How Qualified Allocation Plan (QAP) Components Affect Costs and Time to Develop

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

Abstract

As the affordable housing crisis in the U.S. continues, attention has increasinglyfocused on the high cost and long-times to develop housing with the Low Income HousingTax Credit (LIHTC). Some studies have focused on overall costs drivers associated with the LIHTC program, finding variation nationwide in development costs across regions of the country, between rural and urban regions, and based on type of construction. However, less analysis has focused on how requirements imposed by states may be affecting overall cost and time to develop affordable housing.

This paper uses variation in Qualified Allocation Plans (QAPs) to identify strategies and best practices that states are employing to reduce overall development cost and time to develop, while still meeting the goals of the LIHTC program and the unique needs of the state’s population. The QAP is a critical tool for exploring effective practices within the LIHTC program; while the Federal guidelines are consistent nationally, each allocating agency crafts a unique QAP – including threshold requirements and competitive criteria – that aim to foster the development that their state needs. State QAPs are responsive to a range of stakeholders, including developers, housing advocates, elected officials, housing experts, among others. As such, they provide detailed insight into how various requirements, expectations, and competitive landscapes shift the types of housing that is created.

We use a combination of interviews with individuals involved with LIHTC construction and operation, such as developers, syndicators, and financing partners, interviews with Housing Finance Agencies, and cross-QAP analysis to identify relevant variations in QAPs. We highlight how these variations can create barriers to development, as well as examples of what strategies and processes may promote more time- and cost-effective development. We explore how these policies and practices may be applicable across different states and regions.Keywords: Affordable Housing, Qualified Allocation Plans (QAPs), Cost Efficiency, Low-Income Housing Tax Credit

Author

• Daniel Hornung, Stanford University
  Presenting Author