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housing

For Bipartisanship and Affordable Housing, Try MID Reform

The next contentious battle to sweep through Congress looks likely to be tax reform. Already the partisan lines are forming, with a more-than-healthy dose of special interest groups on both sides. But one area where there could be bipartisan agreement is the mortgage interest deduction. It would take serious political courage all the way around, but for the first time in decades progress is possible on one of the American tax codes most costly mistakes.

What is MID?

The mortgage interest deduction, or MID, allows homeowners to deduct interest payments on mortgages from their taxable income. (Translation: lower taxes for homeowners.) Because it’s a deduction and not a credit, it only applies to tax payers who itemize their taxes rather than taking the standard deduction. (Translation: lower taxes for upper income homeowners.)

What is it supposed to do?

With the current version coming from one of Reagan’s tax overhauls in the 1980s, MID has long enjoyed bipartisan support as a way to increase homeownership. The idea is simple—if you give people who buy a home a tax break, you’ll see more people buying homes. It was part of a broader push in the ’80s to move housing affordability into the private sector, which also included the end of building new federal public housing and the birth of the Low-Income Housing Tax Credit.

What is it actually doing?

Answer 1) Not increasing homeownership. Research has shown that while MID may convince someone to buy a bigger home, it almost never is the determining factor in whether or not someone will buy something. That’s in large part because…

Answer 2) MID mainly helps rich families. Because it just applies to tax payers who are itemizing their taxes, only half of all homeowners are able to take advantage of MID at all. And among those homeowners, a hugely disproportionate amount of the overall money goes to the top. MID is a big part of the reason that 75 percent of all federal housing subsidy actually goes to wealthy families. (It really makes you think about who those “takers” are that some on the right rail against.)

That’s why groups as diverse as the CATO Institute and the National Low-Income Housing Alliance have come together in calling for the cap on deductible mortgages to be lowered from $1 million to $500,000. The move would affect just 6 percent of all mortgage holders, but it would save a whopping $241 billion over the next decade.

The Trump Administration has also floated this plan, although it’s not clear how it will fare once the full weight of the real estate lobby comes down against it.

The path forward

Unfortunately, disagreement arises with the question of how those savings should be put to use. While affordable housing advocates would like to see the money moved to lower-income homeowners and renters, congressional Republicans are likely to want the savings applied to their larger plan of tax breaks for the wealthy and increased military spending.

Regardless of how this plays out on a national level, DC has its own version to deal with: the Homestead Deduction, which allows all DC homeowners—no matter how wealthy—to save on their property taxes. It’s another piece of subsidy for the rich that could be fixed with a simple home value limit.

As Congress looks to rewrite our tax code, it’s important to remember who the “takers” really are. With 75 percent of federal housing subsidy going to wealthy households, MID is long overdue for restructuring.

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DC, NYC now offering low-income tenants free legal representation

Image: Tenant rights activists rally in DC earlier this year

Eviction is just about the scariest thing that a tenant can face. It increases your risk of homelessness, poverty, and job loss. It’s more likely to happen to you if you’re a woman, if you’re black, or if you have kids. And it can set your family back for years. That’s why Washington, DC and New York City just implemented laws offering free legal services to low-income tenants facing eviction.

These laws are part of a growing movement across the country, called “civil Gideon,” to provide legal representation to tenants facing eviction. It stems from data showing that while landlords almost always have a lawyer in eviction suits, tenants almost never do. In DC, 94 percent of landlords have legal representation. That’s compared to only 5 percent of tenants.

That gap produces a huge disparity in outcomes, with tenants often being evicted over minimal debts. Sometimes it’s not even a debt tenants are unable to pay–withholding rent is a common last-straw tactic for tenants who can’t get landlords to make necessary fixes. But without a lawyer to guide them, that tactic can end in eviction.

Opponents of New York City’s law, which offers free representation to tenants making up to $50,000, complain about its cost–estimated to be about $200 million each year. But because evictions so often result in homelessness, increased reliance on safety net programs, and other costs to local governments, supporters of the bill decided to run the numbers.

They found that the measure will not only pay for itself, but it will result in over $300 million of additional savings each year. Between saving tenants strife and saving the city money, it’s hard to find a reason to oppose this bill.

The DC Council agrees, and a similar bill put forward earlier this year by Councilmember Kenyan McDuffie (Ward 5) ended up being included in this year’s budget support act. As a much smaller city, the costs for DC’s program are significantly less than in New York City–the budget included $3.9 million in ongoing funds and an additional $600,000 for this year.

Tenant groups and other advocates will be sure to watch this process closely. But with widespread support, plus clear benefits for tenants and the city coffers, DC’s new effort to get free legal representation for low-income tenants should be a great success.

 

neighborhood cut by interstate

Denver, DC make communities of color “dumping ground”

An interstate slashing through Latino communities in the name of progress. An air-polluting city truck fleet moved from a “commercially viable” gentrifying neighborhood to a lower-income black neighborhood. In the last few weeks, DC and Denver have been busy showcasing the worst of the 20th century’s development ideas—well into the 2010s.

Denver’s new renewal

In the 1950s and ’60s, a philosophy called “urban renewal” was sweeping the nation. Crumbling inner city areas, went the thinking, simply weren’t worth saving. It was better to just knock everything down and start over.

And that’s exactly what urban planners did all across the country. Block by block, city by city, the wrecking balls moved in and cleared old structures out. What determined their path, however, had much more to do with race than it did with a plan for urban growth.

The homes, businesses, churches, and community centers the planners targeted for renewal were almost exclusively owned by people of color. Many communities organized extensively in the face of this theft, and some won decisive victories. But through the use of eminent domain, American cities seized and destroyed whole communities, with the displaced, undercompensated black and Latino families left in their wake shunted along into newly built public housing facilities.

DC has its own history of this practice, with the destruction of functioning black communities along the southwest waterfront something still being felt today.

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Southwest DC in 1939, before the majority black neighborhoods were destroyed

The practice largely petered out in the 1970s and ’80s as community groups honed their resistance tactics, winning more and more victories. But Denver is looking to bring back the bad ol’ days with a new interstate expansion.

In a city that is almost 80 percent white, city planners have targeted several majority Latino neighborhoods on the edge of city limits for destruction. Fifty-six homes and 17 businesses would be razed, and the neighborhoods would be cut down the middle by a full decade of construction.

When community groups filed a complaint alleging disparate impact, the federal government admitted that was the case—but decided it wasn’t enough to force a change in plans. Residents aren’t giving up the fight, however, and you can read more about their efforts here.

DC’s pollution distribution

Unlike Denver’s throwback to another era of racist urban planning, DC’s project is part of a long line of cities putting unwanted goods in black neighborhoods. Residents of majority black Langdon Park in Ward 5 recently learned that Department of Parks and Recreation vehicles will soon be rolling into a new home in their neighborhood.

Langdon Google MapsLangdon Park and Ivy City in northeast DC. Link to Google Maps.

That was only discovered after neighbors noticed activity at the site and did some online searching. The search revealed a lease agreement for the site—and the fact that the city failed to fulfill its legal requirement for notifying residents. ANC officials, who didn’t receive their requisite 30-day notice, were in the dark.

And Ward 5 Councilmember Kenyan McDuffie learned that he also had been illegally kept out of the loop—after investigating, he found that the Council had already unwittingly approved the city’s plan through a 10-day passive approval period last year.

City officials admit their mistake, but they see no reason the project shouldn’t more forward as planned.

The site’s location is problematic because it adds an unwanted good to an already overburdened population. Ward 5 already contains a hugely disproportionate amount of the city’s industrial sites. What’s more, DC, like most American cities, has asthma rates that largely fall along racial lines—black children are far more likely to have respiratory issues than white children.

The addition of more smog-belching trucks to a majority black area of the city, an area that already has too much air pollution and the asthma rates to match, is the stuff of textbooks on environmental racism.

It comes just a few years after a similar fight in Ivy City, Langdon Park’s Ward 5 neighbor, where then-Mayor Vincent Gray announced plans for a new bus depot in another overburdened majority black neighborhood. Mayor Muriel Bowser killed that plan when she came into office, in a win for local residents.

But now she’s advancing an almost identical project. In explaining their decision to move DCPR from its current location in Shaw, the administration stated that the existing site is simply too “commercially desirable” to house vehicles. The burden, then, is intentionally being shifted from a gentrified neighborhood to one with a majority of people of color.

Jeremy Wilcox, the Langdon Park resident who was the first to find the lease agreement, told the Washington Post what it communicates to the neighborhood on no uncertain terms: “We are a dumping ground—Ward 5 is a dumping ground.”

The methods and the scale might be different, but Denver and DC keep putting unwanted goods on the shoulders of people of color. It’s a game American cities have been playing for far too long.

AfrAm farmers

History, Housing Discrimination, and Homeownership: A Step Towards Racial Equity

Image: An African-American farming family in the 19th or early 20th cent. Starting around this time, about 14 million acres of land was stolen from African-Americans.

Centuries of theft. Millions of acres stolen. And a denial of opportunity at every turn. The story of black homeownership in America is a mirror image of the American dream. It’s the reason the average black family in this country has just 1/16th the wealth of the average white family.

That’s why MANNA is especially intent on extending affordable homeownership to black families, and why MANNA opposes long-term affordability restrictions. Because without real opportunities for black families to build wealth, our country will never achieve racial equity.

What was stolen

The numbers are staggering. Between 1910 and 2001, black families lost about 14 million acres of farmland—a land mass roughly the size of West Virginia. That’s about 95 percent of what they once owned. This land was taken in a variety of ways—from lynchings to fraudulent tax charges, the theft ran the gamut. It continues today through a practice called “partition sales,” something used disproportionately by unscrupulous developers to separate black families from their land.

And that’s only the physical theft. Perhaps even worse is the theft of opportunity.

The American 30-year mortgage was born in the 1930s, and with it the dream of homeownership as a pathway to a middle-class life and economic stability—for white people, that is. Mortgages were essentially unavailable to black people until the Fair Housing Act of 1968.

As anyone who’s ever been introduced to the concept of compounding interest will tell you, a forty-year head start will make a difference. Since the wealth of homeownership is passed down along family lines, white families got wealthier with each successive generation, as at the same time black families were losing millions of acres of land.

And although the Fair Housing Act opened significant new opportunities for black families, opportunity theft remained rampant. Practices like block busting, where speculators intentionally drove up and then crashed the value of a neighborhood that was becoming majority black, and modern day redlining, where banks steer families of color away from houses they could afford in majority white neighborhoods, continued and continue to exacerbate the disparity.

With the crash of the housing market in the late 2000s, another truth came to light: black families, regardless of income, were more likely to be given predatory subprime loans than white families. Translation: you were better off buying a house as a poor white family than a wealthier black family.

Where we go from here

We’ve only scratched the surface of discrimination in homeownership—and homeownership is only one kind of asset, and assets are only part of the story on wealth building, and wealth building only works if…

You get the picture. Interest isn’t the only thing compounding in this story.

What this all adds up to is a situation in which the average American white family has 16 times the wealth of the average black family. In the DC area, it’s an incomprehensible 81 times the wealth. For every $1,000 of worth a black family has, a white family has $81,000.

But it’s not a hopeless scene. A report last year from Demos found that even without any other changes, equalizing racial homeownership rates would shrink the racial wealth gap by almost a third.

Wealth gap and homeownership rates

And that’s where MANNA sees its mission. Affordable homeownership opportunities are, for black families, an essential opportunity for moving towards racial equity.

That’s why MANNA opposes long-term affordability restrictions that require homeowners to sell to others in their income category for decades. These restrictions keep low-income families from growing their investment, often keeping them from even being able to sell to their own family members and stopping the generational transfer of wealth. Black families have to be afforded the same opportunities as white families, or the wealth gap will continue to grow.

The chance to build back some of the wealth that was stolen from and in other cases never available to people of color is not just a moral but a practical imperative for our country. To achieve a functioning society, a country that works at its full potential, we need to close the racial wealth gap.

We need affordable homeownership.

We need racial equity.

Asset Building cover

New Push in DC for Racial Justice Through Asset Building

A bold new report released this month details the disparity of wealth along racial lines in DC, then plots several ways the city can achieve a more equitable future. Its authors hope it’s just the start of a city-wide movement for building wealth in communities of color.

The report, entitled An Introduction to Asset Building in the District of Columbia, was written by the Coalition for Nonprofit Housing and Economic Development (CNHED) and Capital Area Asset Builders (CAAB), two long-time players in DC’s asset building landscape.

The need is clear. According to the report, 40 percent of DC residents don’t have enough net worth to stay above the poverty line for three months if their income disappeared. One in ten don’t even have a bank account—and among those who do a full quarter of residents are still forced to use predatory institutions like payday loan offices.

Asset building stats

It’s a problem that largely falls along racial lines. An analysis of DC post-recession found that the average white household has over 80 times the wealth of the average black household. That’s largely due to a lack of asset ownership, especially homeownership, in black communities.

CNHED and CAAB want to start a new coalition to take this problem on. Because this disparity has been created by several centuries of discriminatory laws and spending, it will take smart new investments by public and private actors to start to shrink this racial wealth gap.

The report outlines four general approaches that an asset building coalition could take, from pressuring the city government to institute new programs for low-income wealth building, to creating and managing new programs through a steering committee made up of members from this future coalition.

Whatever form this coalition takes, DC residents are counting on it to be impactful. Many literally can’t afford failure.

For more info about the Asset Building Policy Project and how to join the coalition, click here!

Asset Building strategies

stop trumpcare

Supportive Housing Could Be First to Go if Medicaid Cuts Pass

Even with a series of recent defections, Republicans are still working to roll back Obamacare. Various versions of their bill have all had a couple things in common—tens of millions would be made uninsured and Medicaid would be slashed dramatically.

Between trying to figure out how many people would die, how many people would lose insurance, and just how much money billionaires would save, there are a lot of pieces of this bill worth investigating. In the turmoil, however, one important component has often been overlooked: housing.

With the expansion of Medicaid under the Affordable Care Act, millions of people across the country gained access to healthcare for the first time. Included in that number (but often forgotten) were many who gained housing or housing stability with the expansion.

Programs like Los Angeles’ Housing for Health program use Medicaid dollars to offer mental health counseling and substance abuse treatment alongside the housing it provides to formerly homeless residents. The two parts work together—patients often can’t keep up with counseling sessions or rehab without the stability of a home, and those who receive housing without supportive services too frequently end up back on the streets.

Supportive housing, which includes a variety of social services that people may need to live outside of an institution, became available to thousands more Americans with Medicaid expansion. These programs offer help to people with disabilities, mental illness, substance abuse issues, and those recovering from homelessness.

Under the Republican plan, however, Medicaid would be rolled back—and not just to pre-Obamacare levels. GOP leadership has pushed to end Medicaid as an entitlement, meaning that states would no longer receive funding based on residents’ needs. Instead, states would get a set amount of money for each resident on Medicaid. It would then be up to the states to decide what to do with that money.

The proposed amount per person is far less than what is needed, and it wouldn’t grow with rising costs. That would create a scenario in which state governments are forced to make more and more painful cuts each year, continually shrinking the number of services they provide to their most vulnerable residents.

And experts have predicted that supportive housing could be among the first services to go.

Disability activists and others have been relentless in organizing opposition to the bill, with actions happening almost every day at the Capitol. On Monday alone, 33 people were arrested in Senate buildings and offices while peacefully sitting in to demand that Republican senators kill the bill–not an atypical day.

Because of these efforts, both the initial Republican bill and a follow-up attempt to repeal the Affordable Care Act without a replacement have  failed. Yet activists warn against complacency. As unpopular as the draconian cuts are with the general public, they have broad support among Republican legislators and continued action will likely be necessary to prevent the bill’s revival.

Nam_Viet_DC

New Bill Would Help DC Restaurants with Rent Increases

Nam-Viet in Cleveland Park, which closed on June 25

After two high-profile restaurant closings in Cleveland Park, Councilmember Brianne Nadeau (Ward 1) has introduced a new bill to help longtime DC restaurants deal with rising rents.

The bill, supported by Councilmembers Elissa Silverman (At-Large), Robert White (At-Large), Trayon White (Ward 8), David Grosso (At-Large), and Charles Allen (Ward 6), would provide restaurants that have been in the same location for at least a decade with up to $50,000 of assistance a year for up to five years. The restaurants must also be certified small business enterprises.

With this bill, CM Nadeau is trying to not only stop the displacement of longtime DC eateries, but also to prevent the cultural gentrification that many life-long Washingtonians say makes them feel like strangers in their own neighborhoods.

CM Nadeau’s website says that she hopes the bill will help mitigate “commercial gentrification [that] risks the vibrancy and continuity of our neighborhoods…”

In one study on the topic, researchers at the City University of New York found that longtime restaurants in a gentrifying majority-black New York City neighborhood were likely to receive online reviews portraying them in a negative light.

Reviewers used words like “sketchy” or “ghetto” to describe the neighborhood’s black owned businesses, language that is almost always a coded racial condemnation of a majority-black space.

The CUNY researchers termed this practice “discursive redlining,” noting that the public branding of black-owned institutions as undesirable is an important part of the neighborhood takeover.

While rental assistance alone can’t shift newcomers’ perceptions, it can give longtime restaurants—and by extension, residents—a better chance to feel secure in a changing neighborhood. Perhaps a longer time frame would even convince newcomers to try longtime establishments, increasing chances of connections forming between the old and the new.

In any case, CM Nadeau’s bill would help otherwise sound restaurants deal with rising rents. And that in itself may be enough to make it law.

Anita Bonds

CM Bonds Moves Rent Control Fixes

Councilmember Anita Bonds (At-Large) symbolically closes a rent control loophole at an event in October 2016

DC has one of the strongest rent control laws in the nation. Unfortunately, several landlord-sized loopholes turn lots of ostensibly rent controlled housing into market rate units each year. But Councilmember Anita Bonds (At-Large) is working on passing a pair of bills to fix that.

The problem comes in both cases when a rental unit changes hands.

Currently, anyone living in a rent controlled building (any building built before 1975 that has five or more units) by law sees only modest increases in their rent each year. For people who find an affordable rent-controlled unit and then are able to age in place, the protections are stellar.

But when a unit experiences turnover, as units are liable to do in DC’s fast-paced rental market, landlords are able to raise prices by up to 30 percent—often essentially taking the unit to market rate. One family may leave a home that costs $1300 a month only for the next family who moves in to find themselves facing rent of $1700 a month or more.

One of CM Bonds’ bills, entitled the Rental Housing Affordability Stabilization Amendment Act of 2017, would cap that increase at just 5 percent—an amount that preserves the unit’s affordability and doesn’t incentivize pushing current tenants out the door. Publicly supported by Councilmembers Cheh (Ward 3), Silverman (At-Large), Gray (Ward 7), Grosso (At-Large), and Trayon White (Ward 8), the bill would also limit yearly rent increases to strictly the rate of inflation.

Another tactic landlords sometimes use to raise prices is to make voluntary agreements with tenant associations. It’s a process that involves several steps of abuse.

Landlords can file to raise rent above allowable rates with a “hardship petition,”* claiming that they can’t afford to make necessary improvements (or at least can’t earn enough profit while doing so) without more revenue. If their petition is accepted, tenants have no negotiating power—they can pay the new, higher rates or move out.

But sometimes landlords are unsure whether their petition would succeed or not. If that’s the case, they’ll go a different direction and use the threat of a hardship petition as a bargaining chip. In negotiating with tenant associations, landlords portray the tenants’ choices as this: you can either go through with the petition process and likely see automatic rent increases, or you can sit down with me and work on a deal where you’re guaranteed not to see any increases—but you wave future tenants’ rent control rights.

With the voluntary agreement from the tenant association in hand, landlords are able to make any unit that changes hands into a market rate apartment.

CM Bonds’ other bill, the Preservation of Affordable Rent Control Housing Amendment Act of 2017, wants to stop landlords from pitting current and future tenants against each other. It would outlaw the practice of making deals that only raise prices for newcomers, mandating that any agreed upon increases must be applied across the board.

It was co-introduced by Councilmembers Robert White (At-Large), Silverman, Cheh, and Trayon White.

If passed by the Council and signed into law, both bills would move DC closer to protecting tenants as the District’s rent control law intended.

 

*Another one of CM Bonds’ bills on rent control, this one targeting hardship petitions, was signed into law last December. It succeeded in lowering the return on investment guaranteed to landlords from 12 percent to 5 percent.

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What’s needed to afford housing in DC? $33 an hour

At the current minimum wage of $12.50/hr, Washingtonians need to work 107 hours each week to afford a two-bedroom apartment. That’s according to a new report by the National Low Income Housing Coalition, entitled Out of Reach: The High Cost of Housing.

The report shines a spotlight on the increasing impossibility of affording rental housing in the US, coming during a period where the portion of the population that is renting continues to rise.

It’s a crisis that is truly national in nature: not a single state has an average one-bedroom rent that is affordable to someone working 40 hours a week at minimum wage. (Affordability is defined as requiring only 30 percent or less of a household’s income.)

In the District’s overheated housing market, the situation is particularly dire. As the numbers for a two-bedroom apartment indicate, families have little hope of finding housing while working for the minimum wage. Single people, however, fair little better. The average rent for a one-bedroom apartment is $1,513—more than double what someone earning minimum wage can afford.

And it’s not just those earning low wages that are affected. The average full-time wage paid to a renter in DC still leaves that worker $100 short for rent each month.

Talk of more subsidy for affordable housing is often met with immediate resistance. There’s a sense that the people who need affordable housing aren’t our neighbors, friends, and families—and certainly not ourselves. Rather, they’re some vague unknown other who probably isn’t working as hard as they should be.

Add in the fact that activists are currently fighting simply to preserve what funding there is for low- and moderate-income families, and it can be a complete nonstarter. Besides, our country already spends billions on affordable housing, and it doesn’t seem to be working, right?

As Rep. Keith Ellison (D-MN) notes in his introduction for the report, a full three-quarters of the $200 billion the federal government spends on housing each year goes to wealthy families through the mortgage interest deduction and other tax incentives.

That’s $150 billion in assistance for households who don’t need it. It’s time to take a hard look at our discourse around housing subsidy and redefine the makers, the takers, and the deserving. Otherwise, housing will continue to be out of reach for an ever-growing number of Americans.

out of reach

week of action cover

July 26 DC Rally Against HUD Cuts Part of Week of Action

On Wednesday, July 26, at 11am DC residents will rally at the Capitol with Senator Chris Van Hollen (D-MD).

It’s part of an effort to stop draconian cuts that the Trump Administration has proposed for the Department of Housing and Urban Development. Activists are organizing a National Week of Action under the banner “Our Homes, Our Voices,” and thousands across the country are expected to come out for a series of rallies, teach-ins, HUD site visits, and Congressional meetings.

The Trump Administration has proposed $6 billion in cuts for HUD, which would have devastating and wide-ranging effects. Hundreds of thousands of low-income families would lose their rent vouchers and potentially their homes. Public housing, already in a desperate state of disrepair, would further deteriorate, putting children and families across the country in danger.

In DC, funding for the Home Purchase Assistance Program, the District’s impactful first-time homebuyer assistance, is under threat. 80 percent of HPAP money comes from Community Development Block Grants—a program with bipartisan support that the Trump Administration has proposed eliminating entirely.

Action to oppose these cuts will be crucial, as Congress has so far shown that public involvement (or lack thereof) is the determining factor in its willingness to stand up to the Trump Administration.

You can see the full list of local events here! Be sure to let your enfranchised friends know that they need to call their representatives.

week of action