Affordable Housing

Housing costs are rising across the nation, and Cincinnati is no exception. Cincinnatians are feeling these costs, and they want something done about it. The proposed charter amendment creating a $50 million trust for affordable housing out of city funds was ill-conceived, but a clear signal that housing is a top priority for the city's residents. During my first term on Cincinnati City Council, then-Vice Mayor David Mann and I created the first funding stream for affordable housing in the City of Cincinnati. I am confident we can bring more affordable housing to Cincinnati in a way that's measured, effective, and doesn't break the budget.

There is no easy solution to the problem, but first, we have to understand what the public is generally referring to when they talk about affordable housing. The Federal Housing Administration defines affordable housing as housing for which expenses (including utilities) add up to no more than 30% of a family's gross income per year. By this definition, most full-time, two-wage earner families in Cincinnati can find affordable housing without subsidy.

What we are really talking about is low- or extremely low-income affordable housing. A household is considered low-income if it brings in less than 80% of the local median income, and extremely low-income if it brings in less than 60% of the median income. It is difficult if not impossible to find new affordable housing for low-income or extremely low-income households unless there is government subsidy in the construction and maintenance of the properties. The cost to construct new housing simply makes it economically non-viable for developers to build such housing without subsidy.

Much of the low-income housing that is created in Cincinnati is done through Federal Low-Income Housing Tax Credits authorized under the Internal Revenue Code (LIHTC). If a developer can secure these credits and then find a buyer for them at or close to par, the developer can build low-income housing and earn its profit upfront. LIHTCs come with strings that require the housing to be maintained as affordable for low-income households for a period of 30 years. Securing these credits can be a highly competitive process.

Given the ongoing shortage of affordable housing, what we have been doing is simply not working. A review of the City’s LIHTC transactions shows that, for the most part, the cost ranges from $200,000-$250,000 per apartment. When looked at in this way, the subsidies given seem overgenerous. Recent transactions in the Cincinnati area show that existing, good quality, workforce apartments can be purchased on the open market for around $90,000 per unit.

There is a great deal of rhetoric surrounding affordable housing which amounts to a lot of smoke, but very little fire. The city will conduct an updated housing inventory showing the location and cost per unit of all multi-family housing in the city. The city can then undertake research to determine the amount of subsidy necessary to make the existing inventory of housing affordable. It seems simplistic, but if existing decent housing can be purchased for $90,000 per unit and new or rehabilitated affordable housing is costing $250,000 per unit, the city should be able to take a large part of its excess existing housing stock and create more than twice the number of affordable housing units in the city.

The city cannot ignore this issue. Working with the Cincinnati Metropolitan Housing Agency, we can compassionately assist in creating more affordable housing for all those who need it.