Scott Beyer Author Archives

Encouraging net-zero home construction is an increasingly common tool cities and states seek to reduce their carbon footprints. Buildings account for a substantial share of carbon emissions in many cities and the U.S. in general. Accordingly, several jurisdictions have introduced requirements and incentives for increasing net-zero construction, focusing on residential development. An Urban Land Institute-affiliated consortium of developers, for example, has committed to bring half of their projects to net-zero compliance by 2030.

The Tax Cuts and Jobs Act of 2017 (TCJA) changed some guidelines for housing. As I noted in the Housing USA column in this issue, it capped the state and local tax (SALT) deduction at $10,000, and limited the deduction on mortgage debt interest, two measures that mostly impacted wealthy homeowners.

In 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), the signature tax reform of former President Donald Trump. The law lowered income tax rates, reduced households subject to the estate tax, and generally decreased the burden that various interest groups must pay, using different tweaks and carveouts. 

You don’t often hear “affordable” and “zero-carbon” in the same sentence, because for housing development these goals are seen as being in tension. But in Salt Lake City, one progressive project is addressing both goals simultaneously, in a city that could use such outcomes.

Affordable housing advocacy and policy often prioritizes people who are most in need of housing, and understandably so—nearly one-third of Americans are housing cost burdened. But, the aid for housing often cuts off those who aren’t low-income enough to qualify, yet aren’t wealthy enough to afford market-rate housing.

Overcoming Nimbyism is hard—maybe the most significant barrier—for developers looking to get projects approved. This is particularly the case for affordable housing projects, which must overcome additional biases. Propose one in a city neighborhood, and the developer could have residents, activists and politicians reject the rendering for any number of reasons.

The COVID-19 pandemic has brought challenges to the entire economy, particularly to real estate genres that were already in a tenuous situation. New Markets Tax Credits (NMTC) cover a broad array of these asset classes, so one might think the credits, which are issued by the Department of the Treasury and meant to revive distressed areas, will be impacted. Whether or not that happens was the topic at a recent NH&RA panel discussion.

New Markets Tax Credits (NMTC) can be used for a variety of real estate types. They benefit developers building everything from grocery stores to clinics to manufacturing facilities, in areas deemed underserved. They’re bought by financial institutions, who become eligible for a five to six percent tax credit across a seven-year span. They’re syndicated through community development entities (CDEs), which can be either for-profit, nonprofit, or government-run. However, housing developers have somewhat restricted access to this financing tool. While NMTC has been used to build many a mixed-use residential project, the program can be inflexible, particularly regarding the “80/20 rule.”

2020 has been a brutal year for urban America. New York City, since bearing the brunt of the early COVID-19 impacts, has suffered steep drops in business activity.

The federal role in providing affordable housing takes various forms, but is mainly focused on subsidies or underwriting for private sector housing. Freddie Mac, the government-sponsored enterprise that purchases mortgage shares and pools them for resale as security investments, is a major conduit for this. In September, the corporation announced a new Social Impact Bond (SIB) product that focuses on multifamily properties, using the proceeds from loans to finance affordable housing.

Conservatives often find themselves with two conflicting impulses on housing. They support open markets and property rights and are thus sympathetic to the cause of weakening zoning laws and encouraging construction of different building types.

Since the 1930s, nearly all cities and towns have implemented some form of zoning to separate uses. Retail is put apart from housing, which is put apart from offices, and so on.