Download - Housing Economics - David Kunhardt
Sustainable San Rafael – Housing Choices in MarinSan Rafael, CASeptember 17, 2014
Affordable Housing Economics
David Kunhardt
The Housing Continuum
0 60%
Home Ownership
*2014 Median Income for a family of four is $97,100, per County Housing Element Update.
Served by LIHTC Program
Supportive Housing SolutionsRental Housing
Extremely Low $0 to $33k
Very Low $33k to
$55kLow $55k-$89 Moderate Income
$89k to $126k
Percent of Area Median Income*
30% 50% 80% 100% 120%
Federal Tax Support for Housing (Billions)
LIHTC Capital Gains Deferral
Property Tax Deduction
Mortgage Int. Deduction
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$8 $20
$28
$85
Federal Tax Support for Housing (Billions)
LIHTC Capital Gains Deferral
Property Tax Deduction
Mortgage Int. Deduction
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$8 $20
$28
$85
Homeowners / Renters Subsidies = 17- to – 1
National vs. Marin Home Ownership Ratio
65.5%
34.5%Owner Renter
National Homeowner Ratio = 2/3rds
75%
25%
Marin Homeowner Ratio = 3/4ths
National vs. Marin Home Ownership Ratio
65.5%
34.5%Owner Renter
National Homeowner Ratio = 2/3rds
75%
25%
Marin Homeowner Ratio = 3/4ths
Therefore, Marin uses a disproportionately high level of tax subsidies -- for homeowners on the high end
Public Housing Authorized 1937 Great Society programs in 60’s & 70’s provided boost to private-
sector housing production via loans and loan guarantees. Circa 1972, “syndication” launched to raise private equity 1974: CDBG, and Section 8 in Project-Based & Tenant Vouchers About 1.6 million families receive tenant-based assistance And about 2 million units of private housing produced…so far
Short History of Affordable Housing
In 1986, Tax Reform Act passed: Removed incentives to invest in real estate Initiated Low Income Housing Tax Credit (LIHTC) Codified syndication to raise private equity for housing
1987 to 2013, +/- 2.4 million of LIHTC housing units Housing for people with jobs in our high-service economy:
Retail, Food Service, Car Service, Health-Care, Day-Care
New Evolution in Affordable Housing
Relative Quantities of Affordable Housing
0
0.5
1
1.5
2
2.5
PublicHousing
Sec 202 &811
HUD $Private
Tenant-Based Sec
8
Sec 42LIHTC
Federally Subsidized Units (Millions)
Shift in Housing Leadership Focus
WAS
Federal Agenda-Setting: HUD Public Agency Action HUD compliance Federal Funds Availability Emphasis on cheaper One size fits all
BECAME
State Agenda-Setting (QAP) Private Action, supported Private compliance, reviewed Lender & Investor Initiatives Emphasis on Market Quality Celebrate Diversity
Credits Mean More Equity, Less Debt
Debt, 75%
Equity, 25%
Other0%
Traditional Finance
Debt25%
Equity65%
Other10%
Section 42 - "9%" LIHTC
Affordability With Lower Leverage: Incentive is Equity, not Debt:
Affordable – Rotary Valley Senior Village
LIHTC relies on recorded Regulatory Agreement and Section 42 Regulatory Agreement sets forth:
Term of affordability Depth of affordability (maximum household income) Maximum rents Other service commitments Penalties for noncompliance Unresolved noncompliance ...Means credit recapture
Warner Creek Senior Homes, Novato:
What Makes Housing Affordable?
How Long are Property Restrictions?
Tax credits claimed over 10 years, but compliance period is >15 years Extended use period runs from years 16 through 30 – in CA, 55 years
Creekside in Hamilton Field
Key Ratios for LIHTC
Spend more, get more Credits (up to cost limits) = Quality Credits approx. 85% of project hard cost (over 10 yrs) Equity paid for Credits can be 100% = Efficient And Debt is less More Credits when more low income households served Rents @30% of Low- and Very-Low Income (30% to 50% of AMI) Rents at least 10% under market (Investor standard) Expensive land major drag on feasibility density.
Affordable Apts. at Drakes Way, Larkspur
Affordable properties more handsome than Luxury
Equal to Superior Amenities
Affordable Community Benefits
Non-profit managers work:
Education programs
Scholarships
Special needs
Family support
HomeownershipComputer Center at San Clemente Place
The Housing Continuum & Transportation
0 60%
Home Ownership
Served by LIHTC Program
Supportive Housing SolutionsRental Housing
Extremely Low $0 to $33k
Very Low $33k to
$55kLow $55k-$89 Moderate Income
$89k to $126k
Percent of Area Median Income
30% 50% 80% 100% 120%
Own fewer cars; drive less Own more cars; drive moreBest located near town & transit Can be disbursed—with cost
Action Steps – What Can I Do?
Pass City & County Housing Element Updates Affirm support for projects that have been in local plans:
Marinwood Plaza Fairfax Housing Element Properties Whistlestop in San Rafael Seminary in Strawberry
Affordable homes complete the community, economically Support Habitat for Humanity and First-Time-Buyer
Homeownership programs
Time for Panel Interaction, then Q&A
Edgewater Place - Larkspur