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‘Devastating’ tax bill could cost Bay Area thousands of affordable homes

Posted on December 9, 2017 by

SAN FRANCISCO — The GOP’s tax overhaul would be “absolutely devastating” for California’s efforts to house its low-income residents, Assemblyman David Chiu said Wednesday, speaking from an affordable apartment building that couldn’t have been built without the tax provisions Republicans are seeking to eliminate.

As lawmakers in Washington rush to finalize their tax reform plan, Chiu’s comments underscore what housing advocates have been saying for weeks: the bill will be a major blow to California at a time when the state is experiencing a historic shortage of homes for low-income families. To highlight the real-world implications of the proposal, Chiu, a San Francisco Democrat, and Assembly Speaker Anthony Rendon, D-Lakewood, voiced their concerns from inside a Mercy Housing development in San Francisco that houses 150 low-income families — one-third of whom used to be homeless.

“All the work that we did this year, the hard work of advocates working for years, if not decades on this, could be wiped out overnight if Donald Trump and his Republican allies are successful in passing the so-called tax reform,” said Chiu, who chairs the assembly’s Housing Community Development Committee.

In San Jose alone, the bill threatens to upend 1,381 units of planned affordable housing, many of which are intended to shelter veterans or the homeless, said Ray Bramson, acting deputy director of the city’s Housing Department.

“The result is some of these units either aren’t going to get built at all,” he said, “or they’re going to be delayed a long time.”

That’s because those projects would have been funded largely using a 4 percent low-income housing tax credit — one of the most important weapons used to fight the affordable housing crisis — and one that will be off the table if the tax plan passed by the House becomes law.

“It’s a frightening place for us to head towards,” Bramson said.

bf7fa sjm l taxplan 3 Devastating tax bill could cost Bay Area thousands of affordable homes — Assemblyman David Chiu, D-San Francisco, and Assembly Speaker Anthony Rendon,br /D-Lakewood, meet with local affordable housing advocates to discuss thebr /impact the GOP tax plan could have on the state’s low-income housing on Dec. 6, 2017.br /(Marisa Kendall/ Bay Area News Group)

Developers access those credits through private activity bonds, which the House bill would eliminate. Statewide, those credits fund more than $2 billion in affordable housing construction per year, Chiu said.

The low-income housing tax credits remain under the Senate version of the bill, but they could still take a hit because the plan lowers the corporate tax rate, which would also lower the value of the tax credits, housing advocates say. Republicans say the overhaul would simplify an outrageously complex tax code, and Speaker Paul Ryan promised the House bill would save an average family of four nearly $1,200 a year on their taxes.

Oakland stands to lose 1,497 planned affordable housing units if the tax credits are jeopardized, according to Michele Byrd, director of the city’s office of Housing Community Development.

San Francisco has about 6,000 units of affordable housing in the pipeline that could become a casualty of tax reform. And the city has another 4,400 units already under construction, which it must now scramble to protect, said Kate Hartley, director of the Mayor’s Office of Housing and Community Development. Developers must rush to tap available bonds before they vanish in the tax overhaul, and in so doing, they will rack up between $10 and $20 million in extra interest costs — money that could otherwise have been used to house more people in need.

“The harm done to our communities across the country by these provisions is severe,” Hartley wrote in an email.

bf7fa sjm l taxplan 1207 2 Devastating tax bill could cost Bay Area thousands of affordable homes — A Mercy Housing sign is visible outside an affordable housing developmentbr /in San Francisco’s Mission Bay neighborhood. The building couldn’t havebr /been completed without substantial help from the tax credits the GOP taxbr /plan threatens to eliminate. (Marisa Kendall/ Bay Area News Group)

On Wednesday, Chiu spoke to Hartley and other affordable housing advocates inside one of the buildings that might have been on the chopping block if the GOP’s reforms had come a few years earlier. The group gathered in a communal room at the heart of the Mission Bay apartment complex, a short walk from ATT Park. A Christmas tree shimmered in the corner — evidence that staff is preparing to host a holiday dinner and gift exchange in a few weeks for the building’s low-income residents, including more than 250 children.

Low-income housing tax credits contributed more than $30 million toward building Mercy’s Mission Bay apartments — more than 40 percent of the project’s total construction cost, said Barbara Gualco, director of real estate development for Mercy Housing California.

“We wouldn’t have been able to build this without them,” she said. Gualco, the housing advocates and the politicians had just visited the cozy apartment of a mother and her three children, all of whom used to be homeless.

The idea of losing the tax credits that helped fund that family’s new home is “unimaginable,” Gualco told Rendon as they continued their tour. “It feels apocalyptic.”

Article source: http://www.mercurynews.com/2017/12/06/gop-tax-plan-devastating-for-ca-housing-crisis-assemblyman-chiu-says/

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