Poster #128 - Affordable Housing after Flood Disasters: The Role of Disaster Recovery Provisions in LIHTC Qualified Allocation Plans

• In Event: Friday Poster Reception

Abstract

Climate change is increasing the frequency and severity of natural disasters, creatinggrowing challenges for housing recovery—particularly for low-income renters, who face heightened displacement risk and limited access to rebuilding resources. The Low-IncomeHousing Tax Credit (LIHTC) program is the primary federal tool for financing affordable rentalhousing, yet its role in disaster recovery is mediated by state policy choices. States administer LIHTC through Qualified Allocation Plans (QAPs), which establish criteria for competitively allocating tax credits and vary substantially across states and over time. Some states have introduced disaster recovery provisions in their QAPs to prioritize affordable development in disaster-affected areas, but there is limited empirical evidence on whether these provisions influence post-disaster housing outcomes.
 
This paper asks: How does state-level variation in QAP disaster recovery provisions shape the allocation of LIHTC units following flood disasters? More specifically, to what extent do these provisions influence per-capita allocations of LIHTC units to flood-affected counties?

To answer this question, I construct an original dataset of disaster recovery provisions by systematically coding QAPs across states from 2003 to 2022. I merge these data with county-level flood disaster records from the Spatial Hazard Events and Losses Database of the United States (SHELDUS), LIHTC allocation data from 2003 to 2019, and a set of housing and demographic controls. The resulting county-year panel links within-county exposure to flood disasters to policy variation across states and over time. The primary outcome is LIHTC units allocated per 100,000 residents at the county level.

Using a distributed lag model with county and year fixed effects, I find that disaster recovery provisions are associated with modest increases in LIHTC allocations to affected counties, with the most consistent effects emerging approximately three years after a flood. This timing aligns with the development and financing cycle of LIHTC projects and suggests that QAP provisions support long-term affordable rental housing recovery. Effects are larger for more severe disasters but remain modest relative to overall housing need.

These findings demonstrate that state policy variation within a federal program can shape the distribution of disaster recovery resources. QAP disaster provisions appear to function as a cost-neutral lever to support longer-term affordable housing recovery, though their impact is limited in scale. The results underscore both the potential and the constraints of relying on LIHTC as a primary disaster recovery tool, with implications for how states structure allocation criteria in an era of increasing climate risk.

Author

• Bella Vandersall, University of North Carolina at Chapel Hill
  Presenting Author