The Transformative Investments We Need in Housing
The one who plants trees, knowing that he will never sit in their shade, has at least started to understand the meaning of life.”
Rabindranath Tagore
BLUF: Bottom Line Up Front
Addressing the Housing Crisis: America faces a severe housing shortage, with millions of homes needed annually. This crisis disproportionately affects African Americans, who experience higher rates of homelessness, housing cost burdens, and limited access to affordable housing.
As a transformative approach to redress our policies of housing apartheid for the past century, I propose:
Transformative Housing Investment: Establish a $150 billion Affordable Housing and Acquisition Fund to construct, rehabilitate, and preserve affordable housing, emphasizing racial equity and community control to ensure permanent affordability.
Expanding Tax Credits for Affordability: Significantly increase funding for Low-Income Housing Tax Credits (LIHTC) and New Markets Tax Credits (NMTC) to accelerate the development and rehabilitation of affordable housing while incentivizing private investments in underserved communities.
Boosting Federal Block Grants: Triple Community Development Block Grants (CDBGs) to $10 billion annually to fund affordable housing, improve infrastructure, and create economic opportunities in high-poverty neighborhoods.
Fully Funding Section 8 Vouchers: Expand the Housing Choice Voucher program to serve millions more low-income families while addressing discrimination and administrative hurdles that limit the program’s effectiveness.
For all these solutions, we must invest in effective Residential Anti-Displacement Policies: We must pair housing investments with measures like tenant protections, community land trusts, and affordable housing preservation to prevent displacement and ensure benefits for existing residents.
I close by briefly spotlighting two non-profits doing transformative work in the housing sector: Enterprise Community Partners and the Local Initiatives Support Corporation.
As I’ve emphasized in my two previous posts, America does not have enough housing—especially affordable housing. We’re short at least several million homes per year. The crisis has worsened over the past decade as Americans are forced to pay more for housing than they should, all because the supply of housing—especially quality, reasonably priced housing—is chronically scarce.
For African Americans, as a whole, this crisis hits them worse than any other race.
Consider that they are 32% of the homeless population while only 13% of the population.
Consider as well that in 2023, 56% of African American renter-households were cost-burdened (spending at least 30% of their income on housing), and nearly 31% were severely cost-burdened (spending at least 50% on housing). On top of that, nearly 33% of African American homeowners are cost-burdened. For White households, it's far less on all counts.
For me, it is hard to fathom these statistics. I live in an upper-middle-class community of 1,800 households that is majority Black. My county (Prince George’s) is the second most affluent majority Black county in the U.S. My kids are surrounded by Black success and achievement. Yet, tragically, this is far from the norm in too many Black communities around the country.
Throughout this winter and into the spring, I will propose transformative solutions to consider that serve, collectively, as an alternative to reparations for African Americans (which I support but don’t believe are possible).
I propose them because I believe we must continue to find solutions that fundamentally repair and redress historical wrongs such as redlining, exclusionary zoning, discriminatory lending, and other laws, policies, and practices that, historically, have guaranteed racial segregation and chronically low-opportunity neighborhoods.My first post on housing solutions focused on grants and tax credits for Black homeowners. The second focused on widespread zoning changes to allow for more housing—and in more places—and, thus, more integrated neighborhoods.
Today, we will focus on dramatic shifts in federal housing investment, with five major proposals for your consideration.
Warning: these solutions get a bit technical and complicated to explain, and I’m not a housing policy expert, so I’ve done my best here to explain them in layperson’s terms.
The first is a transformative housing proposal inspired by the work of Oakland-based think tank PolicyLink to:
Establish an Enormous, $150 billion Affordable Housing and Acquisition Fund aimed at constructing or rehabilitating low-cost, efficient, high-quality, and accessible housing in areas where affordable housing is in short supply while also acquiring “existing, distressed, and at-risk units and convert[ing] them to community control and permanent affordability.”[1] These funds would be customized locally, benchmarked for local racial equity targets, and provide low-cost financing to purchase sites for developing or preserving affordable and mixed-income housing.
Per PolicyLink, the acquisition funds could “fully finance the purchase of private rental properties by nonprofit organizations, public housing authorities, cooperatives, community land trusts, and states or local governments in order to increase the availability of affordable housing.”[2]
The second is to:
Significantly Expand the Low-Income Housing Tax Credit (LIHTC) to incentivize developers who build or rehab affordable housing in communities that need it most. This would make the credit more efficient, dramatically increasing new and rehabilitated affordable housing units. The LIHTC “is the nation’s most significant affordable rental home production program and over 35 years has supported the construction or rehabilitation of about 110,000 affordable rental homes per year, financing more than 3.7 million affordable homes in total.”[3] Historically, by leveraging private capital, these tax credits have served as a primary tool to increase the stock of affordable housing nationally.
One hundred ten thousand units per year are significant but pale in comparison to the annual housing need in the U.S. We need the funds to finance five to ten times that amount annually, up to one million units per year.
We also need to see a change in the time interval for these units to stay affordable: in the 1980s, it was 15 years; that changed from 1990 to 30 years. Once this period expires, a unit or a building can be converted to market rate, defeating affordability's whole purpose.
Thus, Congress should establish an ‘in perpetuity’ affordability standard for new LIHTC units while providing funding to help owners and investors improve properties or offer greater liquidity. States like California already do this.[4]
This change would require increasing the current cap on LIHTC funds (it’s allowed a 12.5% annual increase through 2021) to nearly 100% per year for the next 5-10 years. This increase would make available to states and territories (each of whom set the priorities to allocate credits) a far more significant amount of tax credits to provide to affordable housing developers in every state. Congress could also mandate reductions in the amount of bond financing a developer needs to access the tax credits and greater flexibility to fund needs for housing rehabilitation.
The third would:
Expand and make permanent New Markets Tax Credits (NMTC) to at least $10 billion annually to attract private capital into lower-income communities for affordable housing, supermarkets, and other critical community and economic development projects. The federal government currently provides about $3 billion annually. NMTC funding, issued through the Community Development Financial Institutions (CDFI) Fund, is only for Community Development Entities that provide investments and loans in low-income communities. This 300 percent expansion allows far more money to flow into lower-income African American neighborhoods (and other lower-income communities), which historically have experienced disinvestment.
How does it work? Typically, for a tax credit allocation of $1 million from the Fund, a CDE offers that amount to an investor in exchange for an equal equity investment. Over 7 years, that investment will generate $390,000 in tax credit value.[5]
The fourth would:
Invest billions in higher-poverty communities. That means having HUD invest $10 billion annually (compared to about $3 billion currently) through flexible Community Development Block Grants (CDBGs) funding. This would expand investments in affordable housing, upgrade infrastructure, and enhance economic opportunities in higher-poverty communities.
CDBGs fund activities such as acquiring property, rehabbing housing and commercial structures, and constructing water and sewer facilities and community centers. The grants also support businesses in job creation and retention and other economic development initiatives.[6] Tripling the annual allocation here, too, will significantly increase investment in high-poverty neighborhoods.
And, finally, the last one would:
Fully Fund Section 8 Housing Choice Vouchers
A critical component of the housing crisis in America is the sheer lack of public housing, whether owned by government entities or housing for which residents can use Section 8 housing vouchers.
What are Section 8 housing vouchers? They assist “very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. … [They] are administered locally by public housing agencies (PHAs).”[7] that receive federal funds from HUD. The voucher allows a family to choose from among local options the ‘healthy and safe’ private housing they can find, approved by the PHA.
In 2022-2023, 45% of Section 8 voucher recipients were Black, and 35% were White.’ Less than 3% of the U.S. population lives in what is known as Section 8 housing.[8]
In March 2020, the private and subsidized rental housing market only offered 3.6 million homes to satisfy the needs of 10.9 million households (thus, a shortage of 7.3 million rental homes) with extremely low incomes (26 percent of which are Black households).[9] At each of the 2,100 local PHAs, there are very long waiting lists (and long waiting periods). In D.C., near me, people can stay on the wait list for many years; currently, the DC Housing Authority is not allowing new applicants. The states with the longest waits are Massachusetts, Louisiana, Delaware, and Maryland.[10]
Thus, I recommend that the federal government fully fund the woefully underfunded Section 8 housing choice voucher (HCV) program—which would translate into eleven million additional people (up from the current five million served) having access to the program than do now. According to the Center on Budget and Policy Priorities, the HCV program “reduces poverty and housing stability, improves the mental and physical health of participants, and improves life outcomes for participants’ children.”[11]
Expanding the budget doesn’t make sense until far more housing is built or preserved. Still, greatly expanding Section 8 should trigger far more housing to be built to begin to accommodate the expanded number of potential Section 8 recipients searching for suitable housing throughout a local or regional market.[12]
The fuller funding of the HCV must be accompanied by legislation that prevents HCV discrimination, a common occurrence across the country.
It should also significantly lessen the burdensome paperwork landlords must complete and comply with.
NOTE: Discrimination is common enough that in 2018, Milwaukee County banned HCV discrimination but found the enforcement woefully insufficient. It turns out local housing agencies had authority to investigagte discrimination cases.
The Wisconsin legislature may need to pass a new law clarifying local jurisdictions’ enforcement authority. If it passes, it would require hiring county attorneys & dedicated investigators to fight discrimination.[13]This all may feel like tilting at windmills.
I propose them because our nation has never fundamentally repaired and redressed dozens of our historical wrongs perpetrated on African Americans. To do so will require enormous investments that begin to make things right.
Note that none of these proposals solely target African Americans. All five proposals would benefit all Americans who struggle with lower-wage jobs and live in communities where the cost of living for decades has been too damn high.
Spotlight: Two National Non-profits Performing Transformative Work
Let me close by spotlighting two national organizations I’ve had the honor of working with in recent years: Enterprise Community Partners (ECP) and Local Initiatives Support Corporation (LISC). ECP is co-chair of the Purple Line Corridor Coalition, a group I’ve supported in my consulting since 2018 - https://www.purplelinecorridor.org/.
LISC began working in Prince George’s County just a few years ago. Through my facilitation and interviews, I contributed to their Blue Line Corridor Economic Inclusion Agenda, which can be viewed at: https://www.lisc.org/dc/what-we-do/pg-county-expansion/.
Enterprise Community Partners
ECP is a national non-profit that delivers community-based and sustainable housing solutions to those who most need them.
Over the past 42 years, they have invested $72 billion and created 1 million affordable rental homes in all 50 states. They have centered racial equity in all their work to counter decades of systemic racism in housing in the U.S.
You can read a recent blog post: https://www.enterprisecommunity.org/blog/solutions-housing-supply-shortage on Solutions to the Housing Supply Shortage.
Local Initiatives Support Corporation
LISC is a national non-profit with 37 offices across the U.S. that provides financing through loans, grants, and equity investments. LISC also delivers technical and management assistance to local community partners and developers.
They are involved with two exceptional programs I want to spotlight here:
Power Forward Communities – a coalition (that includes ECP) to transform the housing sector through a 7-year, $2 billion grant from the Environmental Protection Agency. https://www.lisc.org/special-initiatives/power-forward-communities/.
Project 10X – designed to “upend the racial health, wealth, and opportunity gaps that keep tens of millions of people from sharing our country’s prosperity and realizing their personal potential. There are four fundamental approaches LISC is pursuing to build greater equity for people of color. One of them is investments in homeownership and business ownership opportunities. https://www.lisc.org/project-10x/
Footnotes
[1] “Securing Housing Justice for All,” PolicyLink, 2020, pp. 3–5, https://www.policylink.org/resources-tools/housing-justice-for-all.
[2] Ibid.
[3] Francis Torres, “Preserving Long-Term Affordability in LIHTC Housing,” Bipartisan Policy Center, May 17, 2023, https://bipartisanpolicy.org/blog/preserving-lihtc-housing/.
[4] Ibid.
[5] “Introduction to the New Markets Tax Credit Program, A slide presentation from the CDFI Fund, Slides 1-10, https://www.cdfifund.gov/sites/cdfi/files/documents/2020-introduction-to-the-nmtc-program_-final.pdf.
[6] “Community Development Block Grant Program,” U.S. Department of Housing and Urban Development, https://www.hud.gov/program_offices/comm_planning/cdbg.
[7] “Housing Choice Vouchers Fact Sheet,” U.S. Department of Housing and Urban Development, https://www.hud.gov/topics/housing_choice_voucher_program_section_8.
[8] “Section 8 Statistics 2023-2022,” Statisticser, https://www.statisticser.com/section-8-statistics/.
[9] “The Gap: A Shortage of Affordable Homes,” National Low Income Housing Coalition, March 2020, https://reports.nlihc.org/sites/default/files/gap/Gap-Report_2020.pdf.
[10] “How long do people wait for subsidized housing in the United States?,” USA Facts, July 22, 2024, https://usafacts.org/answers/how-long-do-people-wait-for-subsidized-housing/country/united-states/.
[11] Julia Baumel, “Unaffordable Housing: Why Housing is so Expensive and What We Can Do About It?” The New Center, August 2020, p. 14, https://newcenter.org/wp-content/uploads/2020/08/Unaffordable-Housing.pdf.
[12] Matthew Yglesias, “Joe Biden’s surprisingly visionary housing plan, explained: Cut child poverty by a third, break down racial segregation, and stabilize the economy,” Vox, July 9, 2020, https://www.vox.com/2020/7/9/21316912/joe-biden-housing-plan-section-8.
[13] “Supervisors Seek Change to Housing Discrimination Law,” Urban Milwaukee, March 9, 2024, https://urbanmilwaukee.com/2024/03/09/mke-county-supervisors-seek-change-to-housing-discrimination-law/.