The low‐income housing tax credit program goes mainstream and moves to the suburbs

Abstract

The Low-Income Housing Tax Credit (LIHTC) program is now 20 years old. With the maturing of the program, the use of tax credits has become commonplace in the development of rental housing across the nation. This article examines how the program has changed both financially and spatially. Specifically, the article asks whether it provides a mechanism that can help deconcentrate impoverished renters by providing access to low-poverty neighborhoods.This research finds that as the price for tax credits rises, the program becomes increasingly popular with developers who are helping it make inroads in low-poverty suburbs. By entering the suburbs, the LIHTC program is meeting and even exceeding the performance of the Housing Choice Voucher Program in terms of offering opportunities to live in low-poverty settings.

Do Housing Choice Voucher holders live near good schools?

“…Similarly, voucher holders typically live in neighborhoods that are less disadvantaged than those lived in by the average public housing resident or resident of other HUD-assisted development (Hartung and Henig, 1997;Kingsley et al, 2003;Pendall 2000;Devine et al, 2003). However, the neighborhoods where voucher holders live appear to be somewhat more disadvantaged on average than the neighborhoods surrounding LIHTC developments (McClure, 2006).…”

Low-income housing development and crime

“…2 Developers generally sell the futures of tax credits to investors in order to raise the capital required to fund construction; McClure (2006) 6 For the purposes of robustness tests, we also collected annual information on DDA designations; depending on the state QAP, developers may have less of an incentive to site projects in QCTs that are located inside DDAs. 7 We also observe the year that funds were allocated to each project; for about one third of the projects, the fund allocation and placed in service years are the same, while for nearly all of the remaining two thirds, the year placed in service is either 1 or 2 years after the year the funds were allocated to the project.…”

“…32 Moreover, renters in LIHTC units tend to have higher incomes than households participating in housing voucher programs or who live in public housing (Abt Associates, 2000;McClure, 2006). To the extent that new development draws relatively higher-income and less crime-prone people into poor neighborhoods and displaces others who are lower-income and more crime-prone, we would expect crime rates to decline in areas with LIHTC-financed development relative to surrounding areas.…”

Location incentives in the low-income housing tax credit: Are qualified census tracts necessary?

“…3 See Stegman (1991); Case (1991); Cummings and DiPasquale (1999); McClure (2000) and McClure (2006 to raise the money that will fund construction and a portion of the subsidy will be used to finance those transactions. Using data on the financing of tax-credit projects, McClure, 2006 estimates that after syndication, tax credits have funded approximately 55% of construction costs for projects built after the year 2000.…”