TAX REFORM PLAN PUTS FLORIDA AFFORDABLE HOUSING IN PERIL
Lower corporate tax rate will make it harder for private developers to raise capital to build communities in Florida where need is most dire
Affordable housing – a scarce resource in Florida – is about to get scarcer if the GOP tax plan is signed into law.
Housing Trust Group (HTG), Florida’s largest affordable housing developer, is putting policymakers and the public on notice: while the tax reform plan does provide some relief in the form of tax breaks for individuals and businesses, it comes at a price: it will severely inhibit private developers’ ability to raise capital to build affordable housing – housing built with mostly private development dollars, with below-market rents scaled to local area median income.
Matthew Rieger, President and CEO of Housing Trust Group, published an OpEd in the Miami Herald on Wednesday describing the potential drawbacks of the plan before a final bill is sent to the President later this month. As it stands, several Republican lawmakers are already walking back support for the bill over other provisions.
“As the largest developer of affordable housing in Florida, living and working in the country’s most cost-burdened metro area, I feel an obligation to let our leaders and the public know that that the legislation, in its current form, will exact a price on the public in the form of higher housing costs. Florida – and South Florida in particular – is facing a major affordable housing crisis. Over two-thirds of Miami residents, for example, spend more than 40% of their income on rent. Now is the time to be expanding our investment in affordable housing, not shrinking it.”
In short, Rieger explains, a reduction in the corporate tax rate from 35% to 21%, as currently proposed, would diminish the value of the Low Income Housing Tax Credit (LIHTC) – a tool that private developers use to raise capital to buy, build or renovate affordable housing. The credits are sold to private investors, who get a dollar-for-dollar offset on their federal taxes. With the lower tax rate, investors will have less incentive to buy credits – translating to a loss of approximately $1 to $2 billion annually to the affordable housing industry, according to analysts.
Around 80% of the financing for Florida affordable housing comes from LIHTC equity. Communities such as the multiple-award-winning Courtside Apartments in Miami, Valencia Grove in Orlando, and Park at Wellington in Pasco County were all built using LIHTC equity. If the GOP tax plan goes through, Florida will see fewer affordable apartments developed in the future.
“While the tax reform bill may put a few more dollars back into the pockets of hard-working families, it will not be enough to offset the continued shortage of housing in Florida and across the country. Rents will continue to rise and the crisis will deepen. I understand the political necessity of passing a tax reform bill – but would urge our lawmakers to consider, at the very least, expanding affordable housing programs to offset the corporate tax rate reduction.”
In particular, Rieger and others in the affordable housing industry are expressing support for the Affordable Housing Credit Improvement Act of 2017 — a bipartisan bill co-sponsored by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) that would expand the LIHTC program by 50 percent and create close to 400,000 additional affordable homes over the next decade. More than 2,000 organizations from all fifty states signed on to an ACTION Campaign letter here in strong support of this legislation.
To read the full text of Matthew Rieger’s Op-Ed, “Proposed GOP Tax Bill Would Gut Affordable Housing,” please see here.
About Housing Trust Group
Housing Trust Group (HTG) is an award-winning full-service developer of multifamily residential communities whose real estate transactions exceed $2 billion in commercial, land and residential developments across Florida, the Southeastern U.S. and Arizona. HTG develops, builds and manages a diverse portfolio of affordable housing, workforce housing, market-rate housing, and mixed-use developments.
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