Where Has the Low-Income Housing Tax Credit Developed Housing and Who Lives There?

• In Event: Impacts of Eviction and Access To Opportunity in Rental Assistance Programs

Abstract

The Low-Income Housing Tax Credit (LIHTC) has been the nation’s principal resource for developing affordable rental housing since the late 1980s.  The LIHTC program has grown steadily since its enactment in 1986, reaching a total of 2.8 million discrete units still active in the program as of 2021.  However, as a tax credit administered by the IRS, the program has been much less studied than other housing programs.  This paper takes advantage of a new merged database that combines data on the locations of LIHTC properties and other property characteristics with data on the households who were living in LIHTC properties as of 2021. 

The creation of the merged LIHTC database and the analysis on which this paper resulted from a collaborative process that included funding from philanthropy and a data use agreement with HUD’s Office of Policy Development and Research.  An advisory group of state housing finance agencies facilitated by the National Council of State Housing Agencies helped the research team identify the policy research questions that drove the analysis, focusing on questions that would be of greatest importance to the state agencies that make the key decisions about how LIHTC is used as part of each state’s housing strategy.  An important advantage of this ongoing proccess is that states will be able to compare the outcomes of their LIHTC programs with those of other states, leading to more efficient and fairer policies.

Analysis conducted for this paper using the merged database reveals important insights about the LIHTC program. For example, more than half of all LIHTC residents have extremely low incomes, incomes below 30 percent of the area median. A third of LIHTC residents are families with minor children, and 38 percent are seniors.  Almost 45 percent of families with children living in LIHTC housing are Black and not Hispanic, while 48 percent of seniors are White and not Hispanic.  Households headed by seniors and people with disabilities are the most likely to be using some form of rental subsidies as well as benefiting from the rent restrictions that are part of the LIHTC program.

Nineteen percent of LIHTC families with children live in census tracts with poverty rates below 10 percent, often characterized as opportunity neighborhoods.  This is lower than the percentage of all renter families with children who live in such neighborhoods but higher than the 14 percent of families with children who use tenant-based Housing Choice Vouchers in private market housing.  Housing that was newly constructed using LIHTC financing is more likely to be in the suburban portions of metropolitan areas than existing housing that was preserved using LIHTC, and a higher percentage of new housing is in opportunity neighborhoods. 

 

Author

• Jill Khadduri, Urban Institute
  Presenting Author