Affordable Housing in America:  Issues and Future Needs

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Affordable Housing Today. Incentive Programs vs. Hard UnitsAffordable Housing Need In AmericaColumbus ConditionsKey IssuesChanging Federal PrioritiesPersistent Over concentrationOpportunity Based HousingFuture Needs. Affordable Housing Today. Rental Housing Assistance in 2004The federal government subsidizes 4.8 million rental units1.3 million government owned rental units1.9 million privately owned rental units1.6 million section 8 vouchers for rental unitsHomeowner assistance prov140

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Affordable Housing in America: Issues and Future Needs

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1. Affordable Housing in America: Issues and Future Needs john a. powell Williams Chair in Civil Rights & Civil Liberties, Moritz College of Law Director, Kirwan Institute of Race and Ethnicity The Ohio State University http://www.kirwaninstitute.org/

3. Affordable Housing Today Rental Housing Assistance in 2004 The federal government subsidizes 4.8 million rental units 1.3 million government owned rental units 1.9 million privately owned rental units 1.6 million section 8 vouchers for rental units Homeowner assistance provided to another 591,000 housing units Impact on Housing Market Assisted housing accounts for 12.9% of the U.S. rental market Assisted housing accounts for 4.5% of the entire U.S. housing market

4. Transition in Affordable Housing Affordable housing in the U.S. has transitioned from hard units to incentive based programs in the 1990’s Growth in voucher programs (Section 8 Program) Perceived failure of project based housing Hope VI an exception Growth of the Low Income Housing Tax Credit subsidy

5. Transition in Affordable Housing Trend continues today Largest program today is Low Income Housing Tax Credit Program Represents approximately ˝ of HUD assistance today LIHTC is the “De-facto new construction program” LIHTC developers built over 800,000 low income units in the 1990’s Fewer than 50,000 units constructed from other HUD construction programs

6. National Trends: Affordable Housing Need The need for affordable housing persists and is growing 35% of rental households spent more than 30% of their income for housing in 2001 21% of rental households spent more than 50% of their income for housing in 2001 Housing costs burden for low income households exasperated by limited supply 56% of very low income households were “severely burdened” by housing cost in 2000 (paying more than 50% of income for housing)

7. National Trends: Affordable Housing Need Mismatch between demand and supply 8.5 million extreme low income households existed in 1999, only 6.7 million affordable units for this income group existed in 1999 In 1999, 9 million households qualified for housing assistance but did not receive it due to insufficient funding Housing cost is rising faster than inflation Then national “housing wage” of $15.21 per hour (the wage needed to afford a 2 bedroom unit at less than 30% of gross income) has increased by 37% in the last five years The “housing wage” is currently almost 3 times the national minimum wage

8. Local Trends: Affordable Housing Need Affordable housing need in Columbus In 2002, 9.5% of rental households were “severely burdened” by housing cost Paying more than 50% of income for housing In 2002, 32% of rental households were “moderately burdened” by housing cost Paying more than 30% of income for housing From 1995 to 2002 the number of rental households paying more than 30% of their income for housing increased from 57,500 to 67,000

9. Key Issues: Federal Priorities HUD’s budget has been in decline since the mid 1970’s As a percentage of the total federal budget authority, housing budget authority accounted 6-7% of spending in 1976, since 1981 this has been at less than 2% Federal spending for housing has not kept pace with other federal spending While total federal budget authority has doubled between 1976 and 2002, HUD’s budget authority has decreased by more than 40%

10. Key Issues: Changing Federal Priorities The recently proposed federal budget makes several major changes to key affordable housing programs Hope VI Allocated no funding under HUD’s 2005 Budget Section 8 Losing $1 billion in funding by 2005, funding decrease of 40% by 2009 New proposed flexible voucher program may discourage more voucher placement in suburban areas of opportunity CDBG Project to be cut by $350 million in 2005 HUD budget

11. Key Issues: Changing Federal Priorities Local impact? Section 8 program impacts The Columbus Metropolitan Housing Authority could lose $7 million in section 8 funds in 2005 Section 8 funding could face a reduction of $18.8 million by 2009 for Columbus Potential impact on more than 10,000 Ohio residents

12. Key Issues: Continued Over Concentration Subsidized housing has traditionally concentrated units in economically depressed and segregated central city neighborhoods Subsidized housing recipients are housed in geographic areas devoid of opportunities such as employment and functioning schools (opportunity poor areas) This has enforced conditions of concentrated poverty and residential segregation in most metropolitan areas In 2000, more than 2/3’s of people living in concentrated urban poverty were African American or Hispanic

13. Key Issues: Continued Over Concentration Focus on Low Income Housing Tax Credit As one of the largest federal housing program impacting construction of affordable units, LIHTC offers an opportunity to locate units in opportunity rich and diverse areas LIHTC vs. Traditional Housing Programs 42% of LIHTC units are located in suburbs, compared to 24% of other project based assisted housing

14. National Trends in LIHTC Project Placement Despite the improvement of the LIHTC program in locating in suburban areas, the program still has substantial room for improvement The majority of LIHTC units 58% are in central city areas, while only 38% of the nation’s metropolitan population live in central cities LIHTC units are still more likely to be located in minority neighborhoods and in neighborhoods with higher poverty rates, lower incomes and lower home values

15. Concentrated Subsidized Housing in Columbus Neighborhood Characteristics of Columbus LIHTC projects in 2000 Poverty rate of 16.4% Columbus MSA Average is 10.1% Median Income of 38,440 Columbus MSA Median is 44,782 Median Housing Value of $112,592 Columbus MSA Median is $120,900 Population is 22.3% African American Columbus MSA is 13% African American Nine percent of units located in high poverty neighborhoods

16. Concentrated Subsidized Housing in Columbus

17. Concentrated Subsidized Housing in Columbus

18. Linking Housing to Opportunity

19. Housing is Key for Access to Opportunity

20. Opportunity Based Housing

21. Opportunity Based Housing Several states are modifying their approach to subsidized housing to target more “opportunity rich” areas Wisconsin Re-evaluating scoring for LIHTC projects based on location in employment growth areas Illinois/Chicago Determining areas of opportunity in Chicago suburbs Agreement with business community to consider workforce housing or transit access for future investments Inclusionary zoning Minnesota – Prioritize LIHTC housing proposals in areas of both high job growth and high population growth

22. Future Needs Regional outlook and regional collaboration for CDC’s and other affordable housing providers Changing federal priorities – need to do more with less Alignment with smart growth and other regional equity movements The housing and job market operate on a regional level, affordable housing needs to be coordinated on a regional level More affordable housing production in areas of opportunity Expansion of state and local initiatives to open areas of opportunity to low income households More inclusionary zoning Incentive placement of housing in areas of opportunity

23. Visit us on-line at http://www.kirwaninstitute.org

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