Last November, I went to Chicago
for an annual gathering of the
tax credit industry.
It takes a lot of players--
bankers, brokers, law firms,
consultants, developers-- to put
affordable housing deals
together.
Over the past 30 years,
housing tax credits have helped
build more than 2 1/2 million
affordable units.
The program costs about $8
billion a year, an amount that's
been growing.
But that hasn't kept up with the
need for affordable housing, and
that lack of housing makes for a
booming market.
Stacie Nekus is a vice president
for one of the largest brokers,
or syndicators.
>> Well, the affordable housing
market has been very robust, and
so investors really like it.
>> SULLIVAN: Why do the
investors like it so much?
>> Well, I think you're giving
back to the community, but
you're also able to get a good
after-tax yield.
>> SULLIVAN: How's business
right now?
>> Very strong.
Yeah, demand is off the charts.
>> SULLIVAN: The program is
often described as a win-win.
Poor people get good quality
affordable housing and the
private sector makes money.
Rick Lazio, a former
congressman, now lobbies for the
industry.
>> People ought not to be
getting rich off of this, but
they ought to be incentivized to
put their capital at risk.
And to feel as though they can
get a reasonable return.
>> SULLIVAN: Is this the most
efficient program?
>> This 100% the most efficient
way to do it.
It gets the most amount of units
built which is what is required.
You have a lot of different eyes
on it.
Because again you have the
public and private partnerships
so everyone's looking at it.
>> SULLIVAN: We were looking at
it too.
With so many people struggling
to find housing, we wanted to
see how well the program's been
working.
We analyzed available data about
the primary tax credits given
out over the last 20 years.
And here's what we found: from
1997 through 2014, the number of
units produced has fallen from
more than 70,000 to less than
59,000.
But the program is costing
taxpayers 66% more
in tax credits, that's
after adjusting for inflation.
The estimated rise in
construction costs only accounts
for about half of that.
We asked representatives of the
tax credit industry about what
we found, and reached out to
more than 20 top
investor and syndicator
firms.
None would agree to an
interview.
But in written responses, the
industry said that "several
factors have affected tax credit
production," such as the loss of
other federal funding, or "soft
subsidies," and the increased
costs of trying to help the
poorest renters.
They also claim the business is
less profitable than it used to
be.
So these are just our numbers.
We took our findings to the
group that represents the state
housing agencies that oversee
the program.
>> I think there are good
reasons that the programs
produced fewer units.
And some of those is that we're
trying to produce more units in
areas of opportunity; areas that
are perhaps more expensive.
We're also trying to do things
like ending homelessness.
So the low-income housing tax
credit program has a 30-year
proven track record and it's
produced good housing that's
very well run.
>> SULLIVAN: But not everyone
is convinced.
Republican Senator Charles
Grassley is investigating the
program.
>> My suspicion is that there's
a lot of things wrong with the
program.
It may not be serving all of the
people it should serve.
There may be people in the
middle getting more than they
should.
But you would think that this
would be something the IRS would
be looking into, because they
have to police to see whether
the money is serving the purpose
it's supposed to serve.
>> SULLIVAN: And are they
policing?
>> No, they aren't.
There's only been seven audits
in 29 years.
Well, if you aren't following
the money, how do you know that
the low-income housing tax
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