Friday, March 27, 2020

Housing Policy Ideas from the Presidential Platforms: Financing Affordable Housing

This post continues a review of the 2020 Democratic presidential candidates housing policies.  The full review I conducted is available on SSRN here.  Today, I excerpt a portion of the review that looks at ideas for financing affordable housing:  

Low-Income Housing Tax Credit.  The Low-Income Housing Tax Credit (LIHTC) continues to be a favored source for funding affordable housing.  Many candidates supported LIHTC, with all seeking to increase its funding levels, though some also seeking additional conditions for that new funding.  Castro sought to expand LIHTC by $4 billion, Steyer wanted to increase the program by 50% over the next 5 years, Bennet also wanted to increase allocations by 50%, and Hickenlooper would have doubled LIHTC funding.  In addition, using LIHTC to pilot local revolving loan funds was proposed (Castro), as was using incentives to extend the period before apartments converted to market-rate to 50 years and prioritizing new construction in high-opportunity areas (Castro).  A 4% credit for renovation projects was proposed (Steyer), as was prioritizing LIHTC projects that incorporate transit-oriented development, deep energy efficiency, and densification (Steyer).  Encouraging Live/Work projects that integrate work and affordable housing in projects was also proposed (Steyer).  Adjusting the minimum credit rate, and increasing incentives to target vulnerable communities and prevent NIMBYism was also proposed (Bennet).  Requiring all new developments receiving the more generous 9% credit be permanently affordable was also proposed (O’Rourke).

Housing Trust Fund.  The Housing Trust Fund was also a favored source of funding for affordable housing.  Proposals for increasing the HTF were generally in the same range, including: $40 billion a year (Klobuchar); $47 billion annually in the Housing Trust Fund (along with the Capital Magnet Fund), prioritizing projects with wrap-around services and climate goals (Steyer); $45 billion annually in the Housing Trust Fund and Capital Magnet Fund (Castro); $42 billion in additional funding for the Housing Trust Fund and CDFI (Inslee); $400 billion over ten years (O’Rourke); $445 billion (over an unspecified time) (Warren); $400 billion over next 10 years (Bennet); and $1.48 trillion over 10 years (with an additional $400 billion to build mixed-income social housing units) (Sanders).

There was also a proposal to reserve up to 10% of the National Housing Trust Fund towards down-payment assistance for prospective low-income first-time home buyers (Castro).

Capital Magnet Fund.  Similarly, the Capital Magnet Fund (CMF) was a preferred mechanism for funding.  Increased funding proposals just to the CMF included $25 billion (Warren) and $60 billion per year (O’Rourke).  Proposals that included both the CMF and the HTF included $30 billion over next 10 years (Bennet); $45 billion per year (Castro); and $47 billion annually (Steyer).

Other proposals.  Other funding proposals included increasing the New Markets Tax Credits funding to $5 billion a year (Biden).  There was a proposal to raise the bond volume cap (Klobuchar), and there was a proposal to incentivize multi-family developments that help increase density in areas of opportunity by supporting new financing tools through Fannie Mae, Freddie Mac, and Private Activity Bonds (Bennet).

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