A quiet housing disaster looms. The clock is ticking.
Two little provisions could create a whole lot of chaos
Welcome to a Wednesday evening edition of Progress Report.
If your Twitter feed is anything like mine — and I’m sorry if it is — you’ve probably spent the last few days following, whether eagerly or involuntarily, the pathetic saga of hollow Republican striver Kevin McCarthy and the dedicated sociopaths who continue to deny him the gavel that has been the central focus of his entire adult life.
He keeps coming back for more, pledging to be even crueler with each go-round, desperate to satisfy the bloodlust of the people who he spent two years protecting, and yet McCarthy just keeps losing votes, which is something of a relief, even if the people torturing him are true reactionary trolls.
The sociopathy on display is astounding, and if it were up to me, Kevin McCarthy would be disqualified from becoming Speaker solely because he still wants the job after such unprecedented national humiliation.
It’s easy to get caught up in the theatrics, but critical to keep in mind that few people that aren’t already obsessed with Beltway parliamentary intrigue care or even now about the leadership mess. We underestimate how little people follow or care about the minutiae of politics, and instead simply look to how their lives are impacted by hard decisions.
The focus of politics should always be about how government can be used to make people’s lives better and easier. In the video report below, which I produced for More Perfect Union, NY State Senator Jessica Ramos gives one of the best quotes I’ve ever heard about Democratic Party politics and the efficacy of populism:
We’ll have more on the coming fights in New York over the next few months, but tonight, we’re focused on a critical policy battle that’s coming down to the wire in the Midwest.
Ohio Gov. Mike DeWine has less than a week to prevent a disaster from hitting the state’s housing market.
Last Thursday, the state legislature finally sent a massive year-end spending bill to DeWine’s desk in Columbus. Buried in HB 45 are two small changes to the tax code that advocates say would do serious damage to Ohio’s exceedingly thin affordable housing market.
The first provision would ban developers from utilizing both federal low income housing tax credits and credits from Ohio’s historic building preservation program on a single project. It may sound like a niche problem, but in a state with so little housing and so many blighted old buildings, rehabilitating existing infrastructure and repurposing it for affordable housing is seen as a solid solution to both problems.
“Often the problem is that a building could be too expensive to tear down but also too expensive to reuse and that's where you get lost,” says Laura Recchie, the COO of affordable housing developer Praxia Partners. “So in addition to the historic tax credit, layering on the Low Income Housing Tax Credit to make it affordable housing is the only way you can make it economically feasible to save the building.”
Praxis is working with local nonprofits to turn an abandoned public school in Toledo into 86 units of affordable senior housing. The organization completed a similar project that was financed by the Ohio program. This year, DeWine’s office has already approved 54 new rehabilitation and repurposing projects, committing more than $1 billion for the work.
The tweak would not only prevent future projects from using both credits, but it’d claw back the money already disbursed to many affordable housing conversions. In doing so, it would likely kill a fair number of approved projects and ultimately lead to a death spiral that ends the conversion of these buildings for low-income tenants.
The prospective ban was a last-minute addition, catching legislators and lobbyists by surprise shortly before the vote. Less shocking was the inclusion of the second controversial provision, which would allow municipalities to assess affordable housing properties at their market rate value. Doing so would make it impossible to sustain low-income units and disincentivize future affordable development.
“It ends up creating a false value for the owners to pay in property taxes, one that they would never be able to meet,” Recchie says. “Those numbers would end up making quite a lot of projects unfeasible.”
In addition to disincentivizing further construction, the second provision in HB 45 would also likely result in landlords forcing renters to shoulder the burden of higher taxes through rent increases and more frequent evictions.
For-profit developers lobbied hard for the second provision’s inclusion, but the real estate lobby has few allies in that fight. The two changes have made for strange ad-hoc partnerships up on the Capitol, including the Ohio Chamber of Commerce, the state’s major business lobby, teaming up with major progressive nonprofits such as the Coalition on Homelessness and Housing in Ohio.
In a letter sent to the governor’s office, the organizations urged DeWine to issue line-item vetoes to strike the two provisions, warning of the “unintended consequences” that would accompany their passage. The letter also described an “unprecedented need for more quality workforce housing,” a description that is anything but hyperbolic.
Ohio is in no position to discourage any sort of affordable housing development. The state is short more than 250,000 affordable housing units for extremely low income renters, and more than half of renters that do have roofs over their heads are nonetheless already cost-burdened. A study of the construction market in Central Ohio this year found that the region needs to build around 19,000 affordable new units per year to keep up with demand, which would be more than double the number of units that have gone up annually for the past decade.
The bill arrived on DeWine’s desk last Thursday, at which point state law gave him ten days to sign, veto, or strike provisions. With Sundays excluded from that countdown, he has four days left to save the affordable housing market in Ohio.
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