Attaining safe, decent affordable housing continues to be challenging for many in our communities. Consider the following:

  • According to the National Low Income Housing Coalition’s 2023 report entitled The Gap, the U.S. has a shortage of 7.3 million rental homes affordable and available to renters with extremely low incomes, defined as incomes at or below either the federal poverty guideline or 30% of their area median income, whichever is greater. This results in only 33 available and affordable homes for every 100 extremely low-income renter households.
  • Extremely low-income renters face a shortage in every state and major metropolitan area.
  • According to Pew Research, in October 2021, about half of Americans (49%) said affordable housing was a major problem where they live, up 10 percentage points from early 2018.
  • In 2020, 46% of American renters spent 30% or more of their income on housing, including 23% who spent at least 50% of their income this way, according to the most recent data available from the S. Census Bureau.
  • Renters across the U.S. have seen the average rent rise 18% over the last five years, outpacing inflation, according to consumer price index data from the Bureau of Labor Statistics.

It is expected that this shortage of affordable housing will continue to be an issue for the foreseeable future. But what can be done about addressing this continuing concern?

Tax incentives

The Low-Income Housing Tax Credit (LIHTC) program is a proven, successful program that continues to assist in producing high quality affordable housing. LIHTC is a federal government initiative created by the Tax Reform Act of 1986 that offers a 10-year federal tax credit to investors in affordable housing developments. This program incentivizes public private partnerships in addressing housing shortages across the country. As of July 2023, the LIHTC program has supported the construction and rehabilitation of almost 3 million units since its creation in 1986.

What banks can do

It’s also critical that financial institutions play their part in addressing these challenges. As part of UMB’s commitment to the communities we serve, we are dedicated to financing projects that help revitalize our communities and providing loans to companies that support the economic growth of our communities. We are always exploring new opportunities to ensure our support for all income classes through our lending and investment activity

In 2019, UMB became active in LIHTC construction lending and investment, and since that time, UMB has financed the new construction or substantial renovation of 3,668 affordable housing units, providing $421 million in LIHTC construction loans and $230 million in LIHTC equity investments. UMB is extremely proud of the success of these efforts, and its meaningful impacts to the tenants proudly living in these communities.

Building the necessary team

Having the key players involved in affordable housing projects is also critical – these are complex undertakings that require developers, state housing agencies, municipalities, general contractors, architects, property managers, financial institutions, and others to work together for these developments to be successful. It truly takes a village to create a village, so to speak.

Realize and celebrate successes

UMB is continuing to grow its impact in affordable housing, having financed the construction or substantial renovation of 879 affordable housing units in 2023, and one of the most recent projects we have financed is at New View apartments in Kansas City, Missouri. The following video tells the story of what can happen when community, business and government groups work together to empower individuals and families, and truly change lives.

Safe, decent affordable housing is foundational to healthy, productive, and happy individuals and families, and seeing tenants thriving in their brand new homes certainly warms my heart. UMB’s continued commitment to addressing the challenge of affordable housing is certainly making a different in communities, and I am proud to have a role in those efforts.

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