As development booms in Denver and the number of home renters, including higher-income renters, continues to increase, affordable housing will stay at the forefront of many minds, both for city residents and officials. The number of people who rent their homes instead of own them has increased significantly nationwide over the last several decades, and many cite financial circumstances as the reason for renting. Fortunately, the city of Denver has taken substantial efforts to increase affordable housing, establishing a fund for this purpose last year. The new federal tax bill, however, presents even more challenges to affordable housing projects, challenges that will require more city strategy and possibly more funding.
The affordable housing plan in Denver consists of a $150 million fund over the next ten years aimed at a variety of housing issues including subsidized housing, homeless transitional housing and mixed-income buildings. The project recognizes that despite low unemployment in Denver, housing prices are still too high for many residents. According to the city’s housing report, the estimate of affordable units needed in the city is over 15,000. This need is based on income of residents making 30 percent or less of Denver’s median income. Denver has good priorities when it comes to affordable housing, and it will be important to follow these promises through.
Affordable housing projects in all states experienced a setback last month with the passage of the Tax Cuts and Jobs Act. Since the low-income housing tax credit was created in 1986, housing developers have been able to get credits from state governments to distribute to corporations that buy equity in buildings. Now, with the large decrease in the corporate tax rate included in the new bill, the value of these credits also decreases. Analysis has shown that this could mean 235,000 fewer units nationally over the next 10 years. Denver is already experiencing an affordable housing shortage which will likely be compounded by a decline in these tax credits.
Low-income residents need to be able to live in the city of Denver, and those already living here need to be able to stay. Sky-high housing prices and shortages of affordable units threaten the livelihoods of families and individuals who cannot afford new units or even their own rising rents. Denver’s affordable housing fund and associated projects are encouraging, but it is likely that city funds will now have to replace more money lost due to the lower-valued tax credits.
Affordable housing planning and fundraising, despite difficulties, should continue to be discussed and carried out as promptly as possible, and an increase in local funding should be considered (several ways to do this, including a bond measure, have been proposed by advocacy groups, though these proposals will need more evaluation). The hit to affordable housing caused by the lower corporate tax rate can be a rallying point for cities across the country to redirect attention to caring for citizens who increasingly cannot afford to live in their homes.
