AS CONGRESSIONAL REPUBLICANS try to fast-track tax cuts, there’s been plenty of reporting about federal studies suggesting rich Americans would come out far better under their plan than the nation’s poor.
What’s been less obvious is that the proposal could rob poor people of housing opportunities as well.
In a move that’s alarmed housing officials, a tax reform package passed by the US House of Representatives on November 16 would eliminate a tool that’s vital for funding affordable housing projects across the country. They’re called “private activity bonds” (PABs), and they enable affordable housing developers to pay for a sizeable portion of the affordable units that are developed or preserved nationwide.
In Oregon, one estimate says killing the bonds could help scrap 2,850 new affordable homes over the next decade, even as other provisions of the tax plan also hamper development. More populous states could lose far more, with California potentially forgoing more than 260,000 affordable units, the study found.
The result? Housing providers are screaming at anyone who will listen. And they’ve been met with conspicuous silence from one Oregon Congressman, US Rep. Greg Walden.
“I’ve sent two emails—one to him directly and one to his staff,” says Tom Kemper, executive director of Housing Works, which provides affordable housing in Central Oregon (part of Walden’s district). “I just got one of those form emails back.”
Walden, the lone Republican in Oregon’s congressional delegation, was also the only Oregon representative to vote in support of the tax plan that would kill private activity bonds. He did so as his district grapples with a housing shortage and skyrocketing rents—and as Kemper is hoping to use the bonds to battle those problems.
Housing Works is closing in on two new affordable developments that rely on private activity bonds—a 42-unit development in La Pine and a 48-unit building in Sisters. The tax plan Walden supported November 16 could dash the deals to pieces.
“This is really serious; it’s really crazy,” Kemper says. “There’s a housing crisis throughout most communities in Oregon.”
Kemper’s not the only housing provider who Walden’s office has ignored. Joel Madsen is the executive director of the Columbia Cascade Housing Corporation, which works to provide affordable housing in the Columbia River Gorge—including Walden’s hometown of Hood River. He says he’s sent “informative emails” about the impact that the House tax plan could have, and hasn’t seen a response from Walden’s office.
A spokesperson for Walden did not respond to repeated inquiries from the Mercury. But if Walden’s not paying attention, he should be.
“Private Activity Bonds are helping to spur affordable housing development across the state, and in particular in rural Oregon and in Representative Walden’s district,” says Ariel Nelson, a spokesperson for Oregon’s Housing and Community Services Department. According to state figures, “the immediate impact of eliminating PABs would be 243 homes under development” in the vast swath of Oregon that Walden represents.
The issue’s far greater than one Congressman, of course. Housing authorities around the country rely on PABs to obtain tax credits, which can then be sold to finance housing projects. There’s still no telling whether the House proposal has legs—the Senate is working up another proposal that doesn’t kill the bonds, and the two bodies will need to agree on any final package. Still, since the idea emerged, the affordable housing industry has been sounding the alarm.
“These tools are essential to our success in Portland and can’t be diminished without serious repercussions,” says Kurt Creager, director of the Portland Housing Bureau. “Unintended consequences could be profound.”
Emily Cadik, director of public policy for Washington, DC-based Enterprise Community Partners and a board member for the Affordable Housing Tax Credit Coalition, says killing PABs could slash development of affordable housing in half nationwide. A study from San Francisco-based accounting and consulting firm Novogradac and Company earlier this month found the tax proposal would kill the development of more than 880,000 affordable apartments over the next decade.
The reason, according to Cadik, is that the funding provided through these bonds is increasingly popular—particularly in states like Oregon facing steep affordable housing shortages. More than a third of affordable units financed with tax credits in the state use PABs, she says.
Without them, “It’s not just harder to finance [those projects], it’s impossible,” Cadik says. “None of those get done. That is why the affordable housing industry is so alarmed right now.”