Updated March 22, 2018: Congressional leaders yesterday decided to ignore all of these budget recommendations and actually increase funding for some of the programs that Trump wanted to eliminate. Read more about this from the National Low Income Housing Coalition. Their spending bill must still be voted on by the House and Senate.
The excellent planners and researchers at CMAP, the Chicago region’s official planning organization, have analyzed the proposed federal budget for 2019. President Trump is proposing to reduce affordable housing construction and maintenance.
There are important and drastic changes for several of our customers, including village planners, economic development analysts, affordable housing developers, housing authority staff, and property developers who specialize in using tax credits and grants to build.
In a nutshell, CMAP wrote in a policy update last week,
Resources to support housing choice for low- and moderate-income residents would decrease, as would funds that communities use to improve disinvested areas. Decreased funding could limit regional efforts to address land conservation, water resource management, and climate resiliency goals. Cuts would also limit workforce development, economic innovation programs, and data collection employed for a wide range of planning purposes.
Trump’s budget would eliminate these programs:
- Choice Neighborhoods
Grants to plan and build upgrades for public and HUD-assisted housing - Community Development Block Grant (CDBG)
Illinois received $105 million in grants in fiscal year 2017 — funds affordable housing, and grants to retain local businesses - Home Investment Partnerships (HOME)
Illinois received $25 million in grants in FY17 — funds affordable housing - Self-Help Homeownership Opportunity (SHOP) program
HUD: “SHOP awards grant funds to eligible national and regional non-profit organizations and consortia to purchase home sites and develop or improve the infrastructure for affordable non-luxury housing for low-income persons” - Public Housing Capital Fund
Funding for housing authorities to build and modernize public housing - Community Development Financial Institutions (CDFI) Fund
Loans and grants for new construction of housing and retail in distressed communities; there are at least three major CDFIs that would be affected: Community Investment Corporation (CIC), Chicago Community Loan Fund (CCLF), and Neighborhood Housing Services (NHS) - The budget would also reduce the amount of rental assistance.
These cuts are on top of the concern that Low Income Housing Tax Credits (LIHTC) has a lower value, given that Congress and Trump reduced the corporate tax rate from 35 percent to 21 percent. These tax credits are sold by affordable housing developers to help fund the project. The Los Angeles Times described how LIHTC works:
Government agencies award the credits to developers, which then sell them to big banks and other investors along with an equity share in their projects. The investors pay not only for the direct credit but also for the right to deduct depreciation and certain expenses as owners.
But with a lower federal tax rate, those owners now don’t benefit as much from the write-offs and thus they aren’t willing to pay developers as much in order to keep rents low.
For a national overview of the impacts of the budget cuts, look at the National Low Income Housing Coalition.
The impacts in Chicagoland would be damaging, and it’s likely that fewer organizations and companies would be able to obtain financing to construct new or renovate existing affordable housing in the region. CMAP staff wrote:
“GO TO 2040 [the official regional plan in Chicagoland] and subsequent CMAP work highlight the importance of providing housing options for low-income residents, particularly in areas with access to jobs, services, and transit; the reductions to HOME and CDBG would limit opportunities to provide affordable housing in communities with access to these amenities.”
Neighborhood news
- I’ve helped organize an all-women panel to talk about gentrification and displacement issues, focusing on public amenity investments and how affordable housing gets built. March 22, 6 PM, at the Currency Exchange Café in Washington Park (next to the Garfield Green Line station). There will be free food. Co-sponsored by ChiHackNight (of which Chicago Cityscape is a sponsor) and City Tech Collaborative.
- “Using anonymized credit and debit card transaction data from Chase bank, the bank’s study found that a Chicago South Side resident on average traveled over four miles away from their home to make a purchase, while residents of the North Side of Chicago on average traveled less than two miles.” (Next City)
- The City of Chicago is planning a permaculture landscape on Fifth Avenue in East Garfield Park, paid for by $500,000 in Open Space Impact Fees (something developers pay when they built multi-family housing without enough on-site open space) and $500,000 from the Water Reclamation District. Details are slim: I gather from the press release that it will exist across several, scattered city-owned parcels.