Few events in history highlight as clearly as the pandemic that housing and health are inherently connected. Families struggle to make ends meet after job loss or reduction in pay due to the coronavirus.
At the onset of the pandemic, governments requested that residents stay at home, schools moved to a virtual environment, and many businesses shuttered to minimize the spread of COVID-19.
These safety measures exacerbated an already tenuous living situation. Many Kansas Citians already did not have a stable, safe place to live. Food insecurity worsened, especially for families that relied on school-provided free and reduced lunches. These barriers — social determinants of health — hit particularly hard those populations most in need in Kansas City.
Nearly half of the population in Kansas City rent their homes. The economic downturn created a heavier burden on low-income families to secure or maintain safe and affordable housing. According to the new 2020 NLIHC Out of Reach Report, a worker must earn $18.81 per hour to afford the average fair market rent for a two-bedroom apartment — $978/month — in Kansas City without paying more than 30 percent of their income on housing. That means someone working a minimum wage job would need to work 80 hours per week to afford rent.
Partnerships are key
Kansas City must act now. The production of affordable housing units is so important to the overall health and sustainability of our communities. We need everyone engaged in this important work of innovating ways to create funding for the production and preservation of affordable housing. This means collaborations between financial institutions, health organizations, philanthropy, nonprofits, and governments. Partnerships are the key to providing this important right of affordable housing for all our residents.
Collective resources and community-based strategies to set goals for healthy food, safe and resilient environments, housing, and livable and walkable communities will improve the health outcomes of Kansas City residents. Economic development efforts should focus on housing as a catalyst for addressing health, employment, and environmental issues in our communities.
Low-income housing tax credit
The Low-Income Housing Tax Credit (LIHTC) federal and state program is the leading source of investment for low-income housing. Changes to the program have lasting implications at the local levels, and on individual ability to access safe, stable, and quality housing, which leads to improved health outcomes.
The LIHTC program is a 10-year state tax credit to qualified owners and investors in affordable housing. The program provides developers with tax credits in exchange for building or rehabbing housing that includes affordable rental units to low-income residents. The tax credit reduces the developer’s costs in exchange for much-needed rental relief for many. The units developed with LIHTC provide families with access to decent, stable housing, which often means entering higher-opportunity neighborhoods that have strong schools and lower poverty.
LIHTC has been a widely popular means of producing and preserving critical affordable rental units. In 2017, the State LIHTC credit program was discontinued, eliminating the state match of $140 million annually that has provided thousands of units of affordable housing since 1990. This cut the housing production in Kansas City almost in half. After ongoing debate, legislative proposals, and housing advocacy, the program has been reinstated, but with a reduced annual cap to 70 percent of the federal allocation (from the previous 100 percent).
This program helps thousands of Missourians survive, and we are glad to see our leadership willing to engage in the conversation about how to make the program more efficient, rather than simply defunding it.
Given the current economic and health crisis, the number of individuals and families in need of affordable housing has grown. In 2019, an estimated 16.5 percent of the Kansas City, Missouri, population lived in poverty. There are currently more than 13,000 households on the Kansas City Housing Authority’s waitlist for affordable housing.
Focus on program improvements
With the reinstatement of the state credits, we can get back to engaging in conversations about how to strengthen the program and implement changes to make the program more efficient. The LIHTC program faces numerous challenges, and we offer a few reforms that should be considered:
- Establish emergency measures for public health crises. Changing the criteria for allocation to cities, for a term of two-years, based upon population, prioritization of hardest hit areas of the state, and housing supply in the area. This approach has been done before during times of disaster and could assist areas that are most impacted by the pandemic.
- Preserve the amount of affordable units on the market. One of the challenges often cited with the LIHTC program is the limited duration of affordability before units are converted back to market rate. There have been strides by the allocating agencies to increase the compliance periods from 15 to 20 or 30 years. However, we must be diligent to ensure that there are tools and ongoing efforts to preserve affordable units instead of watching scarce affordable units revert to market rate. Partnerships between cities, community development organizations, foundations, community development finance institutions, and banking institutions are key to effectuate these efforts.
- Coordinate with the Housing Authority of Kansas City to support the LIHTC program through vouchers and/or project-based Section 8. Vouchers can enable families with incomes at or around the poverty line to access LIHTC units in high-opportunity neighborhoods and growing core city neighborhoods, which they would otherwise be unlikely to access.
- Strengthen the Minority and Women Business Enterprise Initiative (MBE/WBE) in the Qualified Allocation Plan. In 2012, MHDC implemented an initiative aimed at growing the involvement and participation of businesses that are MBE or WBE certified. The provisions within prior versions of the Qualified Allocation Plan provided a priority for projects with MBE/WBE participation as important to achieving diversity, increasing support, and sustaining and growing MBE/WBE involvement in affordable housing production.
In the 2020 Qualified Allocation Plan, authors removed language that prioritizes MBE/WBE participation and uses the softer and less specific language of “encourages involvement” without specific targets. The language used does not sufficiently highlight the importance of MBE/WBE participation in the program, nor give priority to projects that qualify under this initiative.
This change will significantly reduce the ability of women and minority-owned businesses to participate in the LIHTC program. This is especially timely as we are in a critical place of national turmoil centered on race, economic disparity, and job loss. True equity is economic equity, and MBE/WBE participation provides women and minority-owned businesses the opportunity for government contracts and the ability to grow their businesses, generate wealth, and build a business portfolio of projects.
The importance of the LIHTC program cannot be understated, and there are policy improvements that can help make it more effective in reaching those that need it most. Increasing the stock of affordable units in our region is critical to the health of Kansas City. The economic turmoil growing in our communities makes this topic more critical, and the LIHTC program is an important tool in increasing access to affordable housing.
There are amazing examples of organizations providing affordable, sustainable housing for those most in need across our community. We need to learn from their successes and create more innovative solutions that will benefit the health of our communities.