By Deborah Goonan, Independent American Communities
According to a report in Kenosha News (WI), about 40 homeowners in Creekside Crossing Condo Association are protesting new development that will include rental apartments. Owners say they want to keep their pond view, and fear that seven 120-unit apartment buildings will lower their property values.
Condo owners at the meeting are also dead set against low-income housing, because they fear it will bring more crime to their neighborhood.
But S.R. Mills, President of Bear Development says he’s getting Low Income Housing Tax Credits (LIHTC) to build workforce housing suitable for teachers, firefighters, and single working adults. The apartment owner will not accept Section 8 tenants with subsidized rents.
Despite a different approach to financing, many condo owners still consider the proposed Creekside apartments low-income housing, with the same negative stigma.
Are condos more valuable than apartments?
Some Creekside Crossing condo owners apparently see their properties as more valuable rental apartments. By extension, these homeowners appear to believe they are “better” than tenants.
But what makes dozens of angry condo owners so arrogant?
The fact is, many tenants in the U.S. today are young working adults or older adults living on Social Security. Don’t any of these complaining condo owners have adult children or aging parents living on limited incomes?
Here’s the reality. Due to the high cost of purchasing a home, many tenants will struggle to save money for a down payment to buy a home in the future.
And, in an uncertain economy, many Americans consciously choose to rent so that they can easily relocate for work opportunities.
Older Americans or single adults don’t have the time or ability to maintain a home, so they choose to rent their home. Ironically, the majority of condo owners also buy into the promise of a low-maintenance lifestyle.
So why is it assumed that the condo association will maintain the common property better than an apartment community?
There’s simply no evidence to support this assumption.
Bias against tenants
Likewise, it isn’t fair to assume that all tenants are poor. Nor is it fair to assume that all poor people are irresponsible, and potentially criminals. Most of us began our adult lives with very little money, and many of us may find ourselves living on a low-income budget if we suddenly find ourselves unemployed, especially in our retirement years.
Besides, condo associations are notorious for transitioning from owner-occupied housing to tenant-occupied housing within a decade or two after the project is completed, especially when condo fees begin to rise.
Most of Creekside Crossing Condominium Association’s members may be owner-occupants today, but ten years from now, who knows? By then, many of the units may be occupied by tenants.
In short, condo owner objections to apartment housing, in general, are misguided.
That said, taxpaying homeowners can point to other, more compelling reasons to be wary of this tax-credit funded affordable housing project.
Who builds affordable housing, and why?
In theory, most Americans want housing to be affordable for people of all income levels. But, given the speculative environment of the U.S. real estate sector, the free market does not supply enough modestly priced homes and rentals.
Another problem is local zoning. It seems no one wants their house to be next to an affordable housing complex, particularly one that consists of hundreds of apartments.
Both of these factors create barriers to construction of modestly priced housing.
The government could build low-income and workforce housing, as it did 4 or 5 decades ago. But few taxpayers are in favor of public housing, due to its history of concentrating crime and poverty. Most Americans can point to public housing projects that are poorly managed. Thus, public housing’s negative social stigma.
The problem is, if we’re not willing to use tax dollars to house those who need a decent, safe place to live, how do we convince private developers to build affordable housing?
The government’s current go-to “solution” is to privatize affordable housing. That is, to find ways to pay private developers to build and/or manage affordable housing.
One familiar option for existing housing is to subsidize rent payments. Under the Section 8 Program, a tenant pays the landlord no more than 30% of his monthly income. Then the government agency (such as a Housing Authority) pays the apartment owner the difference between what the tenant can afford and the “market” rent.
However, for various reasons, there’s a shortage of landlords willing to accept Section 8 tenants using Housing Choice Vouchers.
In addition, there are many tenants that earn too much money to qualify for a rent subsidy, but who cannot afford monthly rent that eat up nearly half of their income.
Low Income Housing Tax Credits
To address these problems, the Low Income Housing Tax Credit has become a popular option for developers of affordable housing.
Here’s how it works. LIHTCs reduce a developer’s cost to finance and build housing by taking advantage of Federal tax credits. Government sponsored tax credits can be used to offset the development company’s revenue. Or, more commonly, a developer sells tax credits to investors to raise the cash needed for new construction.
Since Bear Development’s cost to build will be reduced by tax credits, some of the apartments can be leased with monthly rents that are affordable to adults earning 60% of the area’s median income, or less.
But is the Federal LIHTC program financially sound? Does it make the best use of our tax dollars? Or is it a cleverly disguised giveaway to housing developers, builders, and construction companies? And how much profit do investors skim off the top, buying and selling tax credits?
LIHTC projects have a history of poor oversight
The U.S. Government Accountability Office (GAO) wanted answers to these questions, so it conducted a study of the LIHTC program, published in 2018. The GAO concluded that the program requires much more oversight to prevent fraud and waste.
See: LOW-INCOME HOUSING TAX CREDIT:
Improved Data and Oversight Would Strengthen Cost Assessment and Fraud Risk Management
GAO-18-637: Published: Sep 18, 2018. Publicly Released: Sep 18, 2018.
The LIHTC program is also criticized for failing to conduct regular audits, according to the U.S. Government Accountability Office (GAO). In 2017, PBS Frontline published an investigation on affordable housing, exposing poor oversight and waste related to the LIHTC program.
Watch: Housing Program Worth Billions Lacks ‘Basic Accountability,’ Says GAO (NPR) August 1, 20176:13 PM ET, Laura Sullivan
Unfortunately, homeowner prejudice against all renters, as well as fears of lower property values, divert attention away from real problems in the affordable housing industry: a high potential for fraud, waste, and abuse of our tax dollars.
Proposed development draws concerns of crime, loss of property values
By TERRY FLORES, Kenosha News (WI)
Jan 31, 2019
PLEASANT PRAIRIE — A proposed new housing development has drawn opposition from dozens of homeowners who live near the proposed site.
Bear Development’s “The Vista at Creekside” — which would includes 43 single-family lots, a two-family lot and seven, 20-unit apartment buildings with a clubhouse on 62 acres — received unanimous approval from the Plan Commission on Monday.