The Proposed Homes Act Would Put $300 Billion Toward Affordable Housing
Representative Alexandria Ocasio-Cortez and Senator Tina Smith want to create a public development authority to permanently address the housing crisis.
Representative Alexandria Ocasio-Cortez and Senator Tina Smith want to create a public development authority to permanently address the housing crisis.
The state of housing across the US is dire, with more than 50 percent of all tenants paying more than 30 percent of their incomes on rent alone, including moderate income individuals and families. While much federal action has focused on single-family home ownership, last week US House Representative Alexandria Ocasio-Cortez (NY-14) and Senator Tina Smith (D-Minn) introduced legislation that would provide federal support primarily for a new stock of affordable rental units. Called the Homes Act, the expansive bill would create a public housing option, allocating $300 billion over the next decade to finance a variety of housing programs.
The new bill comes on the heels of The Green New Deal for Public Housing, reintroduced by Ocasio-Cortez and Senator Bernie Sanders back in March, which proposes a massive $180 billion investment in existing public housing stock in service of decarbonization and weatherization goals. A lofty pitch to the US Congress, the Homes Act would create a housing development authority that would "acquire and develop real estate to create and maintain a stock of permanent, sustainable, affordable housing" as well as help local communities finance their own real estate acquisitions.
The Homes Act would build on "social housing" models seen in places like Montgomery County, Maryland and in Chicago, where part of a recent 1.25 billion bond passed this year will fund social housing projects—wherein a government agency provides low-interest loans to construct, rehab, or acquire new affordable developments. According to the Alliance for Housing Justice, "It can be owned by public entities, residents or mission-driven nonprofits and occupied by renters or homeowners. It includes public housing, community land trusts, new construction, existing affordable housing, and conversion of current market-rate housing."
Unlike traditional affordable housing which uses Low-Income Housing Tax Credits and often has an expiration date on rent subsidies, social housing programs mandate permanent affordability. The bill promises to create 1.3 million homes and includes rent caps and hike protections for future tenants. Projects constructed via this bill would require permanent affordability for 40 percent of very-low income units and 30 percent of low income units. It’s worth noting, too, that while the The Green New Deal for Public Housing plainly asserts the need for funding to address housing and "the existential threat of climate change," the Homes Act says little about decarbonization standards for homes developed under the proposed housing authority.
The bill would serve renters foremost but also emphasizes homeownership opportunities by allowing residents to purchase homes under cooperatives and by "providing relief to mortgage borrowers at risk of foreclosure due to market instability or economic distress." However, Bloomberg states the bill faces "slim odds," calling for an annual $30 billion plus a revolving loan fund, it "would be on par with what the federal government spends every year on the mortgage interest deduction—or equal to about half the current annual funding level for the US Department of Housing and Urban Development." Still, if passed, the Homes Act could address the myriad supply and cost woes faced by renters using tools other than those of the traditional market, acknowledging that current mechanisms for producing affordable housing are inadequate. In their New York Times op-ed from earlier this month, Ocasio-Cortez and Smith assert that "outsourcing development to the private market leaves affordable housing subject to the boom-and-bust cycle of private investment…This is the federal government’s chance to invest in social housing and give millions of Americans a safe, comfortable and affordable place to call home."
Photo by Tasos Katopodis/Stringer/Getty Images.
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