Enterprise Foundation, NY
Morgan Simon
Swarthmore College

As an Everett Intern at the Enterprise Foundation, NY, I spent the first few weeks of my job horribly confused. Low Income Housing Tax Credits? Partial Equity? Limited Partnership? Third-Party Transfer? NEP, NRP, 85/85, CRA, CBO? While I have slowly deciphered the low-income housing lingo that a community development agency like the Enterprise Foundation must speak fluently, I have also become frustrated by the fact that community development is such a complicated process. Floating in this language soup are piles of paperwork, inter-agency politics and layer upon layer of bureaucracy. The fact that America lacks safe, affordable housing is not a hotly contested issue. With so much government and community support, why is so little being done? Why do we have so many different government and non-profit agencies working on this issue if they are all, in essence, working for the same goal? Should it take an intermediary like the Enterprise Foundation just to make sure government money is spent efficiently? It seems that the system has become so complex that precious resources are being lost in the shuffle of money and programs.

Take, for example, the Low Income Housing Tax Credit (LIHTC). This program has enabled the construction and rehabilitation of over 10,000 new units of affordable housing just in New York City. Each state receives a certain number of tax credits which are available over ten years to for-profit corporations that chose to invest in low-income housing projects. Investors receive a dollar-for-dollar tax credit against their federal income tax liability, as opposed to traditional, less lucrative tax breaks which reduce a corporation's taxable income. This program is especially popular with banks, who can fulfill their obligations under the Community Reinvestment Act with a guaranteed return on their investment. In New York City, nearly a billion dollars has been invested in low-income housing, and each year this number grows.

At first, I too was excited to see these figures and learn that there has been significant investment in low-income housing in New York City. Then I considered the fact that federal money is being funneled from the government to corporations, from corporations to intermediaries like the Enterprise Foundation who syndicate the tax credits, and from intermediaries to the non-profit developers who finally create the housing. Why should corporations receive a subsidy? Aren't they the ones with the money? Since the paperwork required to create housing under the LIHTC is complicated and time-consuming, the LIHTC has been affectionately nicknamed "the subsidy for lawyers and accountants." I wouldn't exactly include them as part of the target "low-income" population for whom the LIHTC was originally created.

Enterprise staff have patiently explained to me that old-fashioned subsidized government housing, the type that doesn't require the involvement of corporations and intermediaries, is politically sensitive. "Tax credits" are less threatening than "subsidies" to both politicians and the American public. Also, the U.S. government is not known for its great efficiency. The LIHTC takes housing production out of government hands, and thus housing built under the LIHTC is generally of higher quality and built much faster. Certainly, intermediaries such as Enterprise and LISC have over the years mastered the LIHTC system and make the process as quick and painless as possible. And as happy as I am to see that through the LIHTC, low-income housing is indeed being built, it disgusts me that while American citizens and politicians are against subsidies for housing, they applaud the creation of subsidies for corporations.

Whether or not the government should build low-income housing itself is part of a larger political philosophy question. Big government vs. small government is a difficult issue that has been debated throughout American history. Personally, I would not care if the government built the housing itself, or if it instead gave money directly to non-profit or for-profit developers to create. I am sure however that giving the money first to corporations adds an unnecessary step and can even be considered counter-productive since it helps the rich get richer, and robs the government of tax revenue that could be used to fund additional social services for the poor. If the government is determined to have a tax credit, they should at least give it to low-income people instead. This would be a more efficient allocation of resources in the fight against poverty.

While I enjoy working at the Enterprise Foundation and am a strong supporter of their work, I am angered that there is a need for such work at all. Essentially, what the Enterprise Foundation does is make sure government programs function properly. Someday I hope the government will be able to do this itself and make intermediaries obsolete. It is not fair to entirely blame the government, however. Working in non-profits in general has taught me that while good-hearted organizations can try and correct the mistakes of the government and society, change must take place on a societal level so that solutions to problems need not be so political and complex.