President Donald Trump’s proposal Wednesday to cut the corporate tax rate by 20 percent could wreak collateral damage on efforts to house L.A.’s growing homeless population.
In November, voters in the City of Los Angeles passed Proposition HHH, which provides the city with $1.2 billion in bond money to build permanent supportive housing for currently homeless individuals. The money, it was calculated at the time, could help fund 10,000 new units of housing.
But that calculation may change, experts say, should corporate tax reform go through.
Developers who build affordable housing rely on a patchwork of funding sources, and one of the biggest is private investment fueled by the federal Low-Income Housing Tax Credit program. Essentially, the program provides federal tax credits in exchange for cash used to finance affordable housing developments, like ones that house the homeless.
“If corporate tax rates decrease, the value of this program to tax credit investors also decreases,” said Sarah Letts, executive director of Hollywood Community Housing Corporation, a nonprofit housing developer.