With home prices continuing to rise out of the reach of the average American a crisis of housing affordability, once limited to a few of the nations largest urban centers, now affects cities and states across the country. Recognizing that choices made in housing policy can create either increasing opportunity and prosperity or reinforce the cycle of poverty, Ivory Innovations works to disseminate valuable knowledge and solutions.
The Crisis In Housing Affordability
Rising costs are pricing American’s out of their homes and preventing others from finding reasonable accommodations. These challenges are felt not only in San Francisco or New York, but are also affecting developing cities and suburbs such as Salt Lake City and Denver. The US Department of Housing and Urban Development defines someone as cost-burdened when renting cost and other housing related expenses exceeds 30 percent of household income. The cost of housing is rising, and as a result, many middle-class families are forced into lower cost accommodations, decreasing the housing supply for low-income families. Initiatives to provide affordable housing—commonly understood as non-market, subsidized housing—are widespread; however, these efforts focus solely on low-income individuals and families, omitting a large portion of the population burdened by high housing costs.
Housing affordability focuses on the level of housing prices relative to the household income and encompasses all income levels. Ivory Innovations is dedicated to solving the challenges of housing affordability by seeking out local, national, and international innovators and creators. We believe that the growing crisis in Housing Affordability requires complex and innovative solutions in three distinct areas—finance, policy, and design/construction.
By dedicating time, talent, and funding to solving the crisis in housing affordability, Ivory Innovations expects to be a leading source for change in the housing market. We promise to seek out the best ideas, projects, and talent in order to provide affordable housing to all Americans. Our vision is that no one, regardless of income, will be priced out of reasonable housing.
Areas of Interest
Ivory Innovations looks to explore the new potential of “Opportunity Zones” and “Opportunity Funds” as tools for generating affordable solutions for all. We believe that market based solutions, when applied properly, offer the best chance of sustainable change at a scale large enough to address the national problem of housing affordability.
Opportunity Zones are part of a new federal program established by Congress in the Tax Cuts and Jobs Act of December 2017 to encourage long-term investments in underserved and distressed communities. This program provides special tax incentives for investors to reinvest their capital gains into specialized funds called Opportunity Funds, which are dedicated to deploying capital in underserved communities called Opportunity Zones.
These zones are low-income communities or rural census tracts that are nominated by state governors and then approved by the U.S. Department of the Treasury.
Opportunity Funds are specialized investment vehicles that enable taxpayers to invest gains made from prior investments into Opportunity Zones. These funds must invest at least 90 percent of their capital in Opportunity Zones. The Opportunity Funds offer investors unique benefits for investing their gains in distressed communities:
Temporary deferral of capital gains tax: Capital gains that are reinvested in opportunity zone within 180 days of the sale, are eligible for a temporary tax deferral.
Decreased taxes on realized gains through a basis adjustment: For all gains reinvested in an Opportunity Fund, the basis of the invested capital increases by 10%. If an investment in a qualified opportunity zone fund is held by an investor for at least 5 years, the original investment increases by another 5%. If the investment is held for 7 years, 15% of the original gain becomes excluded from capital gains tax.
Permanent exclusion of taxable income: If an investment is held in a qualified opportunity zone for at least 10 years, the gains accrued from that investment are fully excluded from taxation.