By Tom Collishaw, CEO of Self-Help Enterprises
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Often lost in the broader political conversation around tax reform are the effects of tax law on affordable housing. It was the last major tax overhaul in 1986 that created the Low Income Housing Tax Credit (LIHTC), setting a course for private investment to become the cornerstone of affordable rental housing development for these past 30+ years.
Both the House tax bill and the expected Senate version retain the much-coveted 9% LIHTC program, with lawmakers clearly seeing the value of this important generator of rental housing new construction projects around the country. However, the House bill as passed would do away with the lesser known - although much more prolific overall - 4% LIHTC by removing the tax exemptions for Private Activity Bonds, which is the only way to access these tax credits. In California, approximately 80% of affordable rental housing units are built or repaired through the 4% LIHTC program. Last year this amounted to over 20,000 affordable homes in our state!
Both the House bill and the likely Senate bill also will dramatically lower corporate tax rates from 35% to 20%. Regardless of one's view about whether this will be advantageous to the overall economy, there is one unquestioned effect - the value of LIHTCs will plummet. We have already seen a reduction in pricing for our current tax credits, merely because of the prospect of corporate tax relief.
By far the largest housing subsidy program in America is the Mortgage Interest Deduction taken by homeowners who itemize on their tax returns, the vast majority of whom are not low income. The House bill would limit this deduction to $500,000 in mortgage borrowing, while the Senate bill is expected to maintain the status quo (which caps the deduction at $1 million). While we would prefer the House proposal to dedicate increased tax revenue from such a change to affordable low-income housing assistance we applaud the courage to take on this sacred tax break.
Ultimately, if tax reform is to happen in the current Congress, the final product will be a hybrid that both the House and Senate must pass. Our preferences would be (1) maintain the tax exemption for Private Activity Bonds and thereby 4% LIHTCs, (2) a more modest reduction in the corporate tax rate - somewhere between 25% and 30%, and (3) limit the mortgage interest deduction to a single residence with a $500,000 cap. If you care about affordable housing, it would be a good idea to let your legislators know how you feel in the next week or two as final decisions are made.
To contact your legislators, call the Capitol Switchboard at (202) 224-1321 or click here to find your representative.
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Self-Help Enterprises offers an exciting work environment where you can bring your high caliber skills to a true career opportunity and impact the world around you.
We are hiring a
Construction Superintendent for the north service area (Fresno and north). The superintendent is responsible for the training and supervision of mutual self-help housing participants in the construction of their new homes.
Self-Help Enterprises offers great benefits including year-round, stable work; medical, dental, and vision insurance; 401K; paid holidays; and more.
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WATER FLOWS IN MONSON HOMES
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 Dozens of Monson residents gathered to celebrate the new water system that now provides safe and reliable drinking water to the community. After many years of collaboration by the Monson-Sultana communities and a multitude of agencies and organizations, the Monson Community Well and Water System has completed Phase One - the drilling of a community well and construction of a water distribution system that brings water to approximately 30 homes in Monson.
Monson, an unincorporated community located in Tulare County, has experienced many struggles with dry wells and poor water quality due to high nitrates. The community has been served by individual wells and until recently many residents had been relying on deliveries of bottled water and water trucked in to large temporary water tanks installed on their properties. The water for the tanks has been supplied by the City of Dinuba and Orosi Public Utility District.
 The joint effort also received support from the Monson community, Sultana Community Services District, Self-Help Enterprises, the County of Tulare, and Community Services Employment Training (CSET). The multi-phase project was funded by California Department of Water Resources, California State Water Board and the USDA Rural Development Program. In addition, numerous Rotary Clubs from Visalia and Tulare provided private funds to support connecting homes to the water system.
Work is underway for Phase Two, constructing an additional community well in the neighboring community of Sultana. Following construction of the Sultana well, the two water systems will be inter-connected, providing water delivery to not only Monson, but also to over 200 homes in Sultana. This mutually beneficial partnership allows the neighboring community of Sultana, who is relying on a single well, to construct a new well and incorporate water members into the system. By combining resources, the new infrastructure will meet current and future needs for both Monson and Sultana residents.
"We are so happy and grateful that this project is finally completed. It's been a long wait but it has finally happened!," shared Lazara Luengas, Monson resident. "Families like my own will no longer have to worry about not having water to cook, shower or clean."
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SELF-HELP HOUSING PROGRAM OFFERS PATH TO HOMEOWNERSHIP
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After over 18,000 hours of sweat and hard work, eight families moved in to their new, safe, affordable homes in the rural Kern County community of Wasco. Among them is Marisol Medina who had always dreamed of owning her own home. She never thought that she would build it from the ground up, let alone build a home alongside her parents, Jose and Josefina Medina, who also built their own home through Self-Help Enterprises' mutual self-help housing program.
Marisol's parents, Jose, 62, and Josefina, 61, have rented their entire life and they were excited to become first-time homeowners after years of believing it could never happen for them. For the past few years, Marisol, 35, has also been renting a home in Wasco where she resided with her four daughters, age 15 to 20. Now, Marisol and her parents hold the keys to their new homes, which are located five doors from each other. "We were able to build something here that we will live in, and that is pretty amazing," said Jose.
Marisol applied for the self-help housing program five years ago, but she didn't qualify at the time. It was Marisol's daughters who gave her the motivation to work hard and get her credit score and savings in order. Marisol also credits Self-Help Enterprises' Gateway Homeownership Education program with helping to prepare her to become a successful, long-term homeowner. "I'm so grateful for a program like this that makes it possible for families like mine to be able to have a home." said Marisol. "It's a huge undertaking, but building a home together with my parents made it that much more special. Now we can walk over to share meals together, and I'll be able to care for them as they age. That means a lot to me."
Through the program, groups of families work together as a team and provide "sweat equity" to build all the homes in the group. All homes in the group must be completed before any family can move in. Over a period of about eight to 12 months, the group works under the direction of a skilled construction supervisor and contribute 70 percent of the construction labor. The energy-efficient three- and four-bedroom homes feature two baths, covered patios, and two-car garages. "Without this program, we would never have been able to be in a home like this," said Josefina.
In 1971, Self-Help Enterprises built the first self-help homes in Wasco. Today, 113 Wasco homes are among the over 6,200 homes the organization has built across the San Joaquin Valley since 1965. Self-Help Enterprises is currently building 10 homes in the subdivision with 10 more starting construction in the coming weeks.
As Marisol puts it: "From out my window, I see families who are putting time and energy into building their own homes. I'm excited to meet my neighbors because I know that we all share a common goal - to achieve our dream of owning a home."
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