TAX BREAKS A SPUR FOR LOW-INCOME RENTALS?
Lawmaker pushes incentives for landlords in low-poverty areas
An incentive program aimed at encouraging landlords in wealthy areas to open their doors to low-income families failed to take off in Richmond, but one state lawmaker hopes it might make a difference in Hampton Roads.
The program gives landlords a tax break if they accept housing vouchers — formerly Section 8 vouchers — in neighborhoods that have low poverty.
The idea is to get lowincome residents living in neighborhoods with lower crime, better schools, and better access to things like grocery stores.
Take Newport News. Behind Christopher Newport University near the James River Country Club, residents in the Hidenwood neighborhood made a median income of $90,125 in 2015.
It’s no surprise that the percentage of people living below the poverty level in Hidenwood is low — in the case of one census tract in the neighborhood, it’s 6.81 percent.
Or one census tract in Ghent, where 4 percent of the population lives below the poverty line and the median household income in 2015 was around $94,000.
Del. Jay Jones, D-Norfolk, wants to change that by bringing the tax credit program, which now is only available in Richmond, to the Virginia Beach-Norfolk-Newport News MSA.
Under the Communities of Opportunity Tax Credit, which the General Assembly passed in 2010, landlords get a 10 percent credit on the annual fair market rent of a unit for accepting housing vouchers in areas where less than 10 percent of the residents live below the poverty level. The tax credit is prorated when units are qualified for less than the full tax year.
“Landlords certainly will be able to diversify their tenant base with folks who they know will be able to have some money in their pockets,” Jones said in a phone interview. His bill passed unanimously in a House Finance committee meet-
ing Monday.
Because the bill affects particular localities, it'll need a supermajority vote on the House floor to pass.
Housing vouchers are given to qualifying lowincome residents who pay rent with a percentage of their monthly income, with housing authorities making up the difference with federal funding.
Jones said he's received support for the program from the city of Norfolk, where nearly one third of residents are significantly rent-burdened, spending more than 50 percent of their income on housing, and where some communities suffer from high concentrations of poverty, city spokeswoman Lori Crouch said.
“As the city works to redevelop areas of our city it is important that we do not re-concentrate poverty in fragile neighborhoods,” she said in an email, adding Jones' bill would be another tool to support quality affordable housing.
A carrot for landlords ...
The tax credit was designed to give landlords an incentive to accept housing vouchers, said Patrick McCloud, CEO of the Virginia Apartment Management Association.
Right now, there's no requirement for landlords to accept them.
“Part of the impetus behind the (Communities of Opportunity program) was we had to find some better way to encourage people to take the (housing vouchers) because of all the administrative hurdles,” McCloud said over the phone.
But unlike a regular lease — where someone typically tours the home, pays a security deposit, does a move-in inspection and pays rent on the first of the month — rental agreements involving housing vouchers are much more complicated, requiring several inspections each year and a lot more paperwork.
Every year, the local housing authority is required to recertify that the renter qualifies for a housing voucher and reinspect the home.
“The inspection process is an absolute pain” in Richmond, McCloud said, adding the 10 percent tax credit wasn't enough incentive for a lot of landlords to participate.
McCloud said the state also didn't do a good job of marketing the program to property managers.
The Department of Housing and Community Development estimates it would need $50,000 to market the program to the Hampton Roads MSA.
In Richmond, 177 of the 277 census tracts were eligible, based on 2000 census data.
But in the past four years, the credit was applied to an average of 13 housing units, giving landlords an average of $48,679.
The credit pool is capped at $250,000, and if the program is brought to Hampton Roads, landlords would have to share that total with their counterparts in Richmond.
Helen Hardiman, who owns her own fair housing law practice but worked for years at the nonprofit group Housing Opportunities Made Equal, worked with then-Del. Don McEachin and Del. Jennifer McClellan, D-Richmond, on the 2010 bill.
Hardiman and the delegates identified what they called “neighborhoods of opportunity,” with poverty serving as a proxy.
In the Hampton Roads MSA, which also includes a little bit of North Carolina, 37,600 people have an income below the poverty level, according to the U.S. Census Bureau's 2013-2017 American Community Survey 5-Year Estimates.
The poverty level varies from year to year, but in 2018, the federal government set it at $12,140 per person.
Norfolk Housing and Redevelopment Authority spokesman Ed Ware said there were several landlords that operate large, multifamily properties in Norfolk and Newport News that would be interested in the tax credit.
“That kind of partnership with the larger multifamily developers, they have the capacity to help us market this program more aggressively in the future,” he said.
He estimates over 500 landlords in Norfolk currently accept housing vouchers.
In 2013, the available tax credit shrank from $450,000 to $250,000 with the difference going to HOME's Move to Opportunity Mobility grant program, which also works with landlords in Richmond to accept housing vouchers in neighborhoods with a lower poverty index.
In 2018, the HOME mobility program helped move 76 families from neighborhoods averaging 34 percent poverty to neighborhoods averaging 18 percent.
… or a stick?
Another way to get more landlords to accept housing vouchers is to make it a requirement. Del. Jeff Bourne, D-Richmond, wants to do that by adding source of income to the list of characteristics protected in housing discrimination law.
He's a landlord in Richmond and accepts housing vouchers, and he filed a similar bill last year that failed in committee.
The Virginia Apartment Management Association opposes it.
“By passing that, he's attempting to mandate that property owners participate in already broken government program,” the association's McCloud said.
He'd rather see the housing voucher program work like the SNAP, or food stamps program, with the federal money placed on a tenant's card to make payments each month.
“This has zero to do with the actual tenant; it absolutely has to do with the administrative strings,” he said.
Bourne said he was open to “reasonable safeguards” for landlords.
“To their credit, the Realtors and the builders have come to the table and they're still opposed,” he said.
The Virginia Poverty Law Center has been working with Bourne on drafting the legislation.
Christie Marra, of the law center, said Bourne's bill would make it unlawful to treat anyone differently when it comes to housing because of how much money they make.
“The main thing we see is people being turned away from housing they could otherwise afford to rent because they have a housing choice voucher or other subsidy,” she said.
Similar bills have failed in past years.
And Marra said Bourne's legislation has an uphill battle this year again, especially because lawmakers are focused on bills related to evictions after a study last year found several cities in Virginia — including Norfolk, Hampton, Chesapeake, Newport News and Portsmouth — had the nation's worst eviction rates.
Marra said both Bourne's and Jones' bills are trying to give people more housing opportunities.
“If people choose to stay in the neighborhood because of the ties they have to their community, that is normal, understandable, and I don't think having a source of income provision or a fair housing law precludes us from trying to make all of these neighborhoods as vibrant and economically robust as they can be,” she said.