Define the policy issue being discussed
The policy issue that is being highlighted in the film is growing affordable housing crisis in US. There are more than 11 million households in US that pay more than half of their income toward rent every month and after year 2008 financial crisis there are an estimated two and half million evictions across the US because of decrease in income and increasing rents. Therefore two federal programs Section 8 and Low-Income Housing Tax Credit (LIHTC) programs have been initiated by the federal government with a primary mission to create houses for the low income people.
To make the LIHTC program workable, every year Internal Revenue Service (IRS) distributes tax credits to the state and local housing development agencies. Those agencies pass that tax credit to the developers. The developers sell that credits to the investors and banks in exchange of cash which means that the banks and the developers get tax deductions and the developers have cash in hand for the development of houses. In order to find the investors middlemen called syndicators involved in the process. In this program as the taxpayers paid for the construction, therefore these buildings have lower rent as compare to the market rate developments. But the investigation revealed that these programs are costing more money and producing fewer houses for low income people.
How is the problem measured?
Through a joint investigation of NPR and FRONTLINE it is being revealed that banks and the developers are making millions of dollars in the LITCH program initiated by the federal government. To measure the problem the joint investigation team interviewed government officials, industry officials and other poor households. The investigation revealed that only fewer poor people are getting the houses they need. The federal government spent approximately $6 billion each year on this program but that program is only serving fewer people as the construction of the houses have been decreasing from past 20 years. All this is happening due to negligence of the US federal government.
What is the magnitude of the problem (using the measure above)?
It is a high level problem because after billions of dollars spend each year by the government a huge number of households have been facing affordable housing crisis (Pianin, 2017). Huge numbers of people are homeless because they are unable to find an affordable place to live. On the other hand the banks, agencies and private investors are making lot of money from the tax credit program initiated by the federal government that results in reduced number of houses every year.
Insert one chart/table from online research, or self-generated, that illustrates an aspect of the policy issue.
The figure above shows that over the years’ number of low income housing units have been decreased from 70,000 to 59,000 whereas tax credit allocation has increased from $ 4.1 billion to $6.8 billion (Sullivan & Anderson, 2017)
Who are the stakeholders mentioned in the film?
Federal government, low income households, developers, syndicators, investors, lenders, accounting professionals, agencies and over all community are the major stakeholders mentioned in the film.
Identify at least two experts providing information in the film as well as the organization or interest group they represent
In the film “Poverty, politics and profit” FRONTLINE (Rick Young) and NPR (Laura Sullivan) investigate the affordable housing crisis. It takes nine months to investigate all the issues and the investigation carried out from Dallas to Miami. During the investigation it was found that only one household in every four households that are eligible for Section 8 housing program assistance get it. It was also found that the program is producing less houses and it is costing more. During the investigation the experts finds a money trail that was belong to the Low-Income Housing Tax Credit program.
Identify whether the experts are addressing the issue from the Public interest, Political ideology or Special interest.
In the film the experts are addressing the issue from the public interest. The theme of the film emphasized that there is an urgent need for the additional resources to build the affordable houses in order to address the affordable housing crisis. Because currently there are thousands of people wish to get Section 8 vouchers but only 25% get it. Therefore it is important to address the nation’s affordable housing needs.
Discuss two contextual factors you identify (social, economic, political, governing, cultural); identify why they are related to that context and any measure of that context.
Political factor is involved in this film as the program is initiated by the federal government with the help of private partnership. The reason behind this program was that the private investors build attractive buildings and better manage them and in exchange they get the large tax incentives. In this program tax credit developer, private investors, banks and syndicators are involved in theft of money.
The other factor involved in this film is social as the program was initiated from the social benefit thus all the poor household can afford a place to live in.
What is the cause of the problem?
The major cause of the problem identified in the film is the programs that have been initiated were not doing well. From analyzing the past 20 years of data it was discovered that number of housing units decreased from 70,000 to 59,000 a years. But that program cost tax payers above 66% more in credits which show that the program is costing more and doing less. There are several factors involved that were causing drop in housing units. The investigation revealed that housing developers from all over the country were making a lot of money from kickback scheme e.g. a company stole $34 million from 14 projects; another company stole $4 million. Inflated construction cost was another reason of the production of less housing units. The lack of federal government funding was also the reason that initiated this problem. The lack of audit is another reason of the problem. There are vast majority of housing agencies all over the US that have not been audited even once and the government has conducted only seven audits from past 29 years.
All this happened due to government negligence as the government does not audit the funds and does not audit the banks, developers and syndicators as they are making much money from that tax credit and producing less. Moreover rather than taking actions the IRS rely on the housing authorities to identify the issues.
Are there any policy alternatives discussed, if so what are they?
During the interview the secretary of United States Department of Housing and Urban Development said that the problem is not limited to the less construction of houses but there is discrimination against families that want to use the section 8 vouchers. Therefore there is a need to make policies that could make sure that the families that have vouchers can be successfully utilize it. But the houses that are constructed are not enough therefore there is a need of more houses. To construction of more houses tax credit is important.
A person interviewed from the National Council of State Housing Agencies said that we encourage the public, as well as people working with the developers to come to the council if they feel or observe anything going wrong. Moreover when the cost certifications are filed the council have architects that check the reasonableness of the construction cost.
Having seen the film and its evidence, identify a policy alternative you believe benefits the public interest.
To successfully implement the Low-Income Housing Tax Credit program there is a need that the federal government takes care all of this issue by its own rather than relying on the housing authorities for identification of the issues. There is also need to conduct regular audits by the federal government officials thus it could be ensured that all the funds are invested properly.
Moreover additional funding is needed for the Section 8 and LIHTC programs to ensure that all eligible households receive vouchers because currently one in every four household receive the section 8 voucher.
There is a need that the affordable housing practitioners and developers work tirelessly thus that decent, safe and affordable housing in sustainable communities can be provided to those people that are in need.
Pianin, E. (2017, May 2). An affordable-housing shortage in the US is about to get worse. Retrieved January 22, 2018, from http://www.businessinsider.com/affordable-housing-crisis-shortage-worse-2017-5
Sullivan, L., & Anderson, M. (2017, May 9). Affordable Housing Program Costs More, Shelters Fewer. Retrieved January 22, 2018, from https://www.npr.org/2017/05/09/527046451/affordable-housing-program-costs-more-shelters-less