Creating affordable housing is challenging enough; doing it as part of a sensitive rehabilitation to a historic building in Charleston is even more difficult. That’s why we’re doubly gratified to see construction work finally begin on the long-planned and longer-hoped-for project to convert the former Henry P. Archer School into 89 apartments for seniors with incomes below 60% of the area’s median income.
The Nassau Street landmark has been vacant for years and was in such poor condition that it once was considered for demolition, despite its history as a place where civil rights leader Septima Clark once taught. The project not only will save an important part of the East Side’s history but also will give the city much-needed housing. The phrase “win-win” is overused but fits here.
Still, anyone following the Charleston region’s housing situation knows full well that this $42 million project, as significant as it is, will put only a small dent in our overall need for more affordable units. That’s why we remain concerned about the future of South Carolina’s affordable housing tax credit — a relatively new financing tool that was a critical part of the mix that’s making the Archer rehabilitation possible.
The 3-year-old credit also has provided help to many other multi-family projects across the state, and its unexpected popularity caused some state officials to grow concerned about the resulting loss of revenue. When the bill to create the credit passed, it was estimated that the state would lose about $16 million a year by the 10th year of the program, but the state actually lost about $50 million last year.
In response, state officials essentially froze the program until the Legislature responded; it did so by capping the credit at $20 million a year, not as high as some housing advocates had hoped for but still high enough to make it a viable tool in the years to come.
The legislation contained other tweaks, including a stipulation that about 20% of the $20 million go toward projects in rural areas and giving the state’s Joint Bond Review Committee more oversight into how the credit is used.
We urge members of that committee and the State Fiscal Accountability Authority — which will come up with an annual plan — to remain supportive of the credit, and we encourage the bond committee and the S.C. Housing Finance and Development Authority to keep tabs on the tax credits to ensure they’re supporting projects that promise to make the biggest differences across the state. We also urge legislators to remain open to the idea of raising the cap in future years as market conditions evolve and we learn more about how state tax credits can help.
We understand why lawmakers felt a need to impose the cap this year, but we believe the potential cost of the tax credits is more than justified by the longstanding affordability problem that reaches far beyond the Lowcountry. A 2019 study found that a third of S.C. families struggle to pay their rent or make their mortgage payments. The National Low Income Housing Coalition shows that we have only 44 available affordable housing units for every 100 families who need them and would qualify for them; it estimates the state has a shortage of more than 85,000 units for extremely low-income renters, who are defined as those making 30% or less of the area median income. Low-income renters make 60% or less of the median income, so the need is far greater than 85,000 units.
The housing authority’s own needs assessment found that more than 140,000 renter households experience “severe cost burden,” meaning they spend at least half of their income on rent and utilities.
As we’ve noted before, lawmakers also should consider how the affordable housing enabled by this credit is helping the state’s economy and residents’ quality of life. Trying to cut costs by limiting these credits too much could prove to be penny-wise and pound-foolish in the end.
The renovated Archer School is expected to open its doors to new residents in two years, but the bigger lesson is that we need many more such projects in the years to come.