Disaster Provisions in Low-income Housing Tax Credit Qualified Allocation Plans (QAPs)

• In Event: The Low-Income Tax Credit at 40: Implementation and Impacts

Abstract

Climate change is increasing the frequency and severity of natural disasters, creating growing challenges for housing recovery, particularly for low-income renters. The Low-Income Housing Tax Credit (LIHTC) program is the primary federal tool for financing affordable rental housing, yet its role in disaster recovery depends on 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. 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?

We construct an original dataset of disaster recovery provisions by systematically coding QAPs across states from 2003 to 2022. We overlay these novel measures with existing 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 housing and demographic controls. The resulting county-year panel links within-county flood exposure to cross-state and over-time policy variation. The primary outcome is LIHTC units allocated per 100,000 residents at the county level.

Distributed lag models indicate that recovery provisions drive modest increases in LIHTC allocations to affected counties, with the most consistent effects emerging approximately three years after a flood disaster. These results suggest that QAP provisions support long-term affordable rental housing recovery, aligning with the timelines required to finance and develop affordable housing. The magnitude of these findings is modest relative to overall housing need and varies with disaster severity. Together, the findings highlight how state policy variation within a federal program can shape the distribution of recovery resources, positioning QAP disaster provisions as a cost-neutral lever for strengthening long-term recovery for low-income renters, while underscoring the limits of relying on LIHTC as a primary disaster recovery tool at the state level.

Author

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