SAN FRANCISCO—The proposed changes to the corporate tax rates freezes funding for affordable housing, according to James Silverwood, president and CEO of Affirmed Housing Group and board president of the California Housing Consortium. Silverwood recently discussed the issues surrounding the slowed pace in this exclusive.
GlobeSt.com: What impact has the proposed overhaul had on affordable housing?
James Silverwood: The proposed federal government tax overhaul has slowed the affordable housing industry to a pace that will further impede efforts to provide housing at a reasonable cost for millions of Americans. A tedious process filled with red tape, the development of affordable housing takes at least a year or two of planning before construction can begin. As we have heard, the new administration has vowed to lower taxes for business, which unfortunately has resulted in a halt since December 2016 in the issuance of letters of intent from major investors across the board. The big banks are in a holding pattern and although they are still interested in the LIHTC program as its meets their federal mandate for CRA investments, they have been reluctant to commit to specific deals, and those they have committed are at much higher yields and thus lower prices paid to affordable housing developers for the tax credit.
GlobeSt.com: How have you seen the impacts of this issue first hand?
Silverwood: Our firm, for example, currently has a California pipeline of over 900 affordable homes for families, seniors, homeless and our veterans. Those 900 homes are slated to begin construction in 2017 and 2018, and for the most part are only missing the tax credit award or funding commitment for the LIHTC. Because of the disruption in the marketplace, some of those homes, sorely needed as they are, may never come to fruition.
The gap in housing available is going to have an immense effect on our economy. Currently, the availability of affordable housing is minimal and the shortfall of past production has led to national housing issues. These issues will worsen. In the state of California, one in three families can't afford their rent and 1.5 million households in California pay more than half of their income on rent. This means choosing between paying rent or buying medication, buying school supplies, car repairs, even food, which should not be the way our society functions. This includes approximately 669,207 families with children, 332,821 seniors, 250,185 disabled persons and 94,603 veterans.
GlobeSt.com: What are you proposing as a call to action?
Silverwood: The current housing crisis is unprecedented and worse than anything in California history. Not only are Californians affected, but the housing crisis spans the nation. We call on Congress to not only protect the LIHTC but to increase the allocation of credits and fix the 4% credit rate, and for the investment community including the big banks to move forward now with its investments before we create an even bigger housing crisis.
SAN FRANCISCO—The proposed changes to the corporate tax rates freezes funding for affordable housing, according to James Silverwood, president and CEO of Affirmed Housing Group and board president of the California Housing Consortium. Silverwood recently discussed the issues surrounding the slowed pace in this exclusive.
GlobeSt.com: What impact has the proposed overhaul had on affordable housing?
James Silverwood: The proposed federal government tax overhaul has slowed the affordable housing industry to a pace that will further impede efforts to provide housing at a reasonable cost for millions of Americans. A tedious process filled with red tape, the development of affordable housing takes at least a year or two of planning before construction can begin. As we have heard, the new administration has vowed to lower taxes for business, which unfortunately has resulted in a halt since December 2016 in the issuance of letters of intent from major investors across the board. The big banks are in a holding pattern and although they are still interested in the LIHTC program as its meets their federal mandate for CRA investments, they have been reluctant to commit to specific deals, and those they have committed are at much higher yields and thus lower prices paid to affordable housing developers for the tax credit.
GlobeSt.com: How have you seen the impacts of this issue first hand?
Silverwood: Our firm, for example, currently has a California pipeline of over 900 affordable homes for families, seniors, homeless and our veterans. Those 900 homes are slated to begin construction in 2017 and 2018, and for the most part are only missing the tax credit award or funding commitment for the LIHTC. Because of the disruption in the marketplace, some of those homes, sorely needed as they are, may never come to fruition.
The gap in housing available is going to have an immense effect on our economy. Currently, the availability of affordable housing is minimal and the shortfall of past production has led to national housing issues. These issues will worsen. In the state of California, one in three families can't afford their rent and 1.5 million households in California pay more than half of their income on rent. This means choosing between paying rent or buying medication, buying school supplies, car repairs, even food, which should not be the way our society functions. This includes approximately 669,207 families with children, 332,821 seniors, 250,185 disabled persons and 94,603 veterans.
GlobeSt.com: What are you proposing as a call to action?
Silverwood: The current housing crisis is unprecedented and worse than anything in California history. Not only are Californians affected, but the housing crisis spans the nation. We call on Congress to not only protect the LIHTC but to increase the allocation of credits and fix the 4% credit rate, and for the investment community including the big banks to move forward now with its investments before we create an even bigger housing crisis.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
