LiHTC provides very little housing for too much money.
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Another persistent problem with the way we are talking and acting on housing prices and costs is the continued domination of low income tax credit (LIHTC) as the leading way to create new, subsidized, affordable homes. For a long time I have been critic of the program and the passage of “Big Beautiful Bill” with the expansion of credit has only assured his life in the future. The evidence is undoubtedly: the LihTC housing is accurate and takes a long time to build compared to similar market housing. However, the momentum behind the credit seems unstoppable. The reform and ultimately the transition from Lihtc must be at the top of the agenda if the country wants to move on to the abundance of houses and away from the vibration of prices and the inflation of homes.
I have written about the sneaky impact of Lihtc. I have pointed out How difficult are credits to be effectively usedAnd I have written about how credit could be reformed and turned into discount builders and households directly. The bottom line is that Lihtc apartment units are now approaching $ 1 million per unit. There have been findings from follow -up organizations that find serious compliance issues and vulnerabilities in scams in the use of credit and lack of transparency. Where do all the money go? One would believe that a tax credit that resulted in $ 13 billion to forget about tax revenue would have reports of reports that could answer this question. LiHTC has very dark data on the type of housing made, where, how much it costs and if it is still accessible. And I usually point out that the cost of almost any Lihtc in the country is more than the purchase price of a house.
What does this broken system represent so much political support, despite raising the high cost of home production in this way? First, politicians want to cut the ribbons. This may seem a bit flippant, but Lihtc projects are shiny, new and often incorporate all kinds of bells and whistles. The cost of certifying a building as excessive legal requirements for energy efficiency, for example, is considered as high points not exaggerations, because effectiveness serves another agenda.
All this money and complexity in the system means an industry of consultants, trade unions, lawyers, designers, accountants and contractors who are all speculative actors, make money from the foam of all cash movements through the system. What I call a non -profit housing industrial complex is based on tax credits and multiple capital sources compressed by the government and the charity.
Finally, stacking capital They are common in housing development. There may be many sources of borrowed money in a project. But when capital sources have a variety of agendas, compliance requirements and design requirements, the result can slow down projects and add layers of requirements that add costs to buildings. Things such as the requirement of a few sizes for units can limit unit measurements to a project and increase the cost per unit. It is not a matter of bedroom number, but the overall size of the unit. More, smaller units, even slightly smaller, mean more rent incomes and more units at lower costs per unit.
The answer to the waste of the LiHTC system is to start with greater transparency and accountability. Let’s find out where all the money went and where is it going? Then, some discipline must be imposed on the cost. It is simply not true that the affordable housing should be more expensive. Subsequently, credit must be shifted to a more direct reductions program for developers that include limited rental housing in their projects serving people with higher incomes and households struggling to cover housing costs each month. This would help more people faster and give us the construction of Taj Mahal apartment complexes that make politicians, the media and some supporters feel better, but to do too little to deal with people in the margins of the economy.
