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Reducing Homelessness

In order to reduce homelessness, our country needs to build low-income housing. The federal government used to build both affordable and low-income housing but doesn't anymore. Now the federal government makes deals with private developers and provides tax breaks of all kinds, so that developers build luxury housing and some affordable housing to qualify for tax credits but developers are not building low-income housing. What is the difference between affordable housing and low-income housing?

The federal Department of Housing and Development (HUD) calculates the Area Median Income (AMI) every year for every metropolitan area. AMI is the average household income for a metropolitan area. Let's use New York City metropolitan area as an example. In 2017, the AMI was $85,900 for a family of three. So if a locality defined 50% of the AMI as being low-income, that would mean the maximum income for such a status would be half of $85,900 or $42,950. You can see from these calculations that homeless people who may earn $10,000 to $20,000 in a good year are in the category of extremely low-income and do not earn enough for the affordable housing that is being built. Most developers can get federal and state subsidies if they agree to 20% of their buildings going to affordable housing meaning 100% of the AMI or lower. Hence, federal subsidies usually go to developers who are building luxury housing and providing 20% of their units as affordable housing for the middle and working classes, such as teachers, fire fighters, etc.

So if urban officials wish to solve homelessness, local officials need to create their own strategies. Localities must commit to building low-income housing for the homeless instead of offering tax breaks to developers who are building only 30% of their units as affordable housing. Developers don't wish to build housing for the very poor. They cannot make a profit.

If we are to build extremely low-income housing, we need to use a different set of tools than private developers. These tools are - localities themselves build public housing for low-income people, provide rent subsidies for the very poor so that they can find housing in the marketplace, and/or use nonprofit corporations, such as community land trusts, to build low-income housing. All three of these strategies have worked in the past.

Some will say public housing has not worked well in the past. there are many instances where public housing has worked.               Rent subsidies are an alternative. Localities can provide vouchers to low-income people to go out into the marketplace and find an apartment. The vouchers make up the difference between affordable rents and what poor people can pay. The federal government has provided vouchers in the past (Section 8); however, fewer and fewer vouchers are being provided due to the current conservative administration. Lastly, nonprofit corporations that are not seeking a profit can build low-income housing.


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