Advertisements

The St Louis Contrarian

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

Archive for the category “rental housing”

Hope vi

Hope VI is a now discontinued public housing program that completely rehabilitated distressed public housing projects in this country.   The idea behind the program was to combine physical rehabilitation social services and create mixed income communities. I had the opportunity to work on the Darst Webbe program in the near south side.  That program has been successful in creating a mixed income community and has led to improvements in surrounding neighborhoods. 

Recent research has evaluated HOPE VI.  The program has not really transformed lives and it was noted that displaced public housing residents did not readily move back 

I believe the program has provided urban development benefits but has not significantly improved the lives of residents. The cost is quite high and demolition and new construction may have been cheaper. The jury is still out on mixed income housing. I have serious doubts that given a choice anyone would opt for this type of housing 

Advertisements

Beyond Housing

In writing about great organizations in St Louis Beyond Housing is probably the best. They have been in business for years and fully realize that community development must be comprehensive and is hard work. 

They are focused on Pagedale  and the Normandy School District. Their projects include housing development and rehab,homeownership training, foreclosure prevention,and economic development. They have brought a movie theatre, grocery store, and bank  to the area. They have created the 24:1 imitative which is bringing the smaller communities together to meet common goals.

Their leader is Chris Krehmeyer a talented, passionate, and caring individual. I am proud of their work

Health Care and Housing

More attention is being paid to the relationship between housing and healthcare. There are a couple obvious connections. Someone living in unsafe housing is more likely to suffer from serious Heslth problems. We know asthma increases for children living in substandard housing.

Second, families spending a disproportionate amount of money on housing do not have funds left over for healthcare. 

Third health care reform penalizes hospitals for readmisdion if patients. Hospital Social Workers tell me that they often have trouble finding decent affordable housing for patients. This contributes to readmissions

Work is underway to better mesh housing and healthcare. We need to begin the process in St Louis

Statistics on Lack of Housing Affordability

Everyone knows there is a serious lack of affordable housing in this country. This gap contributes to homelessness, poor school performance, childhood trauma, and mental and physical health problems. The National Low Income Housing Coalition (NLIHC) presents a report every year which documents the housing affordability problems. They compare the minimum wage income to rents and then deduce the level of housing non affordability. They compare the monthly minimum wage income to the median rent in the area and calculate that anyone paying more than 30% of their income for rent is paying too much for housing.

Like I said, I am a big affordable housing advocate and understand the lack of affordable housing. I disagree with the methodology used in this study. Many minimum wage workers are students or retirees and do not expect to live on this income. Others double up with roommates to meet housing costs. Third most minimum wage workers do not stay at that salary level for long. I believe the average tenure at minimum wage is six months. For better or worse, minimum wage was never intended to be a living wage.

A more valid comparison would be between median salary and median rent. This statistic would still tell and alarming story, but the data would be more truthful. I have the highest respect for the National Low Income Housing Coalition. They do great work.

Development Incentives in St. Louis

The City of St. Louis has for years handed out huge development subsidies in the form of TIFs, tax abatement, and other measures. They also offer soft second loans on developments which usually do not need to be paid back. Are these incentives effective? It is difficult to know. The Board of Aldermen Hud Committee is proposing a more rational approach to this issue and is gathering testimony from the public. Everyone involved in development needs to pay close attention.

My take on incentives is that it is difficult to use a formula to provide incentives. Ideally the development getting help would not be built without the incentives and the project would provide a real boost to the city. The Chase Park Plaza Hotel comes to mind. There would be less need for incentives if the city had a more rational, and fair permitting and development process. Most developers tell me the city is the most difficult place to do business.

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.

Mortgage Interest Deduction

The mortgage interest deduction on federal income tax is by far the biggest housing subsidy available. It far surpasses Section 8, LIHTC, or other forms of subsidy. The major problem with this subsidy is because it primarily benefits higher income households. That is because a tax deduction only benefits households who itemize and those with a more substantial tax burden. Most of the benefit of this deduction goes to households earning over $200,000 a year. This program hurts central cities more than suburbs for the following reasons:

1. As stated before, less expensive houses provide less of a deduction to affluent purchasers. The present system actually provides incentives for middle and upper middle income households to buy more expensive homes which are generally located in suburbs.

2. Renters who are more common in the central city receive not subsidy at all.

The National Low Income Housing Coalition has a United for Homes campaign which attempts to rectify the housing tax deduction issue. The policy they advocated would limit deductions to $500000 of interest, and provide a 15% tax credit to households which would much more adequately address the needs of lower income homeowners. The billions in cost savings would be used to subsidize new affordable housing. Check out the website Unitedforhomes.org

Post Navigation