By Jeff Andrews
February 25, 2020 —
With home prices having long since surpassed their pre-financial crisis peaks, many Americans can’t afford to buy a house. And in urban areas, where jobs are often concentrated, Americans are struggling to make rent. We’re in the middle of an affordable housing crisis.
And while the Trump administration has targeted rental-assistance and public housing programs for drastic cuts, putting low-income Americans at risk of eviction, Democratic presidential primary candidates have made housing policy a major issue in the 2020 election.
Building more affordable housing
The National Low Income Housing Coalition (NLIHC) estimates that 7 million affordable housing units are needed to eliminate the shortfall of available affordable housing units for the lowest-income Americans.
To fill this need,the NLIHC has recommended funding the National Housing Trust Fund—a relatively new and woefully underfunded HUD program used to build and rehabilitate affordable housing—to the tune of $40 billion annually.
Democrats are taking this recommendation, albeit to varying degrees. Klobuchar’s plan allocates $40 billion annually to the fund, while Warren gives $50 billion annually, and former South Bend, Indiana, mayor Pete Buttigieg allocates $17 billion annually. Former New York City mayor Michael Bloomberg has no specific allocation to the Housing Trust Fund in his plan. Former vice president Joe Biden gives $20 billion annually to the fund.
Sanders dwarfs all of these with a massive $148 billion annually to the Housing Trust Fund, and he would use the fund in part to maintain and expand the public housing stock.
Investing in public housing
Public housing has been on a gradual decline since the implementation of the HOPE VI program in the mid-1990s, but in the wake of the affordable housing crisis, Democrats in Congress and on the campaign trail have proposed not only updating existing public housing units, but expanding the stock for the first time in decades.
Sanders and the left flank of the Democratic Party have led the push. Sanders has also introduced a bill, along with Rep. Alexandria Ocasio-Cortez and Warren as co-sponsors, called the Green New Deal for Public Housing Act, which would retrofit public housing units to be eco-friendly and energy efficient, in addition to providing workforce training for public housing residents. The bill also repeals the Faircloth Amendment, which bans any net increase in public housing units.
These vouchers cover any amount in rent that’s above 30 percent of a tenant’s income. So if a voucher holder’s rent is $1,000 and 30 percent of their income is $800, the voucher covers $200. They are invaluable to renters who have them, but because the program is woefully underfunded, only about a quarter of those who qualify receive one. Renters qualify if they make less than 50 percent of their city’s area media income.
Democratic candidates have proposed both increasing funding to the voucher program and changing the qualifications for it. Sanders would fund the program with $410 billion over 10 years so that all who qualifyfor a voucherreceive one. Biden’s plan proposes the same. Klobuchar and Buttigieg would fund the program so that all families with children who qualify receive a voucher, meaning that the budget shortfall would only affect people without children. Bloomberg says he would expand the program but provides no other details. Warren does not address vouchers in her housing plan.
YIMBY candidates vs. NIMBY candidates
Empty lots available for development are becoming increasingly scarce, particularly in high-cost urban areas like New York, Los Angeles, and San Francisco, and Democrats and affordable housing advocates have identified local zoning laws as a barrier to building more housing in areas starved for more supply.
Limits on how high a building can be and minimum parking requirements are often called “Not In My Back Yard,” or NIMBY, policies. The movement to roll these policies back is aptly called YIMBY, or “Yes in My Back Yard.”
Because these laws are administered at the local level, federal policy can’t do much to directly change these laws and instead attempts to incentivize—or punish—local governments to change them.
Warren’s plan puts $10 billion into a new grant program communities can use to build infrastructure, but local governments have to reform land-use laws to be eligible. Klobuchar and Sanders propose “prioritizing” local governments that reform local zoning laws when allocating federal housing and infrastructure funds, but don’t specify which ones. Buttigieg plans to “work with cities and states to reform local zoning laws” but has not announced details. Bloomberg does not address zoning in his housing plan.
Biden proposes a Local Housing Policy Grant program, funded with $300 million. To be eligible for the grants, municipalities would have to have a plan for reducing zoning barriers. He also proposes making Community Development Block Grants and Surface Transportation Block Grants contingent on a zoning plan.
However, it’s an open question whether these proverbial carrots and sticks will have an impact in the places where zoning reform is needed most—wealthy communities. Zoning barriers and NIMBYism are usually prevalent in areas that have high property values and thus a strong tax base, meaning they aren’t as reliant on federal funding for infrastructure needs, or they don’t get that money to begin with. Those local governments may just forego the federal funding rather than reform zoning laws.
Low Income Housing Tax Credits
Enacted as part of the Reagan administration’s tax reform law in 1987, Low Income Housing Tax Credits (LIHTCs) are one of the biggest sources of affordable housing production in the United States. LIHTCs are tax credits available to real estate developers who set aside a percentage of new developments for below-market-rate units available to low-income earners.
But the Trump administration’s 2017 tax law lowered the corporate tax rate and thus the value of LIHTCs, which in turn will lead to fewer affordable housing production. Democratic candidates have proposed expanding the program to offset the damage done by the Trump tax law.
Steyer has proposed expanding the credits by 50 percent. Klobuchar and Bloomberg have proposed expanding them but don’t specify by how much. Sanders, Warren, Biden, and Buttigieg do not address LIHTCs in their plans.
Adding eviction protections
Matthew Desmond’s landmark book Evicted: Poverty and Profit in the American City has raised awareness of the devastating effects eviction has on families. Eviction can make it harder to find another place to live and hold down a job, and it can interrupt a child’s education if they have to switch schools as a result.
Klobuchar’s plan would guarantee legal representation for people facing eviction and ban landlord blacklisting of people who have gone to court over eviction (regardless of whether they won or lost their cases), and reverse Trump administration policy on fair housing protections. Warren proposes a Tenant Protection Bureau that would give tenants the right to sue landlords.
Biden supports the Legal Assistance to Prevent Evictions Act of 2020, and would establish a renter and homeowner bill of rights in hopes of reducing the impact of evictions.
Buttigieg and Bloomberg have voiced support for expanded federal protections for tenants against eviction but haven’t provided specifics. Sanders does not directly address eviction in his plan.
Tackling the homelessness crisis
Affordable housing advocates believe homelessness became official policy of the federal government when President Richard Nixon put a moratorium on the construction of public housing and then President Ronald Reagan enacted drastic cuts to rental-assistance programs. With housing costs rising since the financial crisis of 2008, the problem has only gotten worse, particularly in California.
A Sanders administration would invest $32 billion over five years to combat homelessness, including support for outreach services for those experiencing chronic homelessness. He also provides $15 billion to enact a 21st Century Homestead Act, an initiative to “purchase and revitalize abandoned properties to create community and individual wealth and assets for historically disadvantaged communities.”
Buttigieg supports the 21st Century Homestead Act and has stated he wants to “end homelessness for families with children,” but hasn’t provided specifics. Biden wants to put $5 billion into McKinney-Vento Homeless Assistance Grants, which fund local communities or nonprofits looking to aid the homeless population. Klobuchar calls for increased investment in homeless assistance grants but doesn’t specify by how much.
Bloomberg wants to tie the receipt of federal funds to cities that adopt rapid rehousing strategies for people experiencing homelessness. He also calls for $6 billion in funding for homelessness support services.
Fair housing and ending discrimination
HUD secretary Ben Carson has spent most of his term attempting to roll back Obama-era civil rights regulations aimed at strengthening provisions of the Fair Housing Act of 1968. Warren has proposals to advance fair housing among people of color who’ve historically faced discrimination. Sanders said he’ll promote robust legal protections for fair housing and take steps to eliminate racial discrimination and gentrification. Warren, Biden, and Bloomberg would reinstate the Affirmatively Further Fair Housing (AFFH) rule, an Obama-era regulation that provides local governments tools to root out housing discrimination. The Trump administration suspended the rule in 2017 and is proposing changes to it that have been met with opposition from affordable housing advocates.
Warren proposes a Tenant Protection Bureau modeled after the Consumer Financial Protection Bureau, which she helped create. The bureau would enforce federal standards like just-cause eviction, and the bureau would establish and enforce federal standards for evictions and lease renewals. She also proposes a small dollar grant fund to ensure families aren’t evicted because of financial emergencies.
Warren’s plan provides down payment grants to first-time homebuyers who live in areas that were previously redlined or officially segregated. It also puts $2 billion toward supporting people with negative equity on their mortgages caused by the financial crisis, and it restructures the Community Reinvestment Act (CRA) of 1977—which requires banks to invest in the communities where they have branches—to give it stronger enforcement mechanisms. Klobuchar and Biden also call for “strengthening” the CRA.
Klobuchar also proposed changing credit score parameters to include rent payments, phone bills, and utilities so that people of color have more options for building strong credit and thus have a better chance of qualifying for a mortgage. Klobuchar and Warren both propose to ban discrimination against people using housing vouchers to pay for rent.
Introducing a tax credit for renters
A renters tax credit would give taxpayers a credit for the amount they pay in rent above 30 percent of their income. So, if you paid $15,000 in rent in a year and 30 percent of your income was $10,000, you’d get $5,000 from the federal government in the form of a tax credit.
This idea was introduced in legislation proposed by Sen. Cory Booker, who has since left the race, but Biden has proposed $5 billion in renter’s tax credits.
But critics of the plan, such as the Wall Street Journal editorial board, say the cost of the proposal would be astronomical (the Booker campaign estimates it would cost the federal government $134 billion annually) and that the tax credit would essentially be a handout to landlords that would drive up rents. If the federal government covers anything above 30 percent of a renters income, what’s to stop landlords from arbitrarily raising rent, knowing it won’t have an impact on tenants?
States across the country have enacted forms of a renters tax credit, but they come with income restrictions and caps on the size of the credit. Booker’s plan would cap the tax credit at a fair market rent, meaning low-income renters couldn’t lease a luxury apartment and have the federal government pay for it