When Congress reconvenes in the other Washington this fall, Sen. Maria Cantwell will introduce a bipartisan bill — cosponsored by Sen. Olympia Snowe of Maine — to strengthen the Low Income Housing Tax Credit (LIHTC) program. She made the announcement on Friday (Aug 26) at a forum in Tacoma sponsored by the Washington Low Income Housing Alliance.
The legislation would ease the uncertainty and monetary risk of private investors who put capital into affordable housing, by fixing the rate at which they will receive tax credits. Currently the rate is tied to federal interest rates, which fluctuate. With the new legislation, said Cantwell, “even if federal rates remain low we will ensure that projects will receive credits” at a level high enough to spur investment.
Cantwell called LIHTC “the main financial tool with which the federal government participates” in housing production. Ninety percent of affordable housing in the US is created with the program’s help. “Tax credits leverage private dollars so that critical units get built. Before the economic downturn took hold, it generated $9 billion per year for 120,000 units, and 140,000 construction jobs” to build them per year. In Washington state, the program has sparked more than $2.6 billion in private investments to produce 26,000 affordable rental homes in 37 counties.
“That’s why,” Cantwell said on Friday, the upcoming Congressional deliberations about growing the economy must put affordable housing “in the category of roads, bridges, and airports” — infrastructure that endures — instead of classifying them as a social program. Since “the recession froze capital,” there are “thousands of stalled [affordable housing] projects throughout the country” that could go forward, she said.
Seen as an infrastructure essential, a bill that spurs the building of affordable housing stands a chance of passing, at a juncture when the Congressional focus is on cutting budgets and improving job numbers. “I'm hoping [elected leaders] would have gone home to their individual states and districts and talked with people about their priorities,” said Cantwell. Housing officials and advocates like those attending the Friday forum must keep reminding their senators and representatives that building affordable housing is essential to an economic recovery because it boosts job numbers so effectively, she said. There's a strong “nexus between [building] affordable units and putting people back to work.”
The nexus has several strands. For example, due to what Cantwell calls “unacceptably high” unemployment in Washington state, the state “ranks 16th in the nation in its foreclosure rate.” Building affordable housing is an important way of addressing the problem of foreclosure. “We’re solving the problem, but also creating jobs when we do it, especially for the hardest-hit sector, construction.” Further, to bring unemployment numbers down, “you have to have affordable housing near jobs.” Because tax credits for low-income housing solve several problems at once, she called them a “win-win-win” strategy.
It’s one of the ways the federal government has of stimulating the economy that actually produces something concrete and lasting. “All around the state — Seattle, Spokane — people are talking about biofuels investments” from the departments of Agriculture and Defense, said Cantwell. “In southwest Washington a new market tax credit will help investment in low-income or brown-field areas,” and as a result, “a steel fabrication facility is moving into [the region] with 40 jobs for people who had not worked in months and months.” Adding stable low income housing tax credits to the mix will put more people to work again and further brighten economic prospects.
“I'm tired of [the focus on] Wall Street,” Cantwell remarked during the informal panel discussion. “I want us to make something besides exotic financial instruments.” Those attending the forum burst into applause.
Salishan was an appropriately symbolic location for the event. With the help of LIHTC incentives this dilapidated, crime-ridden neighborhood, built in the postwar era, was rebuilt starting in 2002. It is now a mixed-race, mixed-income, walkable neighborhood that has won national awards for combining low-income housing with market-rate homes, greenbelts, play areas, a medical clinic, and a retail center with a library and credit union, all built upon new infrastructure.
Said Cantwell, “Salishan is an innovation, a model of development here in Pierce County. There is national recognition of Tacoma for likely increases in property values over the next 10 years because those investments were made.”