TRAVERSE CITY — A national housing expert said Traverse City and northern Michigan could significantly benefit from a change in the federal tax code to help fund more affordable housing projects.
“We can see you have a significant shortage of housing here for low-income people,” said Sheila Crowley, president of the National Low Income Housing Coalition.
Crowley was in Traverse City Wednesday to discuss the National Housing Trust Fund that was established by Congress in 2008 as part of the Housing and Economic Recovery Act. The fund was meant to create an alternative funding source for affordable housing, but financing never materialized after the housing crash.
Crowley and her organization now advocate for funding through modifications to the mortgage interest deduction. The group wants to lower the cap on the amount of interest that can be deducted on mortgages from $500,000 to $1 million and convert deductions into a non-refundable 15 percent tax credit.
The increased tax revenues, Crowley said, would be allocated to affordable housing through state block grants administered by the Department of Housing and Urban Development.
“If you made the changes we are proposing, you would raise about $200 billion over 10 years,” Crowley said. “It would be on average about 20 billion a year.”
The National Association of Realtors opposes any change to the mortgage interest deduction. Officials with the national agency said the mortgage interest rate deduction is a critical part of promoting home ownership.
Affordable housing remains in strong demand in northern Michigan and particularly in Traverse City. The 2012 Grand Traverse County Housing Inventory and Strategy found regional families increasingly spend huge chunks of their budgets on housing.
There are fewer choices that meet the needs of smaller households, individuals with disabilities and low-income households. The number of small rentals — one-bedroom or efficiency units — is considerably lower than the number of single-person rental households. Nearly half of all rental households pay more than 30 percent of their income for housing.