CORRESPONDENCE - WS-1 OPPOSITION

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one lesson from prior disasters is that rental housing is restored much more slowly than owner -occupied homes. This is likely due to several factors. While homeowners directly control the rebuild- ing of their properties, renters must depend on their landlords' decisions, owners of just a few rental properties may be especially slow to invest in rebuilding if their own homes are also damaged. In addition, policymakers have historically been more generous in assisting homeowners than rental property owners who lack adequate insurance coverage. According to a 2010 HUD survey, only 60 percent of rental properties that sustained major damage in Hurricanes Katrina and Rita in 2005 had been rebuilt by 2010, compared with 74 percent of homeowner properties with similar levels of damage (Figure 38). Instead, 12 per- cent of former rental properties were cleared lots and 28 percent contained residential structures with substantial remaining dam- age, including 13 percent that did not meet the Census criteria for habitability. While there are legitimate concerns about bailing out under -insured rental property investors, a secondary effect of lim- ited rebuilding in these disasterstrickenareas has been to reduce the housing available to renters. The rebuilding of public housing, project -based units, and units available to voucher recipients presents other challenges. Following Hurricane Katrina, Congress made appropriations for disaster recovery that included supplemental allocations of both low-income housing tax credits and housing choice vouchers. While providing much-needed resources, these allocations require attention to ensure that LIHTC units are completed quickly and that the supply of units available to voucher holders is sufficient. After the 2017 hurricanes, rebuilding of units available to voucher holders may be particularly urgent, given that these rentals account for 62 percent of the HUD -assisted stock in Houston and 64 percent in Thmpa. A recent report from the Community Preservation Corporation documents other lessons from the rebuilding effort following Hurricane Sandy and recommends multiple potential improvements to streamline the application process, speed delivery of rebuilding assistance, and allow federal agencies to better prepare for future events. Given that it is just a matter of time before the next natural disaster occurs, taking these steps in advance will help to protect renter households in the wake of future storms. THE OUTLOOK With the economic expansion now in its ninth year, the immediate challenges facing America's rental markets depend on the outlook for the broader economy and the policy decisions of Congress and the Administration. On the one hand, continued economic growth would give a further lift to household incomes, but could also put additional pressure on rents. On the other, though, a recession would put more renters at risk of unemployment and reduced income. Meanwhile, proposals for tax reform and changes to the LIHTC program make future funding for affordable housing production and preservation uncertain. While its prospects are unclear, a bipartisan bill in the Senate proposes to expand support for the LIHTC program and to change program rules to provide additional flexibility to states and improve the program's ability to serve extremely low-income households. In contrast, the tax reform pro- posals under consideration could substantially reduce production of LIHTC units by eliminating the important 4 percent credit. Regardless of the short-term outlook, however, the growing gap between the number of income -eligible households and the avail- ability of rental assistance is a long-term challenge. In some markets, demand-side subsidies—such as expanded access to housing choice vouchers—may be an effective response. However, in many metros across the country, increases in supply have not kept pace with population growth, putting even greater pressure on lowest -income households. In these markets, responding to rapid population growth requires both expansion of the overall rental supply and additional support for new construction and preservation of assisted units. While the federal government remains the primary source of rental assistance, states and localities must continue to take steps to pro- vide increased support for affordable housing through bond issues, trust funds, inclusionary zoning, and other approaches. Since states and localities also define the regulatory context for market -rate housing, they must also lead efforts to ensure that additions to the rental housing stock keep pace with population growth and to miti- gate losses of low-cost units in the private market. 37