Federal real estate programs could be doing more for families, communities and taxpayers alike. Later this month we’ll unveil new policy recommendations for how Congress can make that happen.
Smart Growth America and LOCUS, our coalition of responsible real estate developers and investors, have developed a set of policy recommendations for federal real estate programs. Join us for an online event about this new platform.
The Urban Land Institute (ULI)’s annual housing conference brings together housing professionals from across the country to discuss current challenges and opportunities for supporting a full spectrum of housing choices in cities and suburbs increasingly challenged by the new economy.
Joining the discussion at this year’s conference is LOCUS: Responsible Real Estate Developers and Investors. LOCUS Managing Director Christopher Coes and Steering Committee member John Hempelmann, of Seattle-based business law firm Cairncross & Hempelmann, will join a panel discussion at the conference about federal involvement in real estate and how it might be reformed.
The following post was crossposted on the U.S. Green Building Council’s blog.
The biggest real estate investor in the United States isn’t Donald Trump, and it’s not a private equity firm.
Spending or committing roughly $450 billion a year, the federal government is by far and away the largest investor in real estate in the country. This spending spans 50 federal programs at half a dozen agencies, and includes everything from loans and loan guarantees to tax credits to low-income housing grants. If you include the quasi-governmental enterprises Fannie Mae and Freddie Mac, the amount of money the government spends each year on real estate is even larger.
Trumbull Park Homes, a low-income housing development in Chicago, Illinois. Photo by Robert R. Gigliotti via Flickr.
In January, Smart Growth America released Federal Involvement in Real Estate, a survey of over 50 federal programs that influence real estate in some way. This post is the second in a series taking a closer look at some of the programs included in that survey.
Congress began the Low-Income Housing Tax Credit (LIHTC) program in 1986 to incentivize the private sector to develop more affordable rental units for low-income households. Since its creation, the credit has created or preserved nearly two million affordable rental units across the country.
The program offsets investors’ federal income tax liabilities, but the responsibility for administering the program is delegated to the states. States designate housing credit agencies to distribute a pool of tax credits from the U.S. Department of Treasury based on their population. In 2010, the amount of credits agencies received was equal to the greater of $2.10 per capita or $2,430,000. For example, the population of Oklahoma in 2010 was about 3.6 million people, so the state received about $7.7 million in tax credits, or 3.6 million multiplied by $2.10.
The Parker Ranch installation in Hawaii. Photo by the U.S. Department of Energy.
Earlier this month, Smart Growth America released Federal Involvement in Real Estate, a survey of over 50 federal programs that influence real estate in some way. This post is the second in a series taking a closer look at some of the programs included in that survey. Today’s post is about Qualified Energy Conservation Bonds .
Qualified Energy Conservation Bonds (QECBs) give state and local governments a low-cost financing option to encourage energy conservation.
Funding from the program has been used to retrofit public buildings, to power buildings with renewable energy, and to improve public transit infrastructure. Authorized by Congress as part of the 2008 Energy Improvement and Extension Act, the original legislation allocated $800 million in federal funding to the effort and has since been increased to $3.2 billion as a result of the 2009 American Recovery and Reinvestment Act. As of July 2012, about $760 million in allocated funding had been spent. Because QECBs do not have to be spent within a certain time period, a great deal remains untapped.
The Ely Walker building in St. Louis, MO was redeveloped with the help of the New Markets Tax Credit. Photo by Nick Findley via Flickr.
Earlier this month, Smart Growth America released Federal Involvement in Real Estate, a survey of over 50 federal programs that influence real estate in some way. This post is the first in a series taking a closer look at some of the programs included in that survey. Today’s post looks at the New Markets Tax Credit.
New Markets Tax Credit allows individual and corporate investors to receive a credit against their federal income tax return in exchange for making an investment in a specialized financial institution called a Community Development Entities (CDE). Congress created the credit in 2000 as a way to attract private capital to businesses in economically challenged communities. Authorized under the Community Renewal Tax Relief Act of 2000, the program has appropriated billions of taxpayer dollars to promote investment in these areas that are often overlooked by traditional financing sources.
LOCUS members at 2012’s Leadership Summit.
LOCUS: Responsible Real Estate Developers and Investors is proud to announce a new series of industry roundtable discussions about improving the federal government’s role in today’s real estate market.
The discussion series will gather leading real estate developers and investors from across the country to address the federal government’s role in real estate, and create solutions to align federal involvement in real estate to better support walkable development across America.
Figure 2 from Federal Involvement in Real Estate.
The federal government spends billions each year in the real estate market through a web of costly programs with an uneven impact on homeowners, renters and communities. Smart Growth America’s recent report Federal Involvement in Real Estate surveyed 50 federal real estate programs to better understand where this money goes, who is benefiting (and who isn’t) and which programs are particularly in need of a closer look.
One of the costliest tax-expenditure programs for housing is the home Mortgage Interest Deduction (MID). Created in 1913, the federal government commits an average of $80 billion each year to this program intended to promote homeownership. Our recent report explains that while the MID does promote increased spending on housing , it does not necessarily increase rates of homeownership. Compounding this problem, the deduction in its current form may be skewing the real estate market in unintended ways.
Most Americans don’t know that the government spends $450 billion each year on real estate. And few – if any – know the full impact of these expenditures.
Join the call to examine this spending. Sign our petition calling on Congress to take action.
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Earlier today, we released a new report about the federal government’s involvement in real estate. This spending represents billions of dollars of taxpayer dollars, and impacts Americans on every street in every town and city across the country.
We’re calling for action, and we want you to join us. Add your name to the petition asking Congress to examine this spending and better coordinate federal programs.
We know what programs this funding goes to, but how does it impact American families? Is it supporting U.S. communities? And are taxpayers getting the best return on their investment? All of these questions should be answered.
As the 113th Congress begins its new work, with the Presidential Inauguration just two weeks away, and as budget concerns continue to be a focus of debate in Washington, now is a unique opportunity to examine this spending.
Ask Congress to examine federal real estate spending. Take a moment to add your name to the national petition, and share it on Facebook or on Twitter with the hashtag #RethinkRealEstate.
Federal investments could help American communities grow stronger and more vibrant — in addition to achieving their goals of homeownership and housing security. Call on Congress to examine these programs today.