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Tax credits help save low-income neighborhoods

August 19, 2013

LISC’s op-ed published in the Philadelphia Inquirer

 
by Andrew Frishkoff
Published in the Philadelphia Inquirer and on philly.com, August 19th

A kind of urban miracle has slowly taken place over the past 20 years in Eastern North Philadelphia. This once-desolate neighborhood is today a community full of life and possibility.

Stand on the corner of Ninth and Berks Streets and you’ll see it: Affordable homes with neat, white trim and tended gardens sit on what used to be vacant lots strewn with old tires and broken toilets. Children run and climb on a nearby playground where drug dealers once ruled. Students from nearby Temple University walk with confidence down tree-lined streets. Crime has decreased significantly.

And now, after years of planning and investment, the crown jewel of Eastern North Philly’s rebirth is ready to open this fall: Paseo Verde, a four-story, mixed-income, transit-oriented development with 120 rental units, green roofs, a community center, a pharmacy, and a federally qualified health clinic, all within walking distance of the Temple Regional Rail station.

Paseo Verde will connect neighborhood residents with jobs, services, and amenities that for too long were beyond their reach.

How did it all happen?

First, it took the passion and patience of committed neighbors and local organizations like Asociación Puertorriqueños en Marcha (APM), a community development organization started by Puerto Rican veterans of the Vietnam War.

But by all accounts, none of this good work would have been possible without two vital federal tax-credit programs: the low-income housing tax credit, which currently supports 90 percent of affordable housing development nationwide, and the new-markets tax credit, which spurs investments in businesses, real estate projects, and facilities such as health clinics, charter schools, and child-care centers in low-income communities across America.

Unfortunately, these valuable tax incentives may be at risk as Congress works to overhaul the tax code and eliminate deductions and credits.

It’s easy to understand the arguments for comprehensive tax reform. But it would be tragic to eliminate programs whose long-term benefits far outweigh their costs – in this case, bringing much-needed capital and jobs to communities that most investors have deserted. Thanks to the credits and the projects they support, property values have risen and disposable incomes have jumped in the targeted neighborhoods, all while the tax base has expanded and communities have become safer, healthier places to live and work.

Indeed, the housing credit, created as part of a tax reform in 1986, has proven to be one of the most successful housing production programs ever enacted. In Eastern North Philadelphia, it has helped APM and other organizations to build, repair, and preserve hundreds of new homes that low-income families can afford. It helped lay the foundation for businesses and people to move into an area they would have never considered in the past.

The new-markets credit, enacted in 2000, was based on the same principles that gave rise to the housing credit: The private sector needs incentives to invest in worthy ventures that might otherwise be considered uneconomical or too risky. Across the nation, it has financed at least 3,500 businesses and real estate projects in low-income neighborhoods, and helped to create or preserve more than 360,000 jobs, according to the Treasury Department.

In Eastern North Philly, new-markets capital has been critical to Paseo Verde, a joint venture of APM and the Jonathan Rose Cos. This development will house a new community health center that will offer hundreds of families decent, affordable care, and a financial opportunity center that will help people not only find and keep jobs, but better manage the paychecks they earn.

These tax incentives serve populations that are the most distressed and hardest to reach. More than 80 percent of apartments financed by the housing credit are rented to families making less than half of the median income in their area, according to the Treasury Department. And nearly three-quarters of new-markets investments go to areas that the federal government considers to be in severe distress.

That is certainly where Eastern North Philadelphia was after the manufacturing economy crashed in the 1970s – first went the jobs, and then the people. Within a decade, the neighborhood was overwhelmed by crime. Homes were abandoned, and businesses fled.

Clearly, these two tax-credit programs have supported efforts by residents and community groups to breathe new life into this neighborhood, just as they have so many others across the country.

And so, as tax reform moves forward, we urge Congress to look carefully at programs that truly grow our economy, the ones that positively impact the health and wealth of our communities and help low-income families pull themselves up into the middle class. The housing and new-markets credits do just that. They should be preserved because they work. They change communities for the better. Eastern North Philadelphia is living proof.

See the op-ed on philly.com

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