As discussions swirl around the new federal tax reform plan, it is crucial to understand how these proposed corporate tax cuts can have broader effects on low-income families across our New York state. One of the most destructive elements of this plan involves its impact on hundreds of thousands of New Yorkers living in public housing. Congress cannot ignore that.
For those of us who have reviewed the new tax reform legislation through the lens of public housing, it is clear that this is not a false alarm. At a time when public housing agencies from Buffalo to New York City already face billions of dollars in budget shortfalls, this bill would threaten the very future of public housing by preventing stakeholders from financing many of the repairs needed to keep our buildings standing and keep New Yorkers in their homes.
The fundamental problem here is that the tax plan would eliminate private activity bonds — and while many New Yorkers may not assume that this has anything to do with housing, especially public housing, its impact is huge. The bonds are so important because they generate as-of-right 4 percent Low-Income Housing Tax Credits (Housing Credits), which play a central role in financing the construction and preservation of affordable housing in New York and across the nation. If stakeholders cannot secure the financing needed to pursue costly development projects, affordable housing efforts cannot move forward.
Several housing advocates and organizations, including NYSPHADA and NYSAFAH, recently highlighted that eliminating these bonds would result in an annual loss of around $4.5 billion in statewide affordable housing financing, and prevent the creation of around 17,000 affordable homes per year across New York state.
For public housing authorities and their more than 700,000 residents across the state, this would be especially disastrous because of the severe damage it would do to a critical program known as Rental Assistance Demonstration (RAD).
Lack of funding for public housing means that much-needed repairs to homes and basic infrastructure are already long overdue. This is why public housing residents have for too long faced unacceptable building issues and related quality of life problems — and it is why public housing authorities have worked so tirelessly to create a brighter future for residents through the RAD program, which allows us for the first time to leverage private funds to repair buildings, strengthen public housing infrastructure and support residents.
RAD is key to the future of public housing because it allows us to build partnerships and utilize alternative financing sources to complete repairs and upgrades that would otherwise be impossible.
For example, a RAD partnership recently secured $325 million for much-needed repairs to all 1,395 apartments at New York City Housing Authority’s Ocean Bay in Far Rockaway, a 24-building development that was battered by Hurricane Sandy after facing years of other infrastructure and quality of life problems. This RAD deal is also providing important flood resiliency measures around the development to ensure it is protected against future storms. The program has become so popular with Ocean Bay residents that the New York City Housing Authority and its partners are exploring similar plans at other developments across the city.
But this work would never have been possible without the private financing generated by private activity bonds and LIHTC. And if these resources are lost, it could be virtually impossible to secure other RAD partnerships at public housing properties in desperate need of repairs.
This would be an unacceptable outcome for public housing residents in New York state and across the nation — and Congress must step up now and do the right thing. This flawed tax reform plan must be reworked to ensure that private activity bonds are not on the chopping block. Of course, New Yorkers have other reasons to oppose the tax plan — but we must never forget the impact of federal actions on our public housing communities.
No one can deny that New York’s public housing residents deserve a brighter future and better homes. But unless Congress takes this crucial step to protect private activity bonds, that may never become a reality.