David A. Smith Author Archives

Stuffed into the Dodd-Frank legislation, the tangible manifestation of the witch hunt after the subprime collapse, is a provision, the long-awaited and long-delayed Volcker Rule that put the entire LIHTC business at risk. Hauled out of retirement to chair President Obama’s task force, former Federal Reserve Chair Paul Volcker believed America’s housing bubble was caused by financial sin: nefarious investment banks subverted wholesome commercial banks, taking consumers’ deposits and used them to concoct toxic assets flipped for fast bucks.

Unlike my peers, I do not age. Yet my contemporaries, seen last month at AHF Live in Chicago, look so old. I asked a long-time colleague if I were imagining things.

Isaac Newton thought light was a particle: it moves in straight lines, reflects off smooth surfaces, and refracts if deflected. But Newton couldn’t explain interference effects; a century later, Fresnel and Thomas Young gave wave proponents the upper hand. Yet waves need a medium in which to travel, and light travels everywhere in the universe, including through a perfect vacuum.

Short egocentric architect Frank Lloyd Wright must have hated tall people; his homes all have low ceilings. Similarly, transportation czar Robert Moses hated trucks; clearance under his stone bridges on New York State’s parkways goes as low as seven feet.

To the visitor from a land (U.S.A.) where a Greyhound bus terminal carries a proud plaque attesting to its pedigree, England abounds in spectacular historic, often ancient structures. Many are the nation’s treasures and wonders, sites lovingly maintained with public funds that bring past centuries alive.

While some revolutions are announced; others arrive with so little fanfare that by the time they seep into the public consciousness they’re all but inescapable. Such a revolution is quietly overtaking public housing: while the legacy program of HOPE VI remains on the books but zero-funded (except for occasional Choice Neighborhoods grants), the whole structure of public housing is being reinvented via HUD’s Rental Assistance Demonstration (RAD).

In the November 2012 issue of Tax Credit Advisor, I wrote about “the people niche,” and described affordable housing’s value proposition as plus – housing plus services as an integrated and coordinated ladder toward self-sufficiency or longer and healthier lives for seniors.

You will never hear such a story about a Low-Income Housing Tax Credit (LIHTC) property, because of a fundamental difference in program structure. In appropriated programs, an evil owner can use the residents as economic human shields; in LIHTC and similar investment tax credits, the owner cannot.

George Bailey, Secretary of the U.S. Department of Housing and Urban Development, surveyed his agency’s FY 2013 portfolio-level report. Across the board, results were dismal. With HUD alone bearing the burden of financing the development, renovation, and preservation of the nation’s entire supply of affordable housing, costs were rising; scandals abounded; and banks, investors, and states were unwilling to help.

As Heraclitus said, all things change – including properties. Not only is perpetuity in affordable housing unattainable, questing for it can be harmful.

Death should always be mourned, the more so when that death is of a loved and valued one which happened slowly, through inattention. So it is with as-of-right zoning, an aspect of development that over roughly three decades has softly and suddenly vanished away, taking with it our control over affordable housing costs and our ability to execute a national housing policy – and raising preservation from afterthought to national imperative.

Sometimes a revolution happens not with a blare of trumpets but through a thousand small actions in the same direction. Without actually sensing movement, one suddenly realizes the world has become quite different than it was – and is never going back.