by Brian Tracey, Bank of America Merrill Lynch
As the economy continues to struggle, job growth remains the Holy Grail in any recovery. In that light, perhaps it’s time to embrace a new source of economic wisdom: Monty Python, the British comedy troupe that famously said, “And now for something completely different…”
Consider the current landscape. Overall growth remains dampened by the housing sector, many markets continue to be saddled by stubbornly high unemployment, and private investment remains a critical need in areas hardest hit by foreclosures and job losses. In an opinion piece in the Wall Street Journal in April 2011, Gary S. Becker, George P. Schultz and John B. Taylor stated, “When private investment is high, unemployment is low.”
Fortunately, certain federal programs have proven track records in attracting private capital to develop housing and create jobs:
- The Low-income Housing Tax Credit program has helped build and preserve more than 2.4 million affordable homes since its inception in 1986, according to the National Council of State Housing Agencies. Annually, the program supports about 140,000 jobs and generates about $1.5 billion in revenue for state and local governments, according to the National Association of Homebuilders.
- The New Markets Tax Credit program funneled $20 billion to more than 3,000 qualified businesses through 2010, the U.S. Department of Treasury reported. The New Markets Tax Credit Coalition reports that 300,000 jobs have been retained or created through the use of the New Markets program.
- The Immigrant Investor Program, or EB-5, has generated more than $3 billion of foreign capital in the U.S. economy – creating at least 65,000 jobs – since 2003, according to the Association to Invest in the USA, a trade association of EB-5 Regional Centers.
Without question, we should continue the current uses of these programs. However, based on the above success in attracting private investment, we should also explore new and expanded options for these housing and economic development tools, which could help address our nation’s most pressing needs, particularly those of low- and moderate-income people. With a few simple changes, these programs can help bring back jobs and residents to neighborhoods hit hardest by foreclosures and the slow economy. Click here to read the article and learn more about these policy options.
Brian Tracey is the Chair of NHC’s Finance Committee and Community Development, Lending and Investments Executive at Bank of American Merrill Lynch, an NHC Leadership Circle member.
Special thanks to longtime NHC member National Association of Housing and Redevelopment Officials (NAHRO) for sharing Tracey’s article in their publication Journal of Housing and Community Development. Learn more about NAHRO at www.nahro.org.