The warning comes as the House and Senate negotiate a final tax bill in Washington, D.C. Right now, by lowering the corporate tax rate from 35 percent to 20 percent, the legislation would diminish the value of low-income housing tax credits, the nation’s most effective tool for developing and preserving affordable housing.
Oregon stands to lose hundreds of millions of dollars in tax credit revenue. Home Forward, the public housing authority serving Multnomah County, could lose close to $200 million in funding that would affect close to 1,800 units in Multnomah County.
“Trying to stay alive in emergency rooms”
These are homes that help families transition from homelessness, help seniors afford their rent while also being able to buy medicine and healthy food, and provide stability for veterans and safety for victims of domestic violence.
“No one in my building can afford Portland’s market-rate rents and most of us don’t have anywhere else to go,” she continued. “If our building had gone away, I and most of my neighbors would probably be living on the streets, trying to find space in overwhelmed shelters and trying to stay alive in emergency rooms.”
Hettman joined speakers including Multnomah County Chair Deborah Kafoury, County Commissioner Loretta Smith, State Rep. Alissa Keny-Guyer, D-Portland, Home Forward executive director Michael Buonocore and Portland Housing Bureau director Kurt Creager.
Local leaders have had to step up after decades of federal disinvestment that’s left cities and counties increasingly responsible for keeping residents alive, healthy and housed.
“This tax bill will make that worse and it will undermine our local efforts to maintain a safety net for those who are trapped by poverty,” Chair Kafoury said. “Killing our local affordable housing industry, hiking taxes indiscriminately on working people and blowing a giant hole in the federal budget that our children will have to pay for is not the way to move our country forward.”
At risk: $1 billion in funding for affordable housing
The rally was held amid the muck of a construction site at NE Grand Avenue and Hassalo Street that will soon become Multnomah County’s largest affordable housing development in 50 years.
The project wouldn’t be possible without low-income housing tax credits. When it opens in 2019, all of its 240 apartments will be reserved for people making 60 percent or less of the area’s median income.
Low-income housing tax credits fund 90 percent of all affordable units in the United States.
Developers such as Home Forward sell the credits to private investors for cash. That cash is used, in turn, to buy land, and pay contractors and architects, etc. Investors then use the credits to lower their overall tax bills. Investors can apply for credits that let them deduct either 9 percent or 4 percent of a development’s construction costs over a 10-year period.
Reducing the corporate tax rate from 35 percent to 20 percent would effectively diminish the value of the credits, meaning future sales would provide less for housing development. Nationally, more than $1 billion for affordable units is at stake.
More troubling, the House’s version of the tax legislation also eliminates the tax-exempt status of private activity bonds. If this happens, the more widely used 4 percent tax credit would be decimated, costing the nation as many as 881,000 affordable housing units in the next 10 years.
Buonocore, Home Forward’s director, called the tax bills another “affront to the American people and a disaster for affordable housing” after years of federal administrations cutting funds for housing and human services.
“Maybe we’ll be relieved when a complete catastrophe is averted, and instead we can just celebrate a base level of callous ineptitude,” he said. “Then we can continue to blame state and local leaders for the ongoing nightmare of homelessness, as if it doesn’t have its roots in sustained, federal disinvestment in affordable housing.”
Local leaders have already been working hard to address the region’s housing crisis on their own. Last fiscal year, because of Multnomah County, Portland and Home Forward’s shared strategy and investment, record numbers of neighbors avoided homelessness (more than 6,000), escaped homelessness (4,889) or found a safer place to sleep off the streets in emergency shelter (8,532).
“Our local resources aren’t enough to close the gap. We can’t eliminate poverty on our own,” Chair Kafoury said. “Every day, I wake up hoping that something will change in Washington D.C. That instead of doing the same thing that Congress has been doing the last 30 years -- ignoring the inequality and fundamental moral outrage of poverty in America -- they’ll do something different.”