Public funds for affordable housing ebb

If you don’t like federal spending on public housing, don’t gripe on the same computer you used to file for your federal mortgage interest deduction.

Ian Colgan, assistant executive director of the Oklahoma City Housing Authority, did not say that. I did. What Colgan did say, midway through a thorough assessment of housing affordability here at the recent Mayor’s Development Roundtable, was this:

“The mortgage interest deduction combined with the real estate tax reduction far exceeds any subsidy or investment for low-income households.”

In other words, the middle class and above, not the poor, get the greatest benefits from U.S. housing policy, which officially encourages homeownership. It does so for good reasons, personal wealth accumulation and neighborhoodcommunity growth and stability among them.

In fact, the benefit generally increases with income: the bigger the income, usually, the bigger the mortgage, the bigger the deduction, the greater the benefit.

I am all for it. Anyone who can claim a tax deduction would be a lunkhead not to.

The government foregoes tens of billions of dollars every year by allowing tax deductions for homeowners. That is a fair reminder and a good place to start for considering some of the things Colgan said about public housing, the lower-middle class and the poor. It’s not pretty. Housing affordability,

a key strength of Oklahoma City’s renaissance, is being ground away by rising costs and stagnant incomes, as traditional sources of assistance for public housing are being reduced or under threat of elimination altogether.

“Public housing is an often maligned and ignored source of affordable housing, but over 2 million households nationwide rely upon public housing for safe, affordable housing,” Colgan said. “Despite the desperate need for public housing, Congress has systemically reduced the funding necessary to upkeep properties, leading to a $30 billion backlog in deferred capital needs.”

Here, the Oklahoma City Housing Authority’s capital funds have been slashed by 49 percent in the past 15 years, “leaving only $1 of funding available to fix $18 of capital need and repair,” he said.

“For those in the multifamily business, imagine if you only had ½0th of the funds needed to maintain your properties, but were also precluded from leveraging any other funds or financing to make up the difference. This is the face of public housing today,” Colgan said.

Funding from Community Development Block Grants has been reduced 32 percent and funding from federal HOME Investment Partnerships has dropped 45 percent the past 15 years, he said. Those dollars, with strong local guidance, go directly into the revitalization and construction of housing in high-poverty areas.

“Not only are these funds becoming ever more scarce, but (President Donald Trump’s) initial budget for 2017 zeroed out these programs completely, leaving the mere existence of these programs in question,” he said.

Further, the federal Low Income Housing Tax Credit (LIHTC) program for affordable housing investment and development is going underutilized in Oklahoma City, Colgan said.

“The Low Income Housing Tax Credit has been far and away the most successful affordable housing program in the country, resulting in the vast majority of affordable housing units built since 1986,” he said. “However, Oklahoma City is far behind its peers in utilizing this program.

“Between 2000 and 2014, Indianapolis, Milwaukee, Memphis and Kansas City built between 20 and 33 LIHTC units for every 100 severely cost-burdened household. Over the same time, only five units per 100 were built in Oklahoma City.”

The state affordable housing tax credit, by design, is unable to meet the greatest needs in Oklahoma, he said, which are in Oklahoma, Cleveland and Tulsa counties.

“Ironically, accordingly to the rules established when this program started, these are the same counties which are precluded from accessing the credit,” he said.

Meanwhile, the middle-class housing market, subsidized by the mortgage interest deduction, while it has its ups and downs, isn’t under threat from anything but the market itself.

“So where do we go from here? The answer is not a simple one. But a strategy is needed before Oklahoma City falls victim to an affordability problem that has impacted virtually every city in the nation,” Colgan said.

Reliance on federal funding, he said, “is no longer a plausible strategy.”

NEXT: More from Colgan on alternatives and what is being done.