Developing Affordable Housing in Disaster-affected Communities

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

Abstract

This paper examines how disaster-affected communities use the Low-Income Housing Tax Credit (LIHTC) funding to address affordable rental housing shortfalls following major disasters. We ask: (1) To what extent do disaster-affected counties increase LIHTC activity relative to unaffected counties? and (2) How is LIHTC used in conjunction with Community Development Block Grant Disaster Recovery (CDBG-DR) funding to support multifamily affordable housing recovery? 

We first calculate the extent of LIHTC development following disasters that occurred between 2008 and 2018. Our primary unit of analysis is the county; we track recovery over a five-year window and exclude counties with overlapping disaster periods to isolate post-disaster effects. The analysis includes 716 disaster-recovery periods in 697 counties and we disaggregate findings by disaster damage severity, year of disaster event, and whether the county also received funding from CDBG-DR. 

We couple this national analysis with qualitative case studies in three communities: the South New Jersey Shore (Atlantic County and Cape May County) after Hurricane Sandy in in 2011, Columbia South Carolina (Richland County & Lexington County after the 2015 floods, and Shasta County, California after the Carr Fire in 2018. In New Jersey LIHTC-financed units more than doubled, driving a 16 percent growth in tracked affordable units over five years; in South Carolina LIHTC helped finance over 1,700 units contributing to substantial increases in subsidized stock, though delays limited direct access for disaster-affected renters; in Shasta County LIHTC and other federal programs largely offset expiring subsidies but produced only modest net growth, with multifamily recovery lagging and rents rising sharply. 

Overall, LIHTC—when combined with timely CDBG-DR investments and administrative capacity—can be a powerful tool for rebuilding affordable multifamily housing after disasters, but timing, local development capacity, and severity of damage shape outcomes. The paper concludes with policy implications for coordinating LIHTC, CDBG-DR, and other recovery tools to better serve low-income renters after disasters.

Author

• Daniel C Teles, Urban Institute
  Presenting Author