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Celebrating a win for tax abatement to fight gentrification

Posted on 23. Jul, 2019 by

Last month, the Louisiana State Legislature approved a pair of bills, SB 79 and SB 80, that are designed to address the city’s affordable housing crisis. The passage of these bills, under the leadership of Senator Troy Carter, is a big win for fair housing.  But because changes to tax policy in Louisiana require a constitutional amendment, it still needs voter approval via state ballot in October.

A lack of affordable housing continues to plague New Orleans, as a large number of workers – especially those in the tourism and hospitality industries – are overburdened by their housing costs. Recent research highlights a mismatch between wages earned and costs of owning or renting a home, where growth in costs far outpaces growth in wages. On average, those who make 75% less than the city’s median income pay only 25% less than median housing-related expenditures. Among other causes, the rise of Airbnb as alternative tourist lodging has accelerated the general trend of rising rents, most severely in neighborhoods adjacent to the French Quarter like Tremé, Central City, and the 7th Ward. These historically Black renter neighborhoods are rapidly gentrifying to the point that low-income workers who have resided there for generations can no longer afford their homes. These residents are often the same people who create and maintain the tourism industry that attracts visitors from around the world. Affordable housing would preserve not just individuals’ livelihoods, but also the culture of New Orleans.

The citywide tax assessment that will be complete by the end of this year exacerbates concerns about rising home prices. The continuing spike in home prices since the last assessment in 2015 will mean increased tax assessments. Accordingly, residents in the most quickly-gentrifying neighborhoods have expressed fears that with higher tax bills, they’ll have no choice but to cut spending in other areas of life or will be pressed to sell their home entirely. The impact of new tax assessments, however, is still unclear and will depend largely on the approval of pending measures like tax-relief for long-time low-income homeowners.

If approved by voters this Fall, these bills will become an amendment to the state constitution  that will allow New Orleans to freeze or reduce property taxes for low-income homeowners and small-scale landlords who want to keep or create affordable units. Ultimately, this is an efficient route to increasing affordable housing stock in a unique fashion that helps both renters and homeowners without the complications of reliance on federal funding through the Department of Housing and Urban Development (HUD) or Low Income Housing Tax Credits (LIHTC). It is clear that unique approaches are needed: a call for at least 1,500 more affordable units in New Orleans last year was answered with just 84 units built.

Both fair housing advocates and government officials agree that this is a practical way to address the city’s affordable housing crisis. It presents an opportunity for long-term residents to build and maintain wealth in historically neglected neighborhoods that are at risk of gentrification-driven displacement. Most importantly, tax relief is a measure that directly benefits suffering residents who need support to continue to afford their homes.

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