Tax credits are affordable housing's most powerful tool. How do they work, and who benefits from them the most?

by Ben OlivoJune 9, 2020

ask Romero
it seems like its a very uphill battle to put AH in the city
can the school handle the kids
what baout the traffic
what about the noise
what about the heat island

From left: Rene, 25, Zechariah, 3, and Arely Duron, 25, inside their residence at the Rio Lofts Monday, Feb. 10 at 323 W. Mitchell. Photo by V. Finster | Heron Contributor
The Duron family, Rene (from left), Zechariah and Arely, talk about living in the Rio Lofts near the Mission Reach. Photo by V. Finster | Heron contributor

They are called low-income housing tax credits, a program offered by the Internal Revenue Service that's been called the best tool for building affordable housing. Some housing experts refer to them as "free money." Here's roughly how they work: A developer obtain the credits through a highly competitive process, and sell the tax credits to investors in exchange for cold hard cash that's used to finance the new housing. Investors like Google and Wells Fargo, who use the tax credits to get a portion of their tax obligation deferred.

STATS
what is occupancy at tax credit properties

They help people looking for all ranges of affordable housing.
these are people who have jobs and children
Durons
Phyllis Phillips
???

They can also be very controversial. Developers are encouraged to engage the communities they want to build affordable housing in, which often leads to NIMBYism, the acronym for the phenomenon also known as "not in my backyard." Last year in San Antonio, a local council member tipped the scales during the local process so that it benefited a certain part of town more than the others, a tactic not appreciated by her peers. It also puts into question how much developers are profiting from the program, some of whom's whole business model is building tax credit projects.

frontline

/ / / / / evictions???

millions of families became renters
at the same time, incomes were going down
that lead to a rental affordaiblity crisis that's as bas as its ever been in our history

we have over $11M houeholds spending more than half of their income on housing
Nal Loe income housing coalition

section 8 vouchers, applications, thousands of residents
voucher pays the difference between monthly rent and what the household can afford

section 8
younger kids are sig more likely to finish school, go to college, earn more money, not have teen pregnancy
the younger the kids, the bigger the impact

1933
public works administration began to build public housing / / / / /

??? questions
like a regular development
lender
investors / equity
rate of return???
% they cover
who do you sell to?
free money??
what's the difference between 4% and 9%

...

Missing middle

From left: Arely, 25, holds daughter Juliette, 10 months, while Zechariah, 3, sits on father Rene Duron’s, 25, shoulders Sunday, Feb. 16 at Confluence Park. Photo by V. Finster | Heron Contributor
From left: Arely, 25, holds daughter Juliette, 10 months, while Zechariah, 3, sits on father Rene Duron’s, 25, shoulders Sunday, Feb. 16 at Confluence Park.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Rene and Arely Duron, both 25, were driving by the near South Side when they saw some brand new apartments being built across from Confluence Park. They were looking to move from an apartment complex on the northeast side, where they were paying more than $900 for a tiny apartment where they fit the two of them and their two young children.

"I'm curious about what it's going to cost," Rene remembers thinking at the time. "I'm sure we can't afford it."

» WHO LIVES HERE
missing middle
Duron family
MHPTF stats or NHSD stats
little understood
Frontline
May 9
2017
Frontline link
why they are so controversial???

...

The 95-unit Museum Reach lofts, an affordable residential project by nonprofit developer Alamo Community Group, is under construction at 1500 N. St. Mary’s St. Photo taken Jan. 19, 2020. Photo by Ben Olivo | Heron
The 95-unit Museum Reach lofts, an affordable residential project by nonprofit developer Alamo Community Group, is under construction at 1500 N. St. Mary’s St. Photo taken Jan. 19, 2020. Photo by Ben Olivo | Heron BEN OLIVO | HERON

How they work

How they work
Who buys tax credits
tdhca
... let's take a break here

...

The services they provide

Phyllis Phillips, 53, poses for a portrait inside the Community Center at Montabella Pointe apartments Monday, Feb. 10 at 5121 N. Foster Road. Phillips served over 18 years in the Army and involves herself in as many veterans activities as she can at Montabella Pointe. Photo by V. Finster | Heron Contributor
Phyllis Phillips, 53, poses for a portrait inside the Community Center at Montabella Pointe apartments Monday, Feb. 10 at 5121 N. Foster Road.
Phillips served over 18 years in the Army and involves herself in as many veterans activities as she can at Montabella Pointe.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Services
Phyllis Phillips

...

Public outreach

...

Here in San Antonio

At the CC level
Last year's process

...

This year's applicants

the tenant or the developer?
madhouse, whole business model

/ / /

WHO BUYS THE TAX CREDITS??? WHO DO YOU SELL THE TAX CREDITS TO?

WHO ARE THE MAJOR PLAYERS LOCALLY? WHO ARE ALL THE PLAYERS LOCALLY THE LAST 10 YEARS?

DO THEY ALL ACCEPT SECTION 8 VOUCHERS???

ARE NEIGHBORHOODS AGAINST LIHTC THIS
check the CC A from the last time

/ / /

From left: Arely, 25, swings Juliette, 10 months, while Zechariah, 3 laughs after and Rene Duron, 25, pushes his swing Sunday, Feb. 16 Concepción Park. Photo by V. Finster | Heron Contributor
From left: Arely, 25, swings Juliette, 10 months, while Zechariah, 3 laughs after and Rene Duron, 25, pushes his swing Sunday, Feb. 16 Concepción Park.
Photo by V. Finster | Heron Contributor V. Finster | Heron Contributor
From left: Zechariah, 3 , climbs while Arely, 25, holds daughter Juliette, 10 months, and Rene Duron, 25, makes faces at Juliette Sunday, Feb. 16 Concepción Park. Photo by V. Finster | Heron Contributor
From left: Zechariah, 3 , climbs while Arely, 25, holds daughter Juliette, 10 months, and Rene Duron, 25, makes faces at Juliette Sunday, Feb. 16 Concepción Park.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Contact Ben Olivo at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

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SA fluctuations
» how is tax credit units
» section 8 vouchers (move with tenants)
» section 8 assistance tied to buildings
» public housing

understand the amount awarded, and how much the developer actually gets

is it altruistic or is it a better profit model than for-profit, because it's free money?

sophia

» low-income housing tax credits and the Fair Housing Act
no provisions reducing racial segregation

is it moving poor people to affluent neighborhoods , integration
OR
is it building up latino and black communities

where are they predominately built in SA?

» nybism not just higher income

» neighborhood around rio lofts

» undo san antonio's economic segregation versus a community's right to have a voice
» what about a developer's right to build on land it owns, this is texas
» why aren't developments getting built?

prosper's effort , they got a grant, to talk about affordable housing

NEED TO GET AN IDEA FOR THE RETURN!!!!!!!!

wonder how developers can make money in affordable housing???

both socially responsive and financially profitable

??? what others of the old downtown S.A. buildings got them
» get complete list

$???B a year LIHTC program

is there a finite number of tax credits???

it's an industry

need a N against a development

why hasn't the change in tax code impacted san antonio? or has it?

how has san antonio's policies been changed to ??? What caused the changes???

recession of 2008-09 had an impact, as banks stopped buying them ...

Trump's tax code reform also has affected them ...

also, Community Reinvestment Act

SA has depositors, so this is a nonissue???

is propsoeras buyers regional??? local???

why add the services???

??? in texas, the public facilities corp. » make this more powerful than LIHTC

prospera expert
is the gap because of the lower tax rate's impact on investors

??? eliminate single family zoning
inclusive zoning

those who earn too much for government help but not enough to afford market rates

impact of new development
alters neighborhoods

residents are divided

we're not at the point of lottery housing

does ACG use any other method besides LIHTC

construction and land costs to build new housing have risen, and the wages that low-skilled workers can afford to spend on rent have stagnated

veterans focussed development
do other developers do this?

SAHA
government retreating from building large concentrations of public housing

From left: Rene, 25, Zechariah, 3, and Arely Duron, 25, inside their residence at the Rio Lofts Monday, Feb. 10 at 323 W. Mitchell. Photo by V. Finster | Heron Contributor
The Duron family, Rene (from left), Zechariah and Arely, talk about living in the Rio Lofts near the Mission Reach. Photo by V. Finster | Heron contributor

Duron

Phillips

???

They are called low-income housing tax credits, a program offered by the Internal Revenue Service that's been called the best tool for building affordable housing. Some housing experts refer to them as "free money." Here's roughly how they work: A developer obtain the credits from the U.S. government, through a highly competitive process, and sells the tax credits to investors in exchange for equity, cold hard cash, that's used to finance the new housing's cost. Large financial institutions like Wells Fargo, Chase and Bank of America purchase the credits, which they use to offset their tax liability.

Duron

BACK

Investors like Google and Wells Fargo, who use the tax credits to get a portion of their tax obligation deferred.

STATS
what is occupancy at tax credit properties

They help people looking for all ranges of affordable housing.
these are people who have jobs and children
Durons
Phyllis Phillips
???

They can also be very controversial. Developers are encouraged to engage the communities they want to build affordable housing in, which often leads to NIMBYism, the acronym for the phenomenon also known as "not in my backyard." Last year in San Antonio, a local council member tipped the scales during the local process so that it benefited a certain part of town more than the others, a tactic not appreciated by her peers. It also puts into question how much developers are profiting from the program, some of whom's whole business model is building tax credit projects.

frontline

/ / / / / evictions???

millions of families became renters
at the same time, incomes were going down
that lead to a rental affordaiblity crisis that's as bas as its ever been in our history

we have over $11M houeholds spending more than half of their income on housing
Nal Loe income housing coalition

section 8 vouchers, applications, thousands of residents
voucher pays the difference between monthly rent and what the household can afford

section 8
younger kids are sig more likely to finish school, go to college, earn more money, not have teen pregnancy
the younger the kids, the bigger the impact

1933
public works administration began to build public housing / / / / /

??? questions
like a regular development
lender
investors / equity
rate of return???
% they cover
who do you sell to?
free money??
what's the difference between 4% and 9%
east meadows LOST

...

Missing middle

From left: Arely, 25, holds daughter Juliette, 10 months, while Zechariah, 3, sits on father Rene Duron’s, 25, shoulders Sunday, Feb. 16 at Confluence Park. Photo by V. Finster | Heron Contributor
From left: Arely, 25, holds daughter Juliette, 10 months, while Zechariah, 3, sits on father Rene Duron’s, 25, shoulders Sunday, Feb. 16 at Confluence Park.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Rene and Arely Duron, both 25, were driving by the near South Side when they saw some brand new apartments being built across from Confluence Park. They were looking to move from an apartment complex on the northeast side, where they were paying more than $900 for a tiny apartment where they fit the two of them and their two young children.

"I'm curious about what it's going to cost," Rene remembers thinking at the time. "I'm sure we can't afford it."

» WHO LIVES HERE
missing middle
Duron family
MHPTF stats or NHSD stats
little understood
Frontline
May 9
2017
Frontline link
why they are so controversial???

...

The 95-unit Museum Reach lofts, an affordable residential project by nonprofit developer Alamo Community Group, is under construction at 1500 N. St. Mary’s St. Photo taken Jan. 19, 2020. Photo by Ben Olivo | Heron
The 95-unit Museum Reach lofts, an affordable residential project by nonprofit developer Alamo Community Group, is under construction at 1500 N. St. Mary’s St. Photo taken Jan. 19, 2020. Photo by Ben Olivo | Heron BEN OLIVO | HERON

How they work

How they work
Who buys tax credits
tdhca
... let's take a break here

...

The services they provide

Phyllis Phillips, 53, poses for a portrait inside the Community Center at Montabella Pointe apartments Monday, Feb. 10 at 5121 N. Foster Road. Phillips served over 18 years in the Army and involves herself in as many veterans activities as she can at Montabella Pointe. Photo by V. Finster | Heron Contributor
Phyllis Phillips, 53, poses for a portrait inside the Community Center at Montabella Pointe apartments Monday, Feb. 10 at 5121 N. Foster Road.
Phillips served over 18 years in the Army and involves herself in as many veterans activities as she can at Montabella Pointe.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Services
Phyllis Phillips

...

Public outreach

...

Here in San Antonio

At the CC level
Last year's process

...

This year's applicants

the tenant or the developer?
madhouse, whole business model

/ / /

WHO BUYS THE TAX CREDITS??? WHO DO YOU SELL THE TAX CREDITS TO?

WHO ARE THE MAJOR PLAYERS LOCALLY? WHO ARE ALL THE PLAYERS LOCALLY THE LAST 10 YEARS?

DO THEY ALL ACCEPT SECTION 8 VOUCHERS???

ARE NEIGHBORHOODS AGAINST LIHTC THIS
check the CC A from the last time

/ / /

From left: Arely, 25, swings Juliette, 10 months, while Zechariah, 3 laughs after and Rene Duron, 25, pushes his swing Sunday, Feb. 16 Concepción Park. Photo by V. Finster | Heron Contributor
From left: Arely, 25, swings Juliette, 10 months, while Zechariah, 3 laughs after and Rene Duron, 25, pushes his swing Sunday, Feb. 16 Concepción Park.
Photo by V. Finster | Heron Contributor V. Finster | Heron Contributor
From left: Zechariah, 3 , climbs while Arely, 25, holds daughter Juliette, 10 months, and Rene Duron, 25, makes faces at Juliette Sunday, Feb. 16 Concepción Park. Photo by V. Finster | Heron Contributor
From left: Zechariah, 3 , climbs while Arely, 25, holds daughter Juliette, 10 months, and Rene Duron, 25, makes faces at Juliette Sunday, Feb. 16 Concepción Park.
Photo by V. Finster | Heron Contributor Photo by V. Finster | Heron Contributor

Contact Ben Olivo at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

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