Viewpoints: Federal housing cuts will further hurt Texas’ working poor

  • Editorial Board
1:31 p.m Wednesday, Aug. 2, 2017 Opinion
Nick Wagner
Robert Hewett, an Army veteran and resident at Capital Studios, an affordable housing development, speaks about his experiences finding affordable housing during a rally at City Hall on July 22.

It takes a village made up of folks from the nonprofit world and the private and public sectors to address Austin’s lack of low-income affordable housing. In Austin, as in Texas and the U.S., the affordable housing village relies on a variety of funding sources to get the job done.

The sources – from federal vouchers that help subsidize rent, to corporate tax credits for projects to create new housing units for the poor – often work together to help low-income individuals and families.

Austin and other Texas cities help elderly and disabled residents and working families with limited incomes get into homes they otherwise could not afford. Now, President Trump’s tax reform and federal budget proposals — which include steep corporate tax breaks and cuts to U.S. Department of Housing and Urban Development (HUD) programs – threaten local and state efforts to increase and preserve low-income affordable housing stock.

HOW WE GOT HERE: Federal cuts could worsen Austin’s affordability crisis, groups say.

As Congress prepares to take on Trump’s proposals, we urge our Texas leaders – including Sens. John Cornyn and Ted Cruz – to stand up for families in need and reject proposals that hurt most those with less, as the administration’s plans do.

Currently, nonprofit and for-profit low-income affordable housing developers negotiate with investors — typically corporate entities — for funding in exchange for federal low-income housing tax credits. Developers get funding for their projects, and the corporate entities or investors get tax breaks.

Under Trump’s tax reform proposal, which slashes the corporate tax rate from 35 percent to 15 percent, incentives for corporate participation in low-income housing projects could decline, experts say.

There’s a potential one-two punch in that the president’s federal budget plan would slash housing funding by 15 percent – or $7 billion. The cuts, the National Low Income Housing Coalition estimates, could affect millions of senior citizens, veterans and low-income families already struggling to make ends meet.

When the lives of Texans improve, so does the health of our state. We know that where a person lives has an impact on that person’s success in life. Studies show that a stable, safe and integrated living environment leads to better health, education and employment outcomes. Continued and increased federal funding for affordable housing can help stabilize families in Texas and the nation.

The need for housing assistance is dramatic in Central Texas. Consider that financial experts suggest that a person reserve about 30 percent of gross monthly income for rent. However, in Travis County, a third of residents spend about half their income on housing expenses alone, according to Austin Homes, Austin Voices, a local affordable housing advocacy group. About half of all Williamson County residents do the same.

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In Austin — where the average rent was $1,224 in 2016 — a person making the federal $7.25 minimum wage, for example, would have to work 82 hours a week to afford a market-rate, one-bedroom apartment, according to data by Capitol Market Research.

Federal housing vouchers and other housing assistance programs help low-income families make ends meet. Cuts to programs that help fund affordable housing initiatives threaten the well-being of some our country’s most vulnerable.

Experts say Trump’s tax reform proposal could hurt the federal Low Income Housing Tax Credit Program, the primary method local entities use to direct private funds toward creating and preserving low-income housing developments. Through the program, investors from the private sector can lower their tax liability in exchange for funding affordable housing projects. But, with significantly lower tax rates, investors might be less willing to participate.

Texas and the rest of the country can’t afford to lose corporate investment in affordable housing.

Since 1986, corporate investments through the federal tax credit program have helped create about 3 million affordable homes across the nation. That figure includes more than 46,000 homes in Texas over the past five years alone. Here in Austin, Foundation Communities has used the tax credit program since 2000 to build 10 apartment communities that serve over 1,400 low-income families each year.

Under the federal budget proposal, Texas could lose $494 million in housing funding, affecting more than 55,000 families statewide. Austin faces losing $18.2 million in HUD funding, which means almost 2,000 households could lose vouchers or other types of housing assistance.

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Most recipients of housing assistance are unable to work because they are either over 65 years of age, have a disability or are caring for a person with disabilities. Others who can work do, according to several studies.

Statistics are similar for recipients of housing vouchers, which subsidize rent, and those who live in public housing: Up to three-fourths of nonelderly, nondisabled recipients of housing assistance have jobs, according to data from the Center on Budget and Policy Priorities and the Urban Institute. In places like Austin, where wages haven’t kept up with the cost of housing, many hard-working families just don’t make enough money to afford rent, food and necessities.

If Trump’s proposals are adopted, they’ll have an even harder time making ends meet. For a better Texas, state lawmakers in Congress should advocate on their behalf.

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