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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “affordable housing trust fund”

Low Income Housing Tax Credits

Low income housing tax credits are the primary source of construction and rehabilitation for affordable housing projects. The program has been around since the eighties and is an effort to get private sector involvement in the affordable housing development business. The program uses the equity generated from the sale of tax credits to create low debt on affordable housing projects, thereby supporting lower rents. (This is a vast oversimplification but sufficient for this discussion.)

The program has accomplished much but has significant limitations. It is neither efficient or effective. Let me explain.

The program is not efficient for two reasons. First it is excessively complicated, involving arcane aspects of tax law, legal issues, accounting etc. It is an extremely difficult program for a newcomer to enter. Second, and related, the administrative costs are extremely high. Too much of the money does not go directly to housing but lines the pockets of developers, consultants, syndicators, accountants, attorneys, etc.

Second, the program is relatively ineffective. It does not house the low income people who need it the most. Someone must be able to pay a decent rent to afford the program. Homeless or very low income people cannot participate.

Politically this is not the best time to address the need for a new affordable housing program but the community needs it. The National Affordable Housing Trust Fund is a start but its resources are limited for now. We need a simpler more efficient and effective affordable housing program.

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St. Louis Affordable Housing Trust Fund

The St. Louis Post Dispatch had a good article about the status of the City of St. Louis Affordable Housing Trust Fund. This fund was voted on and approved by the voters of St. Louis about 15 years ago. The purpose of the fund is to construct, rehab, and preserve affordable housing. A hunk of the funds need to be used for persons at or below 50% of the area median income. It has served the community well and has contributed to neighborhood stabilization.

Mayor Slay and now Mayor Krewson have tapped into the fund for other purposes. While I am sympathetic to the financial needs of the city, the purpose for which the fund was established was for housing. I consider other uses to be illegal. Activists need to get on this issue.

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