Addressing the Dichotomy of Federal Affordable Housing Policy and Program Implementation

Abstract

Two of the most popular Affordable Housing initiatives administered by the Federal Government are the Housing Choice Voucher (Section 8) Program administered by The Department of Housing and Urban Development (HUD) and the Low-Income Housing Tax Credit (LIHTC) Program administered by the Treasury Department. Although the two programs have significant programmatic differences, they both serve the same end. They provide affordable housing opportunities for low-income Americans. However, there is a distinct divergence in the Federal Government’s policy regarding affordable housing and the concentration of poverty. In the last few decades, HUD has been ushering in a subtle, yet pervasive, change in affordable housing policy with the near-wholesale transition from Public Housing (typified by the ‘Housing Project’ or Developments) to Housing Choice Voucher which permits participants to select any rental unit in the private market. Unlike Public Housing which is predominantly located in areas of high-poverty, the HCV program works, not only by HUD’s design but by effect, to deconcentrate affordable housing options. Conversely the LIHTC program provides a substantial incentive in the construction of affordable housing options in areas that are designated by HUD to be either a Difficult Development Area or Qualified Census Tract. These areas often represent areas of extreme poverty, high crime, delinquency, psychological distress, various health problems, low property values, poor schools, and few employment or transportation options. The LIHTC approach seems, in effect, to provide affordable housing to areas where those who need it the most currently live, rather than rewarding development that would serve to draw those individuals from impoverished areas. While the QCT/DDAs were determined solely by HUD, the Housing and Economic Recovery Act of 2008 now permits the state housing finance agency to determine which areas are considered DDAs. This has led to a disparate application of standards throughout the country.