Low-Income Housing Tax Credit Developments and Neighborhood Property Conditions

Abstract

Public housing has long been a contentious issue for cities and regions. While there is a great need for affordable housing in many communities, neighbors of low-income housing developments fret about neighborhood decay. This paper evaluates the notion that low-income housing developments damage the communities in which they are placed. The focus is on the evaluation of low-income housing tax credit (LIHTC) financed developments, and the neighborhood indicator of interest is the physical condition of nearby properties. The results of the empirical analysis suggest that proximity to LIHTC developments generally has a positive impact on neighborhood property conditions. However, extended analysis that separates LIHTC developments by type and size suggests that only small new construction developments and large rehab developments impact neighborhood property conditions. Further analysis reveals that when the model does not control for crime, the effect of proximity to LIHTC developments on property conditions is negative.