Multifamily and the Legislative Agenda
- Dec 27, 2012
Irvine, Calif.—Because this is an election year, all eyes are turned toward the White House to see what’s on the legislative agenda. MHN interviews Will Cooper Sr., founder and chairman of WNC and Associates, about the multifamily issues that are on the current legislative agenda and the low-income housing tax credit program.
MHN: What are some multifamily issues that are on the legislative agenda that need to be addressed?
Cooper: From our perspective, the most significant issue is the extension of the 9 percent floor applicable to the federal low-income housing tax credit. In our continuing low interest rate environment, the 9 percent floor is essential to produce financially feasible affordable housing. Without it, there is no incentive to produce these vitally needed housing developments. Support in Congress on both sides of the aisle exists to extend the 9 percent floor, and we are optimistic that the floor will be extended during the Congressional lame duck session.
MHN: How likely is it that the low-income housing tax credit program will be eliminated?
Cooper: I think it is very unlikely that the LIHTC program will be eliminated. The program was introduced in 1986 under the Reagan Administration and has been a tremendous success. Prior to the introduction of LIHTC, affordable housing was a top-down process that produced epic failures like the Cabrini Green housing projects—developments that effectively trapped people in poverty. With the introduction of LIHTC, an effective and efficient private/public partnership was created. By every significant metric, LIHTC has been a success, and it enjoys support among both political parties. While fundamental tax reform is a popular topic, it will be very difficult to enact, especially with a divided Congress. Even if the code is reformed and made flatter, we expect many tax credits will survive, including LIHTC.
The fact of the matter is that, even with the success of LIHTC, this country still cannot develop enough affordable housing units to meet demand. Should LIHTC disappear, a tremendous economic and social crisis in housing will develop. No one wants that, and LIHTC is the most efficient and effective means to maintain a reasonable level of affordable housing development.
MHN: As a developer, how are you preparing for the elimination of the tax credit program down the road, or do you not think it will be an issue?
Cooper: LIHTC is an exceptional public/private partnership that has resulted in the supply of quality affordable housing for more than 25 years. The program enjoys broad support from Republicans and Democrats alike, and the need for affordable housing in this country continues to grow. Under these circumstances, we are very optimistic that the program has a long life ahead of it.
MHN: What are your top priorities, legislatively speaking?
Cooper: In the short-term, it is very important that Congress extend the 9 percent floor for LIHTC. Without this floor, and in the current low interest rate environment, LIHTC is ineffective. We have a lot of support in Congress to extend the floor, and the Senate Finance Committee has included language to continue the 9 percent floor in an extender package. We are optimistic that the Congress will act on this, and a number of other important measures, before adjourning for the year.
Long-term, of course, we need to protect the low-income housing tax credit. Fortunately, the success of the program, and its ability to bring the private sector in to partner with the public, has resulted in strong bi-partisan support. Additionally, demand for affordable housing continues—nearly half of the nation’s renters are rent burdened (paying more than 30 percent of household income to rent) and require affordable options. LIHTC provides for the construction of 75,000 new affordable units per year—a number that is still not sufficient to meet demand, but that at least keeps the nation from having to confront a housing crisis.