'Imperative': New report urges investment in specific type of low-income housing in McLean County
A recent white paper published by the McLean County Regional Planning Commission (MCRPC) urges deliberate investment in a public-private program that provides a majority of affordable housing options across both the county and the U.S.
The study, published in mid-May and the first issued since December 2021, is the fourth in a series commissioned by Normal, Bloomington and county government officials via the 2018-era Regional Housing Initiative. The five-page report examines the status of affordable housing available via the Low-Income Housing Tax Credit (LIHTC) program, ultimately calling it "imperative that local leaders and stakeholders preserve and maintain LIHTC units to sustain housing for McLean County’s most marginalized residents."
"In light of the housing shortage, it's very important that we know that it's not just a workforce housing issue — it's also an affordable housing issue," Mark Adams, an MCRPC planner who worked on the study, said in an interview. "Unfortunately, (as) we see that the housing shortage continues to grow, it also will make it more challenging to increase affordable housing."
The housing options that LIHTC provides are separate from public, subsidized housing managed and provided by, for instance, the Bloomington Housing Authority; instead, private investors purchase tax credits from the government to offset the costs of development.
Property owners then commit via contract to provide a number of "affordable" housing units for at least 30 years. The income restrictions for tenants vary per property owner, although the maximum amount that can be charged to tenants is 80% of the Area Median Income (Bloomington's AMI from 2017-21 was just over $69,000, according to the U.S. Census Bureau) and most property managers appear to cap the rent at 60% AMI, according to the MCRPC's paper.
LITHC units compromise about 90% of all affordable rental housing in the U.S. and the Illinois Housing Development Authority, the state agency responsible for affordable housing and overseeing LITHC properties, calls the incentive program the "most successful affordable housing tool in Illinois."
In McLean County, around 100 LITHC units could disappear by 2027 as property owners pivot to market-based rent, according to the MCRPC's survey of five different representatives.
"Of the number of units that were set to expire over the next couple of years, 96 of them were expected to transition from affordable to market-rate," Adams said. "The property owner(s) told us outright, 'I'm going to be charging market-rate.' They were very upfront — very respectful, but very upfront."
All of the property management representatives who said the LITHC units would return to market rate were in the Bloomington-Normal area, Adams said, while two others in Gridley and Lexington said they would continue to offer a total of 24 affordable units via a different program. The MCRPC's study noted all "five LIHTC property owners/managers reported that the LIHTC program lacked incentives to renew the tax credit contract with the State of Illinois, after the end of the compliance period."
A common motivator among the three property managers or owners who are pivoting back to market-based rent was "profitability due to increased demand for rental housing," states the report.
The shrinking number of LIHTC units isn't a new phenomenon, Adams said: As contracts around the area expire, the trend has been toward non-renewal. In 2019, there were 1,721 of these affordable units in McLean County. In 2022, the number 1,416.
"If there (were) no additional LIHTC units (added), between now and 2027, we would expect that number to be almost down to 1,300," Adams said. "We can't, obviously, foretell how many developers are going to apply for new units over the next couple of years, but we can say on the opposite side that it's been a common pattern that the number of LIHTC units in the community continues to go down."
The MCRPC paper made recommendations ranging from strategies that involve local government agencies to the involvement of nonprofits into the affordable housing market. Adams said the recommendations were based on research into what's worked in other places, best practices and proposals that may failed or gotten little traction.
One suggestion regarding networking among nonprofits, affordable housing groups and local governments is based on a Chicago-based nonprofit working such relationships across the state to provide housing; another regarding proactive code enforcement by city governments to keep low-income housing safe and livable was based on an initiative in Rockford.
"I think that's the one thing that I haven't called out: When it's state-run and state-issued, it doesn't necessarily mean there's nothing that we can do on the local level," said Adams. "There are other means. Even though LITHC is the big chief in town, it's not to say that it's the only way we could ensure there's affordable housing."
Adams said since the white paper was published in May, the MCRPC has been "having conversations" about the findings, although the agency's role in addressing the housing shortage is essentially confined to research. He added that he believes plans to hire a two-year housing navigator at Mid Central Community Action are a step in the right direction by the Normal and Bloomington governments.
"It really comes down to political will," he said. "Obviously the city, the town are receptive. But I think the stronger the push from the community, I think the more likely these (things) will happen."