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Slumlords are often NOT Section 8, as there are no requirements for their property. Slumlords will just let the property deteriorate while still increasing rent.
You need working windows and working doors, railings on more than 3 steps to name just a couple requirements for Section 8.
A friend of mine that really has her head on straight recently purchased a rowhome in West Philly (her 4th home) for $15,000 and renovated it completely-it is really beautiful.
She did Section 8 and has a nice working woman with her child in there. That is how the program is supposed to work. The landlord increases the value of homes by improving the property (which was nearly a shell) and being discretionary when selecting tenants.
Taxpayers pay for outsized profit margins for private landlords like your friend, with many of the lower-middle and working class taxpayers funding the program ending up with a lower standard of living than the concentrated welfare recipients getting the vouchers (and certainly less than the capital-holding landlords also benefiting), after all taxes and transfers are considered? Yeah, the government isn't "supposed" to work like that at all, although sadly it does and is designed to far too often.
It is not paid at the end of the year. It is paid out over 10 years, so if you by 1000 worth of credits, you get 100 each year for 10 years, not 1000 at the end of the year.
Which is a 10 cap rate with NO RISK, plus upside in the project, whcih is extremely good considering the average ROI on NNN investments are about 6%
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Originally Posted by FinsterRufus
They are still paying. They're paying 93c on the dollar. And the money they pay to the developer allows buildings to be built that otherwise may not, and the set aside provides affordable housing in high demand areas. So yes, in this instance there is good out of doing so.
you're assuming of course people wouldnt build housing without government financing which of course is ridiculous.
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Originally Posted by FinsterRufus
How many jobs created by whom? If the tax credit wasn't available they'll find another way to keep it from going to the IRS.
if the tax "write off" for a project is $1m, then how many jobs could have been created by giving businesses $1m in write offs? That comes out to about a $8m investment give or take, which could create quite a bit of jobs, rather than creating housing which simply continues poverty.
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Originally Posted by FinsterRufus
It is okay if it provides a good service. I thought you would rather the private sector got to keep the money instead of giving it to the government? Isn't that what you're all about? Why is it wrong all of a sudden?
Its government creating demand, didnt we learn anything from government created demands in the housing industry? Isnt there enough vacant homes all over the place already? I live a few miles away from Youngstown, where they are knocking down homes left and right..
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Originally Posted by FinsterRufus
I understand that. But, if the General Partner just lost 999,000 on the development that cost 1,000,000, how is that General Partner going to be able to operate the building? If the affordable apartments no longer exist, and the General Partner is noncompliant, the tax credit ceases to be eligible and the INVESTOR no longer receives it. The building has to remain compliant for 15 years. The IRS can cease to honor the tax credit, and make you pay it back, with interest.
Clearly the general partner goes into the investment with the intent to earn a profit, that was never in dispute. The question is, if the general partner loses, that doesnt equate to a loss for the limited, tax purchasing investors who have NO RISK..
"Compliance" is rather easy, especially considering once these properties are built, the general partner usually flips and sells it since they are now receiving government assisted rentals, with a 10 cap rate (note above) and the average ROI for properties are 6 cap rate, meaning they walk away with about 4% profit immediately. Sometimes before the project is even completed.
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Originally Posted by FinsterRufus
The credits are subject to the building being compliant. If the development goes bad and the affordable units go bye bye, so do the credits. You cannot take the full credit in the first year.
Its a brand new, hi rise luxury building, what on gods earth makes you think its not going to be compliant in a few years?
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Originally Posted by FinsterRufus
I understand that, I explained that earlier. But the credits do not come without strings. The building has to keep up it's part of the bargain and comply with the tax code for 15 years in order to not be subject to recapture.
The strings are small compared to the lack of risk involved.
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Originally Posted by FinsterRufus
In this case, I see the subsidy as being of benefit.
I didnt deny the benefit, I questioned if there was a better way to receive a higher benefit at less of a cost.
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Originally Posted by FinsterRufus
Sigh. The government is not paying 100k to a developer. This is money they'll never see. There is a difference. The investors claiming these credits are huge entities such as banks, that will indeed find another way to not give the tax owed to the government.
oh just stop. As an investor who hasnt paid taxes in 15+ years, I know how the system works. The government might not be writing me a check but me not having to pay taxes is just as beneficial, if not more so since I can put the tax credits into a trust and pass them onto my estate.
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Originally Posted by FinsterRufus
Sure it does. It's not only for profit developers that benefit from the credit.
There is little difference between a for profit and non profit. I've seen non profits take $200K from the government and invest it in properties they had a hard time selling for $80K because of where it was located.
This is not how the free market works. You should be able to understand that by now. The government can not make corporations trickle down their profits. By that, I mean make them create jobs.
Many, many employers have re categorized their employees' titles in order to keep from paying over time and they have combined titles. This means many are doing the jobs that used to require two or three people. Businesses know they can do this, because people want to keep their jobs. There is no shortage of manpower. So the businesses win.
This isnt the free market, in fact its just the opposite.
A while back I heard some republicans in the forum speaking about "abolishing welfare agencies and just directly giving the welfare recipients the money" (or something like that.) And it made me think.
Instead of putting Sect 8 recipients in worker class apartments, having a huge Sect 8 agency, and Sect 8 providers cheating the system, ex.ex. Why not just build simple housing buildings for section 8 recipients, or renovate old buildings for Sect 8 housing?
The government could build buildings like Hostels (cheap hotels in Europe.) These Sect 8 buildings could have shared bathrooms and shared laundry facilities (and save huge amounts of money in plumbing expenses.)
Plus the Sect 8 recipients could be placed near good bus lines, near job training programs, ex.ex. And the residents could be made responsible for the upkeep of the buildings. Plus living in those shared restroom buildings would give many of the people motivation to get a job and live in a normal apartment.
And the government could charge low levels of rent for housing recipients (and then Sect 8 recipients are paying money to the government.)
I would assume $50 million dollars would build 1 large Sect 8 facility. 2 buildings would cost $100 million dollars. 20 buildings would cost $1 billion dollars, and 400 buildings would cost $20 billion dollars ($20 billion dollars being 1 years funding for Sect 8.)
With 5 years of Sect 8 funding (2,000) $50 million dollar buildings could be built.
And today taxpayers get nothing for their Sect 8 taxes because the Sect 8 landlords get the money. By the government building Sect 8 buildings taxpayers would get "buildings" for their tax dollars.
I believe (perhaps) after years of Sect 8 funding being used to build housing, there would be enough government owned housing units to end homelessness in America.
++PLUS++ the government could charge low levels of rent for housing recipients, and then Sect 8 recipients are paying money to the government.
The problem with that solution is actually what Section 8 attempt to try to avoid. Centralizing a bunch of poverty in one area where the crime rate skyrockets, drugs etc..
My question is, how many jobs could $20 billion create? How many companies overseas, could you entice to relocate to the USA with that money, thus giving people an income so they could pay their own rent, rather than the government subsidizing poverty?
Sigh.... and tell me how you know that Ferguson is full of Section 8 renters???
Unless you submitted some Open Records requests to ask for information on where the Section 8 renters live in Ferguson and where they originated from, you cannot make any correlation. And FYI, usually voucher holders stay in the actual city where they originally lived in public housing. Over 80% on average stay in the city.
That said, there has been numerous independent studies that show that overall crime rates have fallen in major metropolitan areas where public housing was demolished and residents relocated via vouchers to other neighborhoods. Most areas in the country have not had any significant increases in crime in the related neighborhoods. Some larger locations though have seen some property crime increases when voucher residents are moved into middle class neighborhoods that were already have problems with crime. Property crime would increase in those areas, but violent crime went down. There was a major study done in 2008 on this by some independent researchers in Memphis that made larger institutions take a closer look at the neighborhoods where voucher holders were moving.
What was discovered was that if you put lower income residents in more stable communities where crime is already not an issue, meaning more affluent areas, then crime would not increase in those areas which is why like the OP shows more voucher holders are put in "affluent" and "luxury" communities. As I stated before, crime on a whole has decreased in every major metropolitan area in the country. The 2nd link above specifically speaks of Chicago and Atlanta who moved the largest amount of public housing residents to vouchers and the crime associated with those moves. FWIW, both Chicago and Atlanta have much less crime today versus previous years. If you read a lot of conservative media blogs you may think crime is out of control in Chicago especially but violent crimes there have decreased substantially since the 1980s and 1990s when more reform started in an effort to de-concentrate poverty and ironically, crime rates in Atlanta are higher than Chicago.
In regards to Ferguson, I admit I am not all into cable 24 hour news or goings on in that area. I am more invested in the places that I actually live and I lived for over 15 years in Atlanta and worked in the industry and was a part of the team(s) that demolished public housing and re-built mixed income communities. So unless you live there and have first hand knowledge of the locations where voucher holders live, one cannot assume that crime has increased in Ferguson primarily due to voucher holders. I do know in Atlanta crime decreased. I also know that if you move voucher holders into an area that is going downhill then the area will still go downhill, which is why public housing agencies are seeking landlords and developers with properties in more stable, affluent communities.
Ferguson: As low-income housing boomed, Ferguson pushed back : News
And save your fingers man, I've lived through it first-hand. You take a look at neighborhoods that have had a lot of section 8 housing put into them, you'll see an increase in crime there. And middle-class flight to boot. See: Ferguson, MO.
The problem with that solution is actually what Section 8 attempt to try to avoid. Centralizing a bunch of poverty in one area where the crime rate skyrockets, drugs etc..
My question is, how many jobs could $20 billion create? How many companies overseas, could you entice to relocate to the USA with that money, thus giving people an income so they could pay their own rent, rather than the government subsidizing poverty?
True, you put 100's of low income people in the same building then the drug dealers and criminals come in with them. But instead they could build smaller housing buildings in areas without much crime.
How many jobs could $20 billion create? I don't know. But I know you can lead a horse to water but you can't make it drink. Recently I was reading about illegal immigrants picking all of our crops. Some farmers union sent out 1,000's of letters to people without jobs to get them jobs picking crops (and only 3 people responded.)
My opinion would be in order to get a certain kind of person to work (it would take work.)
When I was in my early 20's I was homeless for a short period of time, and I was also in drug rehab programs for marijuana and pills, so I have a little experience in these areas. I have also spent my life around low income black people.
In my opinion the best way to solve these problems would be to separate people living in poverty, give them 1/2 way decent housing (where they feel secure.) And after a while give them the opportunity to move into better housing if they work 20 hours per week. You could give them jobs picking up trash in dirty areas, fixing potholes, helping the elderly, ex.ex.
And its ironic but I believe part of the problem of people not working is living in poverty. When you don't have a reliable place to live it puts GREAT stress on you. And people who don't work would have great stress if all of a sudden they starting working 40 hours per week.
I feel very strongly about abolishing Sect 8, and instead spending the money on housing units and work programs. Sect 8 is using government funds on renting property. $800 per month is $9,600 a year. Thats $48,000 every 5 years. $48,000 buys a small house.
The government is spending huge amounts of money on renting, when huge amounts of government housing could be purchased with the Sect 8 money. And once the government builds the housing (the government spending stops.)
True, you put 100's of low income people in the same building then the drug dealers and criminals come in with them. But instead they could build smaller housing buildings in areas without much crime.
How many jobs could $20 billion create? I don't know. But I know you can lead a horse to water but you can't make it drink. Recently I was reading about illegal immigrants picking all of our crops. Some farmers union sent out 1,000's of letters to people without jobs to get them jobs picking crops (and only 3 people responded.)
My opinion would be in order to get a certain kind of person to work (it would take work.)
When I was in my early 20's I was homeless for a short period of time, and I was also in drug rehab programs for marijuana and pills, so I have a little experience in these areas. I have also spent my life around low income black people.
In my opinion the best way to solve these problems would be to separate people living in poverty, give them 1/2 way decent housing (where they feel secure.) And after a while give them the opportunity to move into better housing if they work 20 hours per week. You could give them jobs picking up trash in dirty areas, fixing potholes, helping the elderly, ex.ex.
And its ironic but I believe part of the problem of people not working is living in poverty. When you don't have a reliable place to live it puts GREAT stress on you. And people who don't work would have great stress if all of a sudden they starting working 40 hours per week.
I feel very strongly about abolishing Sect 8, and instead spending the money on housing units and work programs. Sect 8 is using government funds on renting property. $800 per month is $9,600 a year. Thats $48,000 every 5 years. $48,000 buys a small house.
The government is spending huge amounts of money on renting, when huge amounts of government housing could be purchased with the Sect 8 money. And once the government builds the housing (the government spending stops.)
If you put hundreds of low-income underemployed childless college graduates in studio apartments, nothing remarkable would happen.
There is no good reason why college graduates should be involuntarily housed with the underclass.
And really, you want to force low-income underemployed college graduates into job programs that will do nothing to improve their job skills?
Developers get tax breaks to provide a percentage of low income units. Residents of these units do not necessarily enjoy all the amenities (pool etc...) which may require an additional fee...
Yep, my wife works for a company that partners in low-income (not just Section 8) housing and "mixed" properties are not new and not uncommon. It is usually a small percentage of units that are affordable housing with the vast majority of the units being market rate.
Taxpayers should not be footing the bill for people to live in luxury homes. Seemed pretty obvious to me.
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