By Yilun Cheng
President-elect Joe Biden has outlined his plans to advance affordable housing nationwide, but with little progress in the past two decades and rising construction costs, Chicago developers remain pessimistic about his proposed affordable housing initiatives.
Biden has made an ambitious proposal to invest $640 billion into affordable and quality housing over the next 10 years. The money would come from corporate tax raises for large companies and financial institutions, according to Biden’s housing platform. $100 billion of the investment would go into an “Affordable Housing Fund,” most of which will be used to incentivize the development and rehabilitation of low-income housing.
But developers are skeptical that the Biden administration will move the needle in creating affordable housing.
“In the last 20 years, I can’t think of an instance where I have felt that there has been a national conversation on housing that reflected what was happening in my community,” said Lissette Castaneda, executive director at Chicago-based nonprofit developer LUCHA. Her organization owns and manages close to 200 affordable housing units in Humboldt Park and Logan Square.
“Affordable housing is in crisis,” Castaneda said. “The effort and money that we have aren’t producing enough affordable housing.”
With 333,000 low-income households but only 217,000 affordable housing units, Chicago has a rental affordability gap of approximately 116,000 units, according to the latest report by DePaul’s Institute for Housing Studies, based on the most recently available census data.
In the end, solving the affordable housing shortage comes down to money, Castaneda said. It takes approximately $400,000 for LUCHA to build one affordable housing unit in the city. Construction costs are on the rise and they now have to spend extra money on personal protective equipment to keep workers safe amid COVID-19.
To finance these projects, Castaneda said, developers need to employ multiple layers of financing, including the benefits under the Low Income Housing Tax Credit (LIHTC), which allows developers to invest in the nation’s most distressed communities with reduced tax rates on capital gains. But it is still not enough.
“When you have a problem at this scale, you also need solutions at this scale,” she said. “The national efforts all feel very piecemeal.”
Christopher Ptomey, executive director at Terwilliger Center for Housing at the Urban Land Institute, agrees with Castaneda’s assessment. He has spent over two decades as a federal housing lobbyist. After witnessing a low commitment to housing from both parties, he said he cannot imagine the new administration making affordable housing a priority.
“It hasn’t mattered which party is in charge of Congress or the White House,” Ptomey said, adding that the ongoing pandemic has created more competing needs for the federal government to invest financial resources into. “The record over the last 20 years is that housing doesn’t compete very well against many of these other issues like transportation, infrastructure, and healthcare.”
“If you do everything in the Biden platform, it would solve a lot of housing needs,” he continued. “But I just don’t think it’s realistic to have even substantial parts of it go through Congress.”
Bill Eager, senior vice president at nonprofit developer Preservation of Affordable Housing (POAH), said he expects a higher likelihood of expanded investment in affordable housing now that the presidency has fallen into Democrats’ hands. But the “devil’s in the details,” he said, highlighting the question of how that increased investment will be deployed on the local level. POAH owns and manages about 2,000 units of affordable and market-rate units in Chicago.
“Given that people are struggling financially, it would be appropriate for a rent subsidy to help depressed people stay in their homes,” Eager said. But it remains to be seen if the Biden administration could deliver all it has promised.
Yilun Cheng is a social justice and investigative reporter at Medill. You can follow her on Twitter at @ChengYilun.