EXPLAINED: Why are affordable housing rentals difficult to build?
Greenville, S.C.
Greenville is experiencing a housing crisis. Housing leaders say even in affordable communities, people struggle to keep up with rent costs. County leaders continue exploring ways to create more affordable housing options. But, it’s a task that’s much easier said than done.
“Construction costs, interest rates and the price of land is all going up at a very rapid pace,” said Bryan Brown, the President of the Greenville Housing Fund. The organization works to create and preserve affordable options. It also works with local leaders to help them understand the challenges, like tax credits.
“Without [tax credits], we cannot produce the housing that is attainable to our growing workforce,” Brown explained. Low-Income Housing Tax Credits, or LIHTC, come from the federal and state government. It’s a tax break awarded to projects that offer income-based affordability.
“The state is treating every county the same even though populations differ by county,” he said. It’s a competitive process, and many projects are put on hold” until they receive the credits. “We had a lot of projects in the pipeline that could not get through the process,” said Brown.
Last year, the state senate passed a bill awarding more tax credits and resources to allow many projects to move along–like a Gateway at the Green, which broke ground earlier this month. The development will have 72 apartments for people making 20 to 60 percent of the area’s median income.
Even after people move in, low rent revenue and high property fees create an uphill battle for property managers. “A lot of these properties operate at the margin,” Brown said. “You’re not making enough, that’s when properties erode, and that’s what reinforces the stigma around traditional affordable housing is we’re not generating enough revenue to maintain these properties.”
Brown says tax breaks, like in the county’s affordable housing policy, are a key. “To provide property tax relief to provide fee relief as these things are developed only helps make these more affordable and more sustainable over time,” said Brown.
