Help for Housing

The House Ways and Means Committee is working on corrections to the Tax Reform Act of 1986. While fixing errors and other problems, Congress can also help poor Americans by extending the low-income housing tax credit. It provides indispensable financing for modest new or rehabilitated rental housing.

Despite a critical shortage of decent apartments at the low end of the rental market in many big cities, President Reagan has cut housing funds by close to 80% during nearly two terms in office. As federal support has dwindled, the housing tax credit has provided the strongest incentive to build or renovate apartments and rooms that rent from $200 to $500 a month. This is all that many working Americans, including parents with families, can afford.

Although developers and investors were slow to embrace the housing credit or any of the confusing and complicated changes provided by tax reform two years ago, the incentive has become increasingly popular. Last year the credit, one of the few major corporate tax shelters available, was used to generate nearly 15,000 low-income housing units--including single rooms for homeless people and apartments for large families in New York, Boston, Chicago, San Francisco, Los Angeles and other cities plagued by severe housing problems. Uncertainity about the tax break, which is scheduled to expire next year, has put several major projects on hold.

The new housing will get a quick go-ahead if Congress approves a proposal by House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.). His “technical corrections” package also includes a one-year extension of the low-income housing credit. The extension would allow reluctant or confused investors more time to take advantage of the benefit. While shrewd developers and corporations would get a tax break, poor people would get a break on housing.

The low-income housing credit has the potential to generate 100,000 housing units nationally and 10,000 housing units in California in one year. Every single apartment, every single room could be rented on the first day on which it became available. At a cost of $200 million in lost taxes, the price is modest.

Millions of poor and homeless Americans need a decent place to rent. Absent stronger government support, the best that can be hoped for is vigorous new private investment. It must not be slowed by uncertainity or confusion about the low-income housing tax credit.