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Federal Government and the Lack of Affordable Housing

The federal government hasn't built public housing since the 1960s. President Johnson pushed Congress to pass the 1968 Housing Act that became a major time of construction of public housing almost doubling such units across the country. In addition, Bobby Kennedy and Senator Jacob Javits pushed through a 1966 amendment to the Economic Development Act that provided private developers with incentives payments to invest in poverty areas. 

Once the Reagan era began that was the end of public housing. Instead, Reagan signed the Tax Reform Act of 1986, which slowed building of low-income housing further. First, the act repealed accelerated depreciation and the use of depreciation deductions to offset other ordinary income, precipitating a sharp drop in multifamily housing production. Second, the law placed a cap, for the first time, on states’ authority to issue tax-exempt bonds for multifamily housing and imposed income limits on eligible households. Third, the act created the Low Income Housing Tax Credit (LIHTC) program, which provided private sector incentives for the development of rental housing for lower-income households.

Then came the Faircloth Amendment. Section 9(g)(3) of the Housing Act of 1937 ("Faircloth Amendment") limits the construction of new public housing units. The Faircloth Amendment states that the Department cannot fund the construction or operation of new public housing units with Capital or Operating Funds if the construction of those units would result in a net increase in the number of units the PHA owned, assisted or operated as of October 1, 1999. 

America got private developers being given tax credits in return for 15-year affordable housing units, after which the affordable units went to market rates. 

We need to stop coaxing the private sector into the low-income housing market and use the public sector to build instead. Read the Peter Gowan and Ryan Cooper's paper, Social Housing in the United States at the People's Policy Project


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