Corporate tax cuts blocked at least 15,000 affordable homes in California. Here's how

[DonViejo]

BY KATE IRBY
JULY 16, 2019 09:00 AM

WASHINGTON - Affordable housing advocates warned that the corporate tax cuts passed by Republicans in 2017 could have disastrous effects on the development of more affordable housing. More than two years later, independent data shows it has meant at least 15,000 delayed or killed affordable housing units in California alone.

The low-income housing tax credit is the primary federal program for funding affordable housing projects. It promises a tax credit to private companies — usually banks — that fund housing accessible to low-income families. It’s a program that has received broad bipartisan support over the years.

But when the Republican tax cuts lowered the corporate tax rate from 35 to 21 percent, it had the unintended effect of lowering the potential benefits of the tax credits. Scott Hoekman, president of Enterprise Community Partners, a company that manages funds for the tax credits nationwide, estimated that meant companies were willing to invest about 10 to 15 percent less than they had before the 2016 election, cutting off a major source of funding and derailing thousands of projects.

In California, that meant about 10,000 delayed or killed housing units in 2017 and 5,500 in 2018, according to Matt Schwartz, president and CEO of the California Housing Partnership, and a 23 percent decrease in affordable housing production — from about 24,000 units in 2016 to less than 19,000 in 2018.

That represented an estimated $1.4 billion less in investment in affordable housing in the state between 2016 and 2017, and $400 million less in 2018 compared to 2016.

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