Tax Overhaul Is a Blow to Affordable Housing Efforts
“It’s the most successful social program that nobody has heard of,” said David Erickson, director of community
development at the Federal Reserve Bank of San Francisco and the author of “The Housing Policy Revolution.”
It works like this: State governments award credits to affordable-housing developers, who transfer them to
corporations in exchange for equity in rental buildings whose units are set aside for low-income tenants.
Kate Hartley, director of the San Francisco Mayor’s Office of Housing and Community Development — the agency
that backstopped Mr. Falk’s development when it needed help — said the lower corporate tax rate had increased the cost of building affordable housing in the city by roughly $50,000 per unit.
But since renters tend to have higher incomes than in years past — households making more than $100,000 a year accounted for a third of the growth in renters over the past decade — many of the newer units are in the pricey glass
and steel buildings that have sprouted in downtowns across the country.
One result of the surge in higher-income renters is
that units that policymakers politely refer to as “naturally occurring affordable housing” — run-down buildings where lower-income residents can afford an apartment without subsidy — are being pulled toward the higher end of the market.
SAN FRANCISCO — The last time that Congress approved a sweeping overhaul of the federal tax code, in
1986, it created a tax credit meant to encourage the private sector to invest in affordable housing.
The number of renters has surged over the past decade, with the country adding about one million renters a year since 2010 — about twice as many as the previous rental peak in the 1970s
and ’80s, according to a 2017 report by Harvard’s Joint Center for Housing Studies.