Housing policy currently favors high-income homeowners, but recent initiatives have begun to recognize the needs of the growing renter population. One of the biggest problems facing the affordable housing community is the lack of available funding. In the next two blog posts, we’ll discuss promising ideas regarding increasing funding (federal policy) and distributing those funds (local policy.) The Common Sense Housing Investment Act, introduced by Minnesota’s Representative Keith Ellison in 2013, aims to create money for affordable housing through mortgage tax reforms.

By rearranging who receives tax benefits, and how many benefits they receive, this Act would create $196 billion for affordable housing. Most funds would go towards the currently unfunded National Housing Trust Fund (NHTF). The NHTF is special because it is a permanent program. The aid it would supply to Section 8 and other housing voucher programs, public housing projects, homelessness shelters, and more would not be subject to annual cuts. According to the Minnesota Housing Partnership, Minnesota would receive $77,500,000 for every $5 billion that goes to to the NHTF.

The Common Sense Housing Investment Act would fund the NHTF by using money through these two changes:

1. Lowers the amount of a mortgage for which a homeowner can receive a tax benefit from $1 million to $500,000.

What it means: People who have mortgages on homes worth more than $500,000 (about 4% of all homeowners) would only receive benefits for the first $500,00 of their mortgage, and no more.  Instead of going back to the wealthy homeowner, that money would go to the National Housing Trust Fund.

2. Converts the mortgage-interest-deduction procedure to a flat 15% tax credit for all homeowners. All homeowners would be able to get back 15% of mortgage interest paid in a year from federal income tax.

What it means: Currently, homeowners can receive mortgage-interest-deductions only if they itemize their taxes. However, homeowners with more moderate incomes often do not make enough money to get this deduction. A flat 15% tax credit for all mortgages opens up tax breaks to more people, especially those with smaller incomes. Estimates predict these changes would benefit nearly 20 million homeowners. (Note: This proposed tax credit would be nonrefundable. This means that it could bring a person’s tax bill to $0, but could not bring about a refund.)

These changes have two interesting effects—they allow more people to receive tax breaks, but also increase total tax revenue for the federal government. And although these tax changes benefit a broader range of homeowners, and they will also ultimately benefit low-income renters. The Common Sense Housing Investment Bill is supported by the United for Homes campaign, a coalition of more than 1,200 organizations that advocate for low-income housing. Unfortunately, it did not receive enough support to be signed into law. But in the US’s slow-moving, laborious policy environment, the introduction of this bill is an important first step into achieving actual housing policy reform. The bottom line is that to build and maintain more affordable housing, there needs to be more money. Bills that give money to the National Housing Trust Fund while achieving bipartisan support will be essential to solving the housing crisis.

Local governments play a large part in determining where money for affordable housing goes. Next time, we’ll break down the Minnesota Housing Finance Agency’s 2015 Affordable Housing Plan.

 

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The Rise of the Renter: Part 2

by Camille Galles on 6 August 2014

In Minnesota, and throughout the United States, the renter population continues to rise. .  For an increasing number of families, “home” is found in a rental or low-income-housing unit instead of a traditional, mortgage-financed house.  But housing policy in the United States continues to disproportionately favor homeownership

Renters make up more than a third of households, but receive less than one fourth of federal housing subsidies. 

This chart from the Center on Budget and Policy Priorities demonstrates the stark difference in homeowner and renter subsidies.

This chart from the Center on Budget and Policy Priorities demonstrates the stark difference in homeowner and renter subsidies.

Federal housing policies are relevant to Minnesota renters because federal policies determine the amount of money, aid and programs state governments can provide.  For example, the local Minnesota legislature just passed a $100 million bonding bill that will largely go towards the preservation of Section 8 housing—a federally created and funded program.  When affordable housing loses funding at the federal level, it trickles down to affect states, communities, and eventually individual renters. 

Renters who live in units that are subsidized with project-based rental assistance are especially at risk. The recently approved Fiscal Year 2015 Transportation-HUD Bill calls for a $200 million reduction in project-based rental assistance.  Appropriations (funding) for these programs are reassessed every year by Congress and continue to decline, mainly due to 2013 budget sequestration efforts.  Sequestration is a procedure through which the federal government tries to limit its deficit by cutting costs throughout various programs. 

When housing programs are partially renewed through yearly contracts, they push ongoing costs to future years, which save the government money today.  However, this practice creates uncertainty and confusion for property owners who have low-income housing contracts.  Over half of the 596,000 contracts for project-based low income housing units will come up for renewal in 2014 and 2015.  Faced with constantly shifty renewal funding procedures, many owners will opt out of low-income programs. And if budget reductions continue, HUD may be forced to let owners’ contracts expire, even if they want to stay in the program.

While many low-income renters across the country could be scrambling to find housing as contracts expire, but the Minnesota legislature should be applauded for providing current renters with tax relief.  Renters will see a one-time 6 percent increase in property tax refund, resulting in more than 346,000 households receiving an average of $36 in tax returns.  Homeowners will receive a 3 percent increase.  Minnesota’s balanced approach to tax relief is encouraging, but still cannot alleviate the policy inequalities that begin at the federal level.  These tax benefits help those who already have stable homes, but who will provide relief for low-income renters as their federal assistance continues to be cut?                                 

State and federal legislation should account for both types of homes—the types that are owned, and the types that are rented.  As the renter population continues to rise, their needs must be legitimized and recognized through policy. 

Coming Soon: The third and final installment of The Rise of the Renter, where we’ll examine the best course of action for policymakers to provide the assistance that renters desperately need.   

 

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The Rise of the Renter: Part 1

July 27, 2014

This week kicks off a three part blog series examining the rise of the renter–not only throughout Minnesota, but across the nation.  Why are so many people seeking rental housing, and why does it matter?  What has (or hasn’t!) the government done to aid renters?  And lastly, how do we move forward?  What is the [...]

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The Livability of Minnesota’s New Minimum Wage

July 20, 2014

  On April 15th 2014, Minnesota Governor Mark Dayton signed a bill that officially increases the state’s minimum wage.  Although the wage increase is a government mandate, workers will not see their paychecks grow overnight.  Rather than automatically spiking, the wage increase will be slowly phased in.  Gradual increases over two years will result in a [...]

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$100 Million for Affordable Housing: Where It Comes From, Where It Goes

July 6, 2014

Welcome back to Homeline’s Public Policy blog!  Check back often as we begin to cover important Minnesota housing bills that were passed during the 2014 legislative session.  We’ll start by breaking down the “Homes for All” bonding bill, which sets aside  $100 million for affordable housing projects. Where does this money come from?  The term [...]

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Whose business is housing?

September 25, 2013

Created by OnlineMBA.com OnlineMBA  recently shared this video contrasting how businesses and governments operate and interact with people they serve. Please take a moment to view the video—and return to read how this discussion relates to housing, and in particular, the dynamics of tenant/landlord interactions. If you look at MHP’s most recent 2 x 4 [...]

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HOME Line’s 2013 Tenants’ Bill of Rights and Tenants’ Survey

July 30, 2013

Based on calls from our statewide tenants’ hotline and our organizing efforts, HOME Line has selected nine proposed changes to Minnesota’s landlord/tenant law to push for in the 2014 legislative session.  We believe that these nine bills, each giving greater and clearer rights to Minnesota tenants, will help make our state a more fair and [...]

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Renters: Is a contract for deed a lease?

July 11, 2013

“There’s a real problem out there with landlords scamming people,” said Rep. Joe Mullery, DFL-Minneapolis. “They’re putting people into rentals and then turning those agreements into contract-for-deed sales without even telling them about it. … I think some of those landlords will keep doing it because they think they won’t get caught.” Jeffrey Meitrodt’s July [...]

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Renter’s Credit Increased!

June 17, 2013

As of recently, the legislature passed a $15.5 million increase in Minnesota’s renters’ credit, the tax rebate used to off-set the property taxes households pay through their rent. During the past several years, the legislature showed interest in cutting this important tax credit to help balance the state budget. Due to the on-going advocacy of [...]

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Fresh air for renters with low incomes

January 25, 2013

It does not take very much to understand that the renter’s credit is a big issue for HOME Line. It is something that government officials have been quick to propose as a tool for balancing the state budget, and renters have been quick to fight for it. Since 2004, the renter’s credit has continued to [...]

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