CORRESPONDENCE - WS-1 OPPOSITION

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6 Growth of Very Low -Income Renters Continues to Outpace Availability of Housing Assistance Millions 20 18 16 14 12 10 8 Percent —50 2001 2003 2005 2007 2009 2011 2013 2015 ?al Number of Very Low -Income Renters ILef sale) ^ Share with Woret Case Lending Need iRightscalel Shore Receiving Noising Assistance IRight sea Iul Notes: Very low income Is defined as less than 50% of area median. Households with worst case housing needs are very low-income renters paying more than 60% of income for rent or living in severely inadequate conditions, and do not receiva housing assistance, Soume', US Department of I lousing and Urban Development, 2003-2017 Worst Case Housing Needs Reports to Congress. The incidence and severity of natural disasters is on the rise. In devel- oping their recovery plans to improve resiliency after such events, governments at all levels must keep in mind the needs of renters— particularly very low-income renters—for replacement housing. 45 THE OUTLOOK Slower growth in rental housing demand could be good news if it 40 helps to check the rapid rise in rents. But even if the homeownership 35 rate stabilizes near current levels, the number of renter households 30 is likely to continue to increase at a healthy clip, driving up the need for additional supply. And given that a broader array of households 25 has turned to renting, this also means a growing need for a range of 20 rental housing options. in high-cost markets. However, tax reform proposals also under debate call for elimination of the 4 percent LIHTC program, which accounted for just under half of production in 2015. THE CHALLENGE OF REBUILDING AFTER DISASTERS The series of disasters this past year—including devastating hur- ricanes in Texas, Florida, and Puerto Rico, and massive wildfires in densely populated areas of California—have affected millions of owners and renters alike. A key lesson from previous disas- ters is that rental property owners are slower than homeowners to rebuild or replace their units. For example, five years after Hurricanes Katrina and Rita ravaged the Gulf coast, three-quar- ters of severely damaged owner -occupied housing in Louisiana and Mississippi had been rebuilt, compared with only 60 percent of small rental properties. A recent report by the Community Preservation Corporation recom- mends a series of improvements to the federal disaster response process, including provision of additional housing vouchers to help displaced renters and special allocation of LIHTC authority to speed rebuilding of affordable housing. The study notes that the award- ing of additional LIHTC authority supported development of 30,000 rentals on the Gulf Coast after Katrina. In contrast, the Northeast was without similar authority after Hurricane Sandy and has subse- quently struggled to rebuild its affordable stock. With the divergence between housing costs and household incomes after 2001, cost burdens are a fact of life for nearly half of all rent- ers (Online Figure 1). The lack of affordable rental housing is a conse- quence of not only strong growth in the number of lower-income households, but also steeply rising development costs. The complex set of forces driving these increases includes the escalating costs of inputs and a lack of innovation in production methods, the design of homes, and the means of financing housing. Addressing all of these challenges requires action on the parts of both the public and pri- vate sectors. Government at all levels has a role to play in ensuring that the regulatory environment does not stifle much-needed inno- vation, and that tax policy and public spending support the efficient provision of moderately priced housing. Industry has its own part to play in fostering and advancing new approaches. However, the market simply cannot supply housing at prices afford- able to the nation's lowest -income households. The best means of supporting these families and individuals depends on both local market conditions and the value placed on other policy goals, such as helping to revitalize communities and improving the geographic distribution of permanently affordable housing. Another consider- ation for policymakers is to find ways for housing assistance pro- grams to enable and encourage economic mobility. While there is much to debate about the best approaches to pursue, the current level of rental housing assistance is grossly inadequate. It is concerning that discussions about federal tax reform have not addressed ways to expand the availability of affordable housing, and proposed measures could even erode the limited support that currently exists. As a growing body of evidence shows, the costs that poor -quality, unstable housing situations impose on individuals and families—as well as on broader society in terms of lost productivity and the strain on public budgets—are simply too high to ignore.