t like voucher programs because of the dreaded “red tape” and are not obliged to rent to voucher holders as often as not.

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