The ink is hardly dry on the legislation to increase the allocation formula for low-income housing tax credits, yet a major Wall Street investment firm says more needs to be done to resolve the growing shortage of affordable rental housing.

The newly enacted increase, the first since 1986 when the program began, is expected to lead to the construction of some 30,000 more affordable rental units a year. But Jenny Netzer of Lend Lease Real Estate Investments points out that according to the government's own statistics, more than 5 million households have worst-case housing needs.

The shortfall affects not only families depending on public assistance, but also is becoming an increasing problem for low-income worker-supported families, she said.

"We hope that President-elect Bush and the new Congress recognize the need for more affordable housing and take advantage of the willingness of the private sector to help finance it," said Netzer, a principal in the firm and head of its housing and community investment group.

Lend Lease is one of the nation's largest landlords, with more than 128,000 units in its management portfolio, as well as one of the most active providers of tax credit investments to corporate clients.

The low-income housing tax credit was created to provide financial incentives for the development and/or rehabilitation and preservation of privately-owned affordable rental housing.

To this end, investors in affordable housing receive federal tax credits for 10 years. Investments in these tax credits can increase earnings, reduce an investor's effective tax rate and provide an attractive internal rate-of-return.

Netzer said Congress should consider a further increase in an expansion of the tax credit program as well as other federal programs that help fund housing.

Six months ago, researchers at her firm presented the case for aggressive action in a report that cited an actual decline in low-cost housing availability and overall rent inflation as key factors preventing many low and moderate-income households from participating in the booming economy.

The study pointed out that, while relatively few young adults entered the market for the first time in the 1990s, this will change as the Baby boom Echo joins the workforce in large numbers.

Moderate and even middle-income seniors who can no longer live alone already are finding it difficult to locate affordable apartments with the supportive services they need, the authors reported. And they warned that while today's welfare caseloads are at record lows (because of more stringent eligibility criteria and an extraordinarily tight job market), the inevitable economic slowdown will put many under-educated workers back on the waiting list for subsidized apartments.

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