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Supporting LIHTCs: As Simple As Show and Tell

Published by Jennifer Hill on Sunday, May 1, 2011

Journal cover May 2011   Download PDF

On a sunny, brisk March day in Clare, Mich., Rep. Dave Camp, chairman of the Ways and Means Committee, took a tour of ClareCastle Senior Apartments, a low-income housing tax credit (LIHTC) financed property in his district. The tallest building in downtown Clare, the apartment community stands on the former site of Thayer’s Dairy, an old ice cream factory with which the chairman was familiar. Camp, along with a handful of representatives from the Michigan Housing Council (MHC), a representative from Mid Michigan Community Action Agency and the property manager, among others, toured the grounds and talked about the property’s positive impact on Clare, including new shops that cater to residents. Talking about the building’s merits led to a broader discussion about the LIHTC program and how developments like ClareCastle can boost local economies.

“In the context of the LIHTC, [Rep. Camp] will have a significant role in discussions,” said Ted Rozeboom, MHC secretary and former director of affairs for the Michigan State Housing Development Authority, noting that the House Ways and Means Committee has sole jurisdiction over tax policy. Rozeboom attended the informal meeting at ClareCastle and said that he left feeling positive about the LIHTC program’s future.

That said, with federal expenditure cuts looming on the not-too-distant horizon and nearly 100 new faces in Congress, industry participants say that communicating the LIHTC program’s economic and social value to legislators may be more important this year than ever before.

Surveying the Political Landscape
Discussions about tax reform began in earnest last year, shortly after the election of the 112th Congress. A November report from the President’s Economic Recovery Advisory Board (PERAB) suggested that housing vouchers would be a cost-effective replacement for the LIHTC program. Congress did not act on the proposal, but shortly after the report’s release, two members of the National Commission on Fiscal Responsibility and Reform recommended giving the tax code a clean slate by eliminating all tax credits and deductions. (See the December 2010 Journal of Tax Credits for more details about these proposals.) Then in January, Rep. Camp kicked off a series of hearings on comprehensive, fundamental tax reform to examine the administrative and economic burdens imposed by the current tax structure. “Everybody’s going to have to justify their [program’s] existence in the tax code,” said David Gasson, vice president of Boston Capital and executive director of the Housing Advisory Group (HAG).

Being Prepared
Rozeboom, a former Senate Banking Committee staffer, points out that the tax reform discussion is still in the early stages and may not play out for at least another year. Gasson said that he too does not expect any legislative action on tax reform until after the next election, but it’s never too early to get involved, especially given the current climate. The industry will fight and win this legislative battle “at home,” Gasson said, stressing the importance of demonstrating to members of Congress that LIHTC properties create jobs and stimulate the economy in their districts.

“There’s only so much folks in D.C. can do to convince them of that,” he said, adding that because there is little or no difference between conventionally funded and LIHTC-assisted developments, representatives in many cases are not aware that LIHTCs helped finance new properties in their districts. “Unless developers tell them, they have no idea. You can give them ownership in the program by letting them or their staff members know that without this program, this development wouldn’t be there,” Gasson said.

Getting Involved
Elected officials will usually listen to developers who are also constituents in their districts, said Ronne Thielen, Affordable Tax Credit Coalition’s (AHTCC) board chairman. Inviting lawmakers to events like groundbreakings and ribbon-cuttings might be a no-brainer to some, but even if a property has been around for a while it never hurts to invite them to celebrate a renovation, or just for coffee and a tour, she said.

Also, if a developer can arrange for media coverage of an event, the odds are better that officials will attend and speak, said Arjun Nagarkatti, president of AMCAL Multi-Housing. As a developer, AMCAL, whenever possible, encourages a media presence at its property events by spreading the word about any unique or interesting property features. During grand opening events residents often speak poignantly about their new home, said AMCAL CEO Percy Vaz. Vaz says that personal accounts can be important for legislators to hear. “Some of the stories are heartbreaking in terms of the difference between where they lived before and where they’re going to be living now,” he said.

The first step to reaching out to an elected representative is as easy as picking up the phonebook, which contains congressional office contact information. Gasson recommended e-mailing or faxing updates about upcoming events to local, state and national representatives and their staff members, making sure to include some details about the property such as why it was needed, how many jobs it created and the amenities it offers residents. “It’s easy to impress them because LIHTC properties are impressive,” he said.

Preparing for a conversation with an official by keeping up with developments in the marketplace is key, according to MHC’s Rozeboom. At the meeting with Rep. Camp, Rozeboom said the topics ranged from senior and rental housing to homeownership and the state budget before the group circled back to the benefits of the LIHTC program. “You want to keep the discussion at a fairly high level without getting too technical,” he said, adding that it’s important to highlight any spin-off economic development from the property, including job creation, new local businesses, and the role of any local investors in the transaction.

Going to a Washington, D.C. office meeting to talk conceptually about a development can’t compare to visiting the homes and witnessing their positive effects firsthand, Rozeboom said. “When you go in, you get the sense that this is a community within a community, and you can’t get that in an office or with a picture,” he said. “In this case [Rep. Camp] knew it was the site of a dilapidated ice cream factory and now here’s this new building. It really hits home.”

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