Who is LIHTC Built For? Rents, Tenant Incomes, and Project Features in California

• In Event: 20425 - Landlords, Developers and Housing Affordability

Abstract

The Low-Income Housing Tax Credit (LIHTC) program relies on housing developers to build affordable housing units. Developers consider financial feasibility and programmatic regulations when planning projects, and one central project feature is units’ affordability levels. Decisions around unit affordability have impacts for low-income tenants’ housing and locational outcomes. In this article, I analyze LIHTC projects in California and show that, among projects funded from 2011 to 2023, only a small share (15%) of units were affordable to extremely low-income (ELI) households. In contrast, ELI households comprise the majority of LIHTC tenants, and this mismatch implies either high levels of rent burden within subsidized housing or the need for additional subsidies. I also assess how unit affordability and mismatch with tenant incomes varies across tax credit programs and project types, as well as by neighborhood socioeconomic status (SES). Projects funded in the 9% program, which provides deeper subsidies, and for tenants with special needs, who tend to be ELI, provide the most affordable units, though not enough for the share of ELI tenants living in these types of projects. Mismatch between unit affordability and tenant incomes is particularly high in projects serving seniors. Units affordable to ELI households are less likely to be in the highest SES communities, though mismatch between affordability and tenant income is similar across neighborhood types. I describe the programmatic and other features that guide developer decision-making and conclude by noting the importance of studying supply-side actors for understanding housing and locational outcomes.

Author

• Ann Owens, University of California, Los Angeles