Discussion Forum Topic:

With Biden Plan, American Dream Will Become a Nightmare!
Original Comment:
Roland Reagan once quipped “The nine most terrifying words in the English language are, I’m from the Government and I'm here to help.” Never have those words rang truer than when I read the White House release on the American Jobs Act and the administration’s plan to deliver affordable housing.

The plan proposes to pair $213 billion in direct funding with more than $100 billion in new and expanded tax credits with bipartisan support to build and modernize housing across the country. Specifically, the plan would expand access to federal subsidies that enable the construction or rehabilitation of more than 1 million affordable rental housing units. A significant portion of those funds would bolster the Low-Income Housing Tax Credit program (LIHTC), the primary vehicle to address affordable housing in our country.

Let’s pause right there to address the elephant in the room. The LIHTC Program has not been able to meet anywhere near the need for affordable housing in this country. In our own white paper published in 2019, we cited a report by the National Low Income Housing Coalition in which they reported:

A shortage of seven million available and affordable rental homes for America’s Extremely Low-Income (ELI) renters in its annual report, “The Gap: A Shortage of Affordable Homes 2019,” released on March 14, 2019. This shortage leaves only 37 available and affordable homes for every 100 ELI renter households. The Coalition found that no state or major metropolitan area has an adequate supply of rental housing for its poorest renters.

So, the Administration’s answer is to dump more tax-payer money into a program that is not working. But that’s just the beginning of the problem. In the release, the plan calls for a requirement for employers to pay workers prevailing wages; enter into project labor, community workforce, and local hire agreements; and use workers from registered apprenticeships and other labor or labor-management training programs.

Did you know that the prevailing wage rate for a carpenter in Allegheny County, Pennsylvania is $55.54 with fringe benefits? Given the extreme labor and housing shortage, how will forcing contractors to pay inflated unions rates do anything to help address affordability? Short answer: it will not. It will simply drive developers away from the LIHTC program and construction of affordable housing units altogether. The projects simply will not pencil out.

But we’re not done yet. Yesterday Biden’s Commerce Department leaders also announced their desire to double the tariffs on Canadian lumber from 9% to 18.32%. Does anyone in D.C. realize what has been happening to the price of lumber over the last year? How does adding 9% to the cost of Canadian lumber make housing more affordable. Once again, it does not!

We have been working with various state housing authorities to encourage incentives for developers to be more innovative and efficient. Give them points for tax credits for things like delivering housing in a shorter amount of time, at less costs, or with less environmental impact. Put it back on the developers to drive the innovation and create the efficiencies. But not this!

I’ve been in the government affairs arena for many years. I don’t think I recall any proposal as counter intuitive to its goals as this one. This proposal if passed without changes, will absolutely lead to less housing options and more homeless families. These families do not care about political payoffs to organized labor - they need real solutions. And there are few to be found in this proposal.
Started on May 27, 2021 by Tom Hardiman
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