Bridging the affordability gap to make decent, affordable rental housing available to Delaware's unserved families and elderly requires substantial resources. Not only does it require substantial resources, but the resources must be attractive, meaning low interest loans, deferred loans, grants, and rental assistance. Even with current low interest rates, it takes a combination of federal and state housing aid to make a difference. Rising land and construction costs work against attempts to serve those the market simply cannot serve. An increasing regulatory environment adds cost and time to what should be a simpler process. The most difficult population segment to serve are those earning 50% of median income and below. They often live in substandard, overcrowded, or rent-burdened conditions and are often victims of the recent economic downturn accompanied by layoffs, downsizing, and plant closings, which exacerbate the low wage structure of much of central and southern Delaware. Those with low or fixed incomes are hurt the worst.

Housing assistance from HUD and USDA paint a bleak picture. Rather than swimming for the gold, the 03 and 04 budgets tread water at best, only a step away from drowning. New construction financing for rental housing is virtually no where to be found in today's urban or rural programs. USDA's Section 515 rental housing, responsible for most of rural Delaware's apartment stock serving very low income households, is in preservation mode. The program has been cut 75% from its 1994 level. For the first time since its inception, there will be no new construction financing available in 04. HUD's public housing assistance is being reduced and only a nominal budget for elderly apartments and people with disabilities exists. Fortunately HOME and CDBG dollars should still flow. With such a miniscule national allocation of HUD and USDA apartment production funds, Delaware will be fortunate to receive any new apartments from the 04 federal budget serving 50% of median and below.

Amazingly, the national Millennial Housing Commission report, which after a year of study calls for increased resources and programs has had virtually no impact. Unlike previous commissions, it appears no renewed housing emphasis and no new substantive programs or resources will emerge.

Most of the housing programs available to Delaware are federally based and then some are block granted to the state for implementation. One of these resources is the federal Low Income Tax Credit program. Delaware has effectively used federal Low Income Housing Tax Credit (LIHTC) resources to develop quality apartments that serve residents well. In many ways, the LIHTC program represents the only substantial apartment production program over the past decade. In 2000 there was a successful congressional initiative to raise the small state minimum of federal Low Income Housing Tax Credits, more than doubling what Delaware receives to $2 million annually. The limiting factor of this financial resource for apartment development has been that it typically serves households with incomes between 51% and 60% of local median income. We now realize the victory comes with quite a price tag. For tax credits to work, substantial other financing that is highly attractive is required. Doubling the tax credits also doubles the need for this attractive financing. Now, striving to utilize all the tax credits, much of the annual federal HOME pass-through dollars and almost all the State's Housing Development Fund (HDF) appropriated dollars are being allocated to develop housing which unfortunately serves a very narrow band of income. This can take away some of the HDF's flexibility to tackle other housing initiatives and take advantage of opportunities to fund unique projects. This shift in resource allocation should not be taken lightly as it may sap potential resources necessary to reach even lower incomes.

The State Picture

The opportunity loss of having the Housing Development Fund and much of HOME tied to LIHTC projects is tremendous, and makes the HDF unable to be the creative, flexible fund it was created as. At the same time, Delaware's projected budget deficit is cutting deeply into HDF appropriations, down to$ 3.1 million from a typical $4 million, representing a 22% cut. One has to ask if a 22% cut to the state's only contribution to affordable housing is warranted? As a Housing Trust Fund, the HDF was designed to be the recipient of several dedicated revenue streams so that it would not have to rely almost solely on appropriations. Having no success adding dedicated revenue sources with the exception of the Recorder of Deeds surcharge, the HDF is still, 15 years after its makeover, largely appropriations driven. Hindsight would say we should have made great progress securing added revenue streams and added appropriations during the mid and late 1990s. Even during a booming economy, the State's will to make affordable housing a priority did not exist. Virtually every time housing advocates sought a new revenue source or higher appropriations they were thwarted.

The Targeting Disconnect

This reduced federal and state commitment to affordable rental housing production comes at a time when the Delaware housing needs assessment is soon to be released. Preliminary numbers clearly show the very low income population, households under 50% of median income, make up 81% of Delaware's "At Risk" housing needs below 80% of median income. Amazingly, 61% of the needs are for extremely low income households with incomes under 30% of median income. On the other hand, the needs assessment shows that 10% of the need falls within the income band of 51-60% served by standard LIHTC projects. Therefore, virtually all state housing dollars and much federal HOME pass-through dollars are targeted to 10% of the "At-Risk" need below 80% of median income. At the same time, very little of these important resources are directed at the 81% and 61% of need below 50% and 30% of median income respectively.

Not being able to count on federal apartment production from HUD or USDA serving below 50% of median income is disturbing. Further, the allocation of much of the federal pass-through HOME dollars and almost all state appropriated HDF dollars to facilitate Low Income Housing Tax Credits which serves such a limited income group when other needs are so great is a policy worth re-examining. There does not seem to be a federal or state approach in place to serve the predominant need for affordable housing for very low and extremely low-income households. A policy designed to serve the incomes with the greatest needs will require more resources per unit and probably result in the production of fewer units. Directing housing resources in this manner would be consistent with the State's emphasis on better serving families in poverty. If Delaware can approach serving those below 50% of median income with the same high level of competency and creativity used to date to serve the 51 to 60% of median income group, great headway can be made.

An Equation that doesn't add up

Equations are supposed to balance out even using modern math. In Delaware we have an unbalanced situation with less federal and state housing assistance addressing documented needs than is warranted. This situation shows that affordable housing is not the priority it needs to be during good or difficult economic times. People, families, elderly, children and their quality of life suffer because of it. Bad housing impacts health, esteem, education, employment, productivity, and opportunity. It also directly impacts Delaware's potential for attracting new and retaining existing businesses. People at 50% of median income and below, those living in poverty, and those with limited or fixed incomes do not have access to necessary housing resources. Balancing this equation should become a federal and state priority.

We have a strong and successful affordable housing heritage in Delaware over the last fifteen years. Let's work to create a housing equation that is just as effective at addressing the needs of very low and extremely low-income households.