Smart Growth America recently published a report entitled “Federal Involvement in Real Estate: A call for examination”, to look at the effectiveness of various federal real estate investment programs and determine how well these programs influence development. The report focuses on all types of federal housing and real estate investment programs including the Low-Income Housing Tax Credit, Historic Tax Credit, New Markets Tax Credit, several grant programs at HUD and the U.S. Department of Agriculture (USDA), as well as a few programs within the U.S. Department of Energy (DOE), and Small Business Administration (SBA). According to the report, each year, the federal government spends approximately $450 billion on real estate through a combination of direct expenditures and tax and loan commitments.
A broad analysis of these investments and expenditures show that they significantly impact where real estate is developed and what kind of product is built; however, the analysis also suggests that the impact is uneven. For example, small multifamily buildings are less likely to receive financing, despite the fact that most renters in the United States live in these smaller buildings. The report finds that, when viewed as whole, federal funds are not targeted to those most in need, are not targeted to strengthen existing communities and are not targeted to places where people have economic opportunities.
While Smart Growth America does not give specific policy recommendations for how to improve the impact of these real estate investment programs, the organization does urge policymakers to review federal programs with the following goals in mind:
- Support balanced housing choices in suburbs, cities and rural towns.
- Reinvest in America’s existing neighborhoods and communities.
- Provide a safety net for American families.
- Help more Americans reach the middle class.
Click here to read the report.
