AFFORDABLE HOUSING – DEFINED
The United States is facing an affordable and attainable housing crisis. Rising rents and stagnant wages have made most rental housing unaffordable to low-moderate income households. More than 11 million renter households – roughly one in four renters – spend over half their income on rent, leaving too little for other necessary expenses like transportation, education, healthy food and medical bills.
Affordable housing is no longer an issue pervading low income households as it now touches middle and upper income households in some capacity, either directly or indirectly. The issue is urban, suburban, and rural. It touches millennials, families, veterans, seniors, and the workforce. It impacts economic development and the potential redevelopment of communities. Prairie Fire’s mission is to develop projects that address this issue while improving conditions in communities, leading to economic growth and development.
A PROVEN SOLUTION
The Housing Credit is our nation’s most successful tool for encouraging private investment in the production and preservation of affordable rental housing. For 30 years, it has been a model public-private partnership program, bringing to bear private sector resources, market forces, and state-level administration. It has financed nearly three million apartments since 1986, providing roughly 6.5 million low-moderate income families, seniors, veterans, and people with disabilities, homes they can afford. Unlike many other tax expenditures, which subsidize activity that would occur at some level without a tax benefit, virtually no affordable rental housing development would occur without the Housing Credit. Other important facts of the program include:
- The tax credit is provided through the IRS, not HUD.
- Tax credit housing is NOT public housing.
- Residents must show proof of income and pass criminal and credit background checks.
- Tax credit housing is held in compliance by the owner for at least 15 years, if not 30. We make a long term investment in a community and are here to stay!
- Tax credit housing is capitalized with significant operating and replacement reserves to ensure the asset is properly cared for over time.
- The property has annual physical and tenant file inspections by state housing finance agencies, investment partners, and lenders.
At Prairie Fire we have a saying “the math shall set you free!” We are research analysts that happen to be real estate developers. Our team is constantly reviewing and analyzing data that impacts our industry – economic, financial and demographic. Some of the more telling statistics are outlined below, demonstrating the demand curve and incredible need for more affordable housing in this nation:
- Since 1960, rents charged to tenants have increased 64% while renter incomes have increased only 18%, creating a severe cost burden on renters.
- One out of two renters earns less than $35,000.
- Nearly half of all renters in the nation are cost burdened – they spend more than 30% of income toward rent. Meaning they have less funds available to spend in the local economy. This issue is more prevalent in rural and urban areas.
- For every unit of affordable housing developed, there is a need for 66 more! The demand vastly exceeds supply.
- Since its inception, the affordable housing tax credit program has generated over $310 billion of revenue and over $122 billion in tax revenue to local economies.
- Employers consistently rank the need for housing as a top issue facing their growth and expansion.
- Concern is apparent within the business community particularly among larger employers – about the lack of affordable housing for employees, with companies reporting the shortage as being problematic in hiring and retaining entry-and mid-level workers, according to a new survey released by the Urban Land Institute (ULI).
- The vast majority of studies looking at the impact of affordable housing on neighboring property values have found that affordable housing does not depress neighboring property values, and may even raise them in some cases.
PERFORMANCE AND SUCCESS:
Low-Income Housing Tax Credit Showcase (Novogradac & Co., 2016)
How Many People Have Benefitted from the Affordable Housing Credit? (National Association of Homebuilders, 2015)
The Economic Impact of the Affordable Housing Credit (National Association of Homebuilders, 2014)
NEED FOR AFFORDABLE HOUSING:
Paycheck to Paycheck (National Housing Conference)
Out of Reach 2016 (National Low Income Housing Coalition, 2016)
Projecting Trends in Severely Cost-Burdened Renters (Enterprise Community Partners and Harvard’s Joint Center for Housing Studies, 2015)
The State of the Nation’s Housing 2016 (Harvard’s Joint Center for Housing Studies, 2016)
Mapping America’s Rental Housing Crisis (Urban Institute, 2015)
The State of Senior Renters (Make Room, 2016)
Housing America’s Future: New Directions for National Policy (Bipartisan Policy Center Housing Commission, 2013)
Health in Housing: Exploring the Intersection Between Housing and Health Care (Enterprise and the Center for Outcomes Research and Education (CORE), 2016)
How Investing in Housing Can Save on Health Care (National Housing Conference, 2016)
Housing Credit Policies in 2014 that Promote Supportive Housing (Corporation for Supportive Housing, 2014)
What Can We Learn About the Low Income Housing Tax Credit by Looking at the Tenants? (New York University Wagner Graduate School and Furman Center, 2012)
Affordable housing development is a powerful economic development tool. Whether it is redeveloping an urban neighborhood like CP Lofts in Kansas City, Missouri, or the expansion of workforce housing in McPherson, Kansas or Moundridge, Kansas, it has a significant short, mid and long term impact on local communities. The primary goal of affordable housing is to lower the monthly housing costs for low and moderate income families. More housing choices improves worker and employer attraction and increasing the buying power of residents. Further research shows that affordable housing development also drives local economic growth:
- The Roll of Affordable Housing in Creating Jobs and Fostering Economic Development
- The Economic and Fiscal Benefits of Affordable Housing
- Lack of Affordable Housing Near Jobs: A Problem for Employers and Employees
- Good Local Housing Policy is Good Economic Development Policy
- Affordable Housing is an Economic Development Benefit
- Investing in Affordable Housing Promotes Economic Development
- Rural Boomtowns: The Relationship Between Economic Development and Affordable Housing
- The Effects of Housing Development on a Rural Community’s Economy
- Opportunities for Promoting Credit for Affordable Housing in Rural America
- National Economic Impact of Affordable Housing Development
Economic Impact Fact Sheets, listed by state, that Prairie Fire is currently working on:
Joint Center for Housing Studies at Harvard University releases the 2018 State of the Nation's Housing Report
Prairie Fire recently selected by Iowa Finance Agency to build two workforce housing projects in Iowa - Harlan and Red Oak.
Prairie Fire to develop mixed-income workforce housing in Ottawa, Kansas using Housing Tax Credits, Housing Trust Fund and Moderate Income Housing Funds!
Cyrena Burns | Prairie View Estates If someone had told Cyrena Burns a year ago that she would be living in a brand-new, beautiful, two-bedroom duplex by the end of 2019, she would have shaken her head or laughed at them. It was around that time that she had started...read more
770 East 5th Street
Kansas City, MO 64106