Page 11 - Balancing Priorities

BALANCING PRIORITIES: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30 voluntary state incentives for longer affordability periods in the estimates of LIHTC units reaching the end of their affordability period was beyond the scope of this report, as was accounting for locally imposed affordability restrictions.3 Measuring Neighborhood Characteristics Based on a review of the literature and con rmatory factor analysis, we created two indices at the census tract level to measure neighborhood characteristics. The rst index ranked neighborhood desirability to represent the likely preference for and quality of the neighborhood. The index consisted of the percent of households with incomes above $200,000 annually, percent of the population in poverty, median housing value, personal crime index, and housing vacancy rate. We ranked census tracts by each of the measures individually and then by a composite index, which standardized the direction of desirability for each indicator. We identi ed each neighborhood as very-low, low, moderate, high, or very-high desirability based on quintiles of the neighborhood desirability scores within a given metropolitan or micropolitan area (CBSAs).4 Census tracts outside CBSAs were ranked relative to all other non-metropolitan census tracts within the state. We assume that owners of LIHTC properties in more desirable neighborhoods, where the market will likely bear higher rents, have a greater incentive to reposition their units as market-rate housing with higher rents after the end of affordability restrictions. We assume LIHTC owners in the least desirable neighborhoods, where the market is soft, will face challenges nancing capital needs for renovation by Year 30 due to lower rental income (Schwartz & Melendez, 2008). The second index measures neighborhood opportunity and is used represent the degree to which each neighborhood provides access to amenities thought to provide pathways for economic mobility. The neighborhood opportunity index was constructed using a similar method to the neighborhood desirability index using sub-indices for each aspect of neighborhood opportunity. We included measures for labor market access, educational opportunity, transit access, and a healthy environment. Our indicators for labor market access included the percent of workers with a commute less than 30 minutes, a job density index, the labor force participation rate, the unemployment rate, and the percent of the population over age 24 with at least a high school degree; our educational opportunity indicators included HUD’s school pro ciency index, student-to- teacher ratios, SAT and ACT participation rates for 11 and 12th graders, and pre-school enrollment5; our transit access indicators included the percent of workers commuting by public transit, average commute time to work, distance to the CBSA centroid, and the percent of households with a car; and our health environment indicators included a cancer risk index, a measure of grocery store access, the proportion of older housing in the census tract, proximity to environmentally hazardous sites, and primary care doctors per capita. We matched the location of LIHTC properties with their census tracts to categorize them by neighborhood desirability and opportunity. 3 There is no centralized source of data on properties subject to affordability requirements beyond 30 years due to state or local requirements or QAP incentives. Our estimates of properties losing affordability restrictions by 2029 inevitably include some properties with longer affordability restrictions stemming from state or local incentives. 4 Scores were reversed for some indicators, so that higher scores always indicate greater desirability. 5 The values for the student-teacher ratio, SAT/ACT participation rate, and pre-school enrollment indicators in a given neighbor- hood were derived from the average value for all schools in the census tract or the school closest to the census tract centroid, depending on what data permitted. NATIONAL LOW INCOME HOUSING COALITION AND THE PUBLIC AND AFFORDABLE HOUSING RESEARCH CORPORATION 11