Getting The Best From The U.S. Low Income Housing Tax Credit Program

a set of modern houses
Legends Park West is a mixed-Income and affordable housing redevelopment located in Memphis, Tennessee. Low Income Housing Tax Credits helped to pay for the redevelopment..

The Low Income Housing Tax Credit Program (LIHTC by common usage, pronounced Lie-tek) has become the major source of affordable housing supply in the United States.

With commitments to community development and housing, the non-profit Shelterforce is well placed to discuss whether government policies support people who are homeless. That also goes for people who are struggling to keep their homes. Shelterforce has followed LIHTC since the program began in 1986. Recently, Shelterforce has published a five part series under the banner LIHTC: The Good The Bad And The Very Complicated. The series brings together the analysis and experience of front line organizations, advocates and legislators.

It is generally agreed that the program has contributed to the construction of millions of homes since it began.

It is also generally agreed that for some important questions, there are no definitive answers. For example:

    • How many of all the homes built with LIHTC tax credits are affordable today? Hard to say.
    • Are landlords that rent out LIHTC funded homes following the rules? No one is keeping track, which in itself increases the likelihood that the answer is, “no.”
    • Are there protections for tenants who live in LIHTC homes? Not across the whole program, but there are individual innovations that have helped tenants.
    • Does LIHTC deliver housing for people with the lowest incomes? It could, but it doesn’t have to.
    • Does LIHTC affect spending at the state level? Yes it can.
    • Are LIHTC homes becoming unafforable? Yes, but it’s not possible to find out how many.

There is one thing that does not show up much in these articles: LIHTC housing is not permanently affordable. The article by Alan Mallach is an exception. His article, which is called How to Really Reform the Low-Income Housing Tax Credit Program, says:

“measures are needed to incentivize affordability beyond the 30-year horizon, up to and including permanent affordability.”

Why isn’t permanence front and centre in these articles? Mallach says that permanence is a big issue for tenants, but less so for landlords and the multiple groups that get involved when using LIHTC for housing development. Tenants are not among the people who are pushing to change the LIHTC rules in Washington.

Mallach offers some thoughts about what tenants might want from changes to LIHTC. His writing also reminds us that reading an article is as much about what it is not saying as what it is.

These articles will obviously be valuable for US readers. They will also be of interest to advocates in Canada and other countries that are eyeing tax credit programs as a potential way to add substantially to the supply of affordable housing. The articles themselves are interesting. They also identify people and organizations that have direct experience of LIHTC and who are worth following up with directly. Here are links to the articles in the series:

LIHTC: How It Started, How It’s Going
How Are LIHTC Rules Enforced—And How Well?
Can Residents Get More Out of Tax Credit Housing?
How to Reform the Low-Income Housing Tax Credit Program
How to Really Reform the Low-Income Housing Tax Credit Program