Low-Income Housing Tax Credit Projects Research Articles

Responding to the Challenges of Preserving Low-Income Housing Tax Credit Projects: Lessons From New York City

The year 15 presents a critical moment for the preservation of Low-Income Housing Tax Credit (LIHTC) properties. While there have been studies looking into the year-15 challenges in weak housing markets, there has been little research on strategies and contexts that have led to successful preservation outcomes. While different localities may require different strategies depending on local contexts, there are common challenges shared by LIHTC properties due to the program structure. This paper aims to examine how New York City has been responding to some of these common challenges through its LIHTC (Year-15) Preservation Program which has been quite successful in preserving expiring LIHTC properties. Through a combination of data analysis on LIHTC and New York City’s Year-15 Program, interviews with government officials, and an examination of approximately 530 land documents of 107 expiring LIHTC properties in New York City, this study takes an in-depth look into the development process, strategies, and outcomes of the program. By doing so, future challenges and lessons are highlighted that are helpful for New York City and beyond.

Measuring the Differentiated Impact of New Low-Income Housing Tax Credit (LIHTC) Projects on Households’ Movements by Income Level within Urban Areas

Social mixing is one of the key objectives of the housing policy in OECD countries. The Low-Income Housing Tax Credit (LIHTC) program, the largest affordable housing construction program in the US since 1986, has recently set creating mixed-income communities as one of the standards. As a project-based program, LIHTC developments are likely to influence residential mobility; however, little is known about its empirical effects. This study investigated whether new LIHTC projects are effective at attracting heterogeneous income groups to LIHTC neighborhoods, thereby contributing to creating mixed-income communities. Using unique individual-level household movement data combined with origin–destination neighborhood characteristics, we developed zero-inflated negative binomial (ZINB) models to analyze the LIHTC’s impact on residential mobility patterns in Franklin County, Ohio, US, from 2011 to 2015. The results suggest that the LIHTC attracts low-income households while deterring higher-income families, and therefore the program is not proved to be effective at creating mixed-income neighborhoods.

Exploring Spatial Clustering Over Time and Spillover Effects of the Low-Income Housing Tax Credit on Neighborhood-Level Income Segregation

This study investigates the longitudinal and spatial patterns and spillover effects of Low-Income Housing Tax Credit (LIHTC) developments on neighborhood-level income segregation. Focusing on all MSAs in the U.S., the results show that LIHTC units have been spatially clustered in socioeconomically disadvantaged neighborhoods over time. This research also explores the spillover effects of LIHTC units on neighborhood economic status by utilizing propensity scores and weighted linear regression to address a self-selection bias of developers’ decisions regarding the location of LIHTC projects. The results suggest that LIHTC developments, in general, are expected to increase the concentration of households that have lower income than the average household income of the MSA. However, in high-poverty neighborhoods, LIHTC developments yield positive spillover effects on neighborhood economic status. Moreover, providing LIHTC units in high-poverty neighborhoods where LIHTC units were built previously in the focal or any adjacent neighborhood also improves neighborhood economic status.

Year 15 and the Preservation of Low-Income Housing Tax Credit Projects: Lessons from Detroit, Michigan

This study examines the efforts to preserve the Low-Income Housing Tax Credits (LIHTC) projects that are at risk from their year-15 transition in Detroit, Michigan. Using the preservation framework recommended by the National Housing Trust, the paper first identifies the risks LIHTC projects in Detroit face. It then reports what major institutional actors in LIHTC developments have done in addressing those risks, with particular attention to the roles these actors have played in shaping preservation needs and actions. The study concludes by discussing what broader lessons can be learned from Detroit with regard to the preservation of LIHTC projects nationwide.

GIS for planning a sustainable and inclusive community: multi-criteria suitability analysis for siting low-income housing in a sustainable community and suitable neighborhood in Buffalo Metropolitan Area, New York

This study utilized Geographic Information System (GIS) as a tool for sustainable community planning which incorporateslow-income communities into current sustainable neighborhoods. GIS suitability analysis aimed at finding suitable and sustainable neighborhoods for locating subsidized housing projects for low-income families through the Low-Income Housing Tax Credit (LIHTC) program in the Buffalo Metropolitan Area (BMA), New York. LIHTC projects allocate 30% of their rental units for low-income families. They must be located in sustainable neighborhoods to ensure economically and socially sustainable livesfor low-income inhabitants. Data was collected from various New York State government agencies and used as input for several raster-based criteria maps using GIS network analysis, raster cost-distance analysis, Kernel density analysis, raster-based local statistics, and surface analysis.The criteria of sustainable neighborhoodsusing GIS multi-criteria analysis (MCA) were grouped into five factors, namely public amenities, economic viability, population growth, property conditions, and environmental factors. A final suitability map was created by multiplying the derived raster maps with their respective weight resulting from the Analytical Hierarchical Process (AHP). The study found several locations in suburban areas of the BMA that meet the criteria and canbe usedby the Buffalo Metropolitan Housing Authority (BMHA) to site the LIHTC housing.

Challenges for Low-Income Housing Tax Credit Projects at Year 15 and Beyond in a Weak Housing Market: The Case of Detroit, Michigan

ABSTRACTProjects financed through the Low-Income Housing Tax Credit (LIHTC) program, the largest producer of affordable housing in the United States, face ownership transition after 15 years in service when tax-credit investors leave. In Detroit, Michigan, projects whose transitions were complete but that were subject to additional affordability restrictions fared much worse than national surveys showed. Many projects continued to provide affordable housing, but a share experienced mortgage or tax foreclosure, and many units became permanently uninhabitable, increasing disinvestment in neighborhoods. Projects reaching year 15 from 2016 through 2022 were under considerable financial stress as of 2015 and would likely need financial restructuring. Few high-capacity nonprofit developers existed to assume property ownership. The intervention of mission-driven syndicators helped stabilize numerous projects. Detroit’s experience illustrates the challenges LIHTC projects are likely to face in weak-market cities. Additional studies should investigate the year-15 challenges in diverse housing markets and the efforts to address those challenges.

The impact of the low income housing tax credit program on local schools

The low-income housing tax credit (LIHTC) program has developed over two million rental homes for low-income households since 1986. The perception of deterioration in school quality has been a main reason for community opposition to LIHTC projects in middle- and upper-income areas. In this paper, we examine the impact of LIHTC projects on the nearby school performance using data on all LIHTC projects and elementary schools in Texas from the 2003–04 through 2008–09 academic years. We employ the longitudinal structure of the data to control for school fixed effects and estimate the relationship between the opening of nearby LIHTC on campus-level standardized test scores and performance ratings. We address the potential selection biases by controlling for preexisting trends in school performance prior to the study period. We find no robust evidence that the opening of LIHTC units negatively impacts the performance of nearby elementary schools.

Walkability, Transit Access, and Traffic Exposure for Low-Income Residents With Subsidized Housing

We assessed the spatial distribution of subsidized housing units provided through 2 federally supported, low-income housing programs in Orange County, California, in relation to neighborhood walkability, transit access, and traffic exposure. We used data from multiple sources to examine land-use and health-related built environment factors near housing subsidized through the Housing Choice Voucher Program and the Low Income Housing Tax Credit (LIHTC) program, and to determine these patterns' associations with traffic exposure. Subsidized projects or units in walkable, poorer neighborhoods were associated with lower traffic exposure; higher traffic exposure was associated with more transit service, a Hispanic majority, and mixed-use areas. Voucher units are more likely than LIHTC projects to be located in high-traffic areas. Housing program design may affect the location of subsidized units, resulting in differential traffic exposure for households by program type. Further research is needed to better understand the relationships among subsidized housing locations, characteristics of the built environment, and health concerns such as traffic exposure, as well as which populations are most affected by these relationships.

The low income housing tax credit and racial segregation

This paper addresses a critical but almost unexamined aspect of the Low Income Housing Tax Credit (LIHTC) program – whether its use (and in particular, the siting of developments in high-poverty/high-minority neighborhoods), is associated with increased racial segregation in the metropolitan area. Using data from the Department of Housing and Urban Development (HUD) and the Census, supplemented with data on the racial composition of LIHTC tenants in three states, we examine three potential channels through which the LIHTC could affect segregation: where LIHTC units are built relative to where other low income households live, who lives in these tax credit developments, and changes in neighborhood racial composition in neighborhoods that receive tax credit projects. The evidence on each of these channels suggests that LIHTC projects do not contribute to increased segregation, even those in high poverty neighborhoods. We find that increases in the use of tax credits are associated with declines in racial segregation at the metropolitan level.

Low-income housing development and crime

This paper examines the effect of rental housing development subsidized by the federal government’s Low-Income Housing Tax Credit (LIHTC) program on local crime. Under the LIHTC program, certain high-poverty census tracts receive Qualified Census Tract (QCT) status, which affects the size of the tax credits developers receive for building low-income housing. Changes in federal rules determining QCT status generate quasi-experimental variation in the location of LIHTC projects. Exploiting this variation, we find that low-income housing development in the poorest neighborhoods brings with it significant reductions in violent crime that are measurable at the county level. There are no detectable effects on property crime.

The External Neighborhood Effects of Low-Income Housing Tax Credit Projects Built by Three Sectors

ABSTRACT:This study examines the external neighborhood effects of Low-Income Housing Tax Credit (LIHTC) Projects built in Santa Clara County, California from 1987 to 2000. Three types of developers have built LIHTC projects in this area: nonprofit, for-profit, and a county public housing authority. Using a difference-in-difference hedonic regression approach, this study finds that almost all the LIHTC projects examined have generated significantly positive impacts on nearby property value. In particular, the study also finds that most nonprofit projects have delivered benefits similar to those of for-profit projects. Yet projects built by some of the largest nonprofits and the county housing authority have generated the greatest neighborhood impacts. Low-income neighborhoods have also benefited more from LIHTC developments than other types of neighborhoods.

Living in Affordable Housing and Duration of Tenure: Do Older Adults Stay in Low-Income Housing Tax Credit Projects as They Age?

Compliance data for the low-income housing tax credit program in Ohio was examined to identify factors associated with affordable housing tenure. Residents aged 55 and older reported a median tenure duration of 2.7 years. Cox regression was used to explore time until exiting housing, controlling for demographic factors, and the date the housing project was placed into service. Results suggest that duration of tenure was predicted by age and race. Modifications to the state Qualified Allocation Plan guiding development under the low-income housing tax credit program should be considered to promote aging in place in affordable housing. Reasons for exiting and subsequent housing choice should be explored.

Neighbourhood Valuation Effects from New Construction of Low-income Housing Tax Credit Projects in Iowa: A Natural Experiment

This paper estimates the valuation effects from new construction of low-income housing tax credit (LIHTC) projects on neighbouring single-family homes in Polk County, Iowa. The evaluative models estimate the impact from LIHTC project locations on assessed values using a 1999—2007 panel of neighbours and their matches, while controlling for unobserved heterogeneity. The results suggest that the siting of new low-rise, concentrated low-income LIHTC projects is associated with a 2—4 per cent slower rate of nearby single-family home valuation and that these effects persisted for five or more years after project approval. On the other hand, no clear valuation effect is detected when the LIHTC project is high quality and targeted to mixed-income groups. It is also found that new construction LIHTC projects serving the elderly, including assisted living, are associated with a 2—4 per cent faster rate of growth in neighbouring single-family home values, although the acceleration appears to be short lived. It is concluded that concentrating low-income renters in subsidised housing projects has negative consequences for neighbouring property values that might be avoided with tenant income mixing and improved site planning and design.

The Impact of LIHTC Program on Local Schools

The low-income housing tax credit (LIHTC) program has developed over two million rental homes for low-income households since 1986. The perception of deterioration in school quality has been a main reason for community opposition to LIHTC projects in middle-and upper-income areas. In this paper, we examine the impact of LIHTC projects on the nearby school performance. The LIHTC projects tend to have positive and statistically significant impacts on school performance the year they are placed in service and this finding is robust to various specifications. Offsetting these, the one year lag effects are negative and of similar or

The cost‐effectiveness of the low‐income housing tax credit relative to vouchers: Evidence from six metropolitan areas

How expensive is the Low‐Income Housing Tax Credit (LIHTC) program relative to vouchers? Are there any market conditions under which the supply‐based LIHTC could be more cost‐effective than demand‐based vouchers? This article examines these questions in six metropolitan areas—Boston, New York, San Jose (CA), Atlanta, Cleveland, and Miami. Controlling for family income and unit size, I compare the development subsidies of new‐construction LIHTC projects with the alternative 20‐year voucher cost in each area. In general, the LIHTC is found to be more expensive than vouchers. The premium, however, varies significantly by voucher payment standard and local housing market. Assuming a payment standard of 100 percent of fair market rent, the LIHTC is only 2 percent more expensive than vouchers in San Jose, but more than twice as expensive as vouchers in Atlanta. Many factors account for these regional variations. This study emphasizes two: local market conditions and program administration.

The Low‐Income Housing Tax Credit An Analysis of the First Ten Years

The Low‐Income Housing Tax Credit (LIHTC) has been the de facto federal rental housing production program since its creation in the Tax Reform Act of 1986. In this article, using a detailed database on 2,554 LIHTC projects, we analyze the costs of building these projects, where they are built, their financial viability, whom they serve, who finances them, and the size of the subsidies provided to them. The LIHTC is a flexible program that has built different types of housing in various markets. While LIHTC projects serve low‐ and moderate‐income households, their rents are beyond the reach of many poor households without additional subsidy. Revenues just cover costs for many LIHTC projects. Over time, considerably more of each tax‐credit dollar has ended up in the projects, and returns to equity investors have dropped significantly, perhaps reflecting an increased understanding of project risks. We estimate that LIHTC projects developed by nonprofits are 20.3 percent more expensive than those developed by for‐profits.