The purpose of this week’s post is to echo an editorial that appeared in the Baltimore Sun a few days back, titled, “Baltimore needs the federal housing tax credit.” The opinion piece was penned by David Abromowitz and Jack Manning, who are, respectively, a fellow at the Center for American Progress and the C.E.O. of a Boston-based real estate finance firm, Boston Capital. Their editorial is a pressing one, as speculation over exactly which government programs will be slashed by the newly created, bipartisan debt reduction commission pervades the public sector, particularly housing and community development NGOs like St. Ambrose, whose livelihood often depends on federal programs. The authors points out that the private sector may take a hit as well, as programs like the federal housing tax credit thrive as a result of public-private partnerships, involving investors on one side and newly resourced renters on the other.
The article makes several good points, the pith of which is copied below:
Beyond this picture, the authors deliver several cold, hard facts, all of which buttress their position that right now, it’s crucially important for the government to assist renters in the process of securing an affordable home. They argue that: 1) for various sociological reasons, the population of renters is soaring while an adequate supply of affordable rental housing does not exist to meet this demand, making rental units less affordable. 2) This exact tax credit has proven effective in the past, as it requires private investors to sink their own money into a project, which usually ensures that property owners remain accountable to their tenants, maintain their properties well, and keep rents low—the success of the credits are evidenced in the fact that foreclosures on tax credit properties occur rarely. 3) Thousands of new construction related jobs would be created by new tax credit opportunities—“In Baltimore this year alone, roughly $5 million in housing tax credits just awarded will spark more than $60 million in new construction and rehabilitation of nearly 300 rental units.” 4) Finally, the tax credits will lead to community stabilization and help encourage diverse neighborhoods, both of which this city must maintain as we head forward into the recession.
This editorial comes on the heel’s Vinnie Quail’s recently published Letter to the Sun’s editor, in which Vinnie defends the President’s stimulus program, arguing that the program has, contrary to popular opinion, delivered stability and job creation in Charm City: “Baltimore suppliers, hardware stores, contractors and their families thank God for the President’s stimulus program. America’s unemployment problem is certainly real but would be much worse were it not for the stimulus program.”
Moreover, recently, multiple new outlets have reported a revealing study by the web site Trulia, which found that buying real estate was cheaper than renting in roughly three quarters of the nation’s fifty largest cities, an increasing trend that has resulted from the combination of a depressed housing market, a sharply increased demand for rental units, and low interest rates. The news further supports the notion that governmental assistance to renters is critical in this poor economy.
Frankly, NGOs too often function as some of the most potent providers of low-income housing in cities across America. While non-profits (or “charities”) remain a popular bastion of welfare services in a time of cuts, few people know the extent to which government funding plays a role in helping us do our job well, whether the funds be direct—in the form of grant money, for instance—or indirect. Tax credits for lower-income Americans comprise the latter, but they nevertheless help us deliver our service to a wider swath of Baltimore residents, ultimately leading to more stable neighborhoods.