“There are many issues that divide our country, but one thing that Democrats and Republicans clearly understand and agree on is that we urgently need more housing. That’s why we need reforms like this. has had strong bipartisan support in the past.”
Across the country, a growing number of cities are facing a severe affordable housing crisis. Here in New York City, more than half of renters are rent-burdened, and housing costs remain a major factor driving New Yorkers out of the city. At the same time, record numbers of individuals and families are residing in the city’s shelter system.
The solution to this crisis is basic math. More housing needs to be built to meet demand. In particular, we need to build more affordable housing for all types of households, including first responders, teachers, the formerly homeless, older New Yorkers, and people in need of supportive housing.
At the local level, New York City Mayor Eric Adams has pledged an unprecedented $24 billion for affordable housing, along with a bold proposal for comprehensive zoning reform called the “City of Yes.” The city is stepping up efforts to expand the city’s housing supply. It would remove barriers to development and help meet the housing needs of New Yorkers.
But local efforts alone are not enough. As leaders from two city agencies focus on funding new construction and preservation of affordable housing in New York City, we explore how new economic challenges are dramatically driving up development costs. I have seen it with my own eyes. The price of building materials alone rose nearly 30% from 2020 to 2022, according to the National Association of Home Builders. And recent increases in insurance premiums and interest rates are pushing costs even higher.
These harsh realities further constrain the limited resources available to expand the supply of affordable housing, and require partners across government to similarly ramp up affordable housing efforts. This highlights the gender even more.
Congress now has an exciting opportunity to free up more federal resources for affordable housing development by passing the tax proposal recently approved by the House Ways and Means Committee. The package includes two key provisions that will dramatically improve the Low Income Housing Tax Credit (LIHTC) program. It would lower the threshold for tax-exempt private activity bonds and increase the allocation of the 9 percent housing tax credit.
LIHTC is considered the nation’s primary tool for financing affordable housing development. Since the program’s creation in the 1980s, LIHTC has financed more than 3.7 million homes nationwide. If Congress enacts a tax plan that incorporates these two provisions, it would secure approximately $1.4 billion in additional LIHTC stock in New York City, and billions more nationally, which is urgently needed. It could help finance affordable housing.
As currently proposed, the tax would temporarily reinstate a 12.5% increase in the amount of credit available to us through the expired LIHTC program and increase the program’s bond financing threshold from 50% to 30%. This is to enable the Company to make distributions. We will make more effective use of the limited resources of private activity deposits. Combined, Novogradac estimates that these two reforms could provide funding to build an additional 4,400 units of affordable housing in New York City, and nationally he could produce more than 200,000 units.
There are many issues that divide our country, but one thing that Democrats and Republicans clearly understand and agree on is that we urgently need more housing. As such, such reforms have received strong bipartisan support in the past. We are grateful that Congressional leaders fought to include both of these important provisions in this tax package. And now it’s time to get it to the finish line.
With so many people in need of housing, we cannot afford to miss this opportunity to expand the supply of affordable housing. As we work diligently to expand our affordable housing stock, we need Congress to enact this tax policy immediately so more families can live here in New York City and across the country. .
Adolfo Carrion Jr. is the Director of the New York City Department of Housing Preservation and Development. Eric Enderlin is president of the New York City Housing Development Corporation.