Page 5 - Balancing Priorities

BALANCING PRIORITIES: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30 • The greatest demand for preservation resources, however, may come from LIHTC owners in lower opportunity and less desirable neighborhoods where lower rents might not cover the cost of capital repairs and additional subsidies would be needed to address the units’ physical deterioration. The lowest income renters face a national shortage of more than 7 million affordable and available rental units, and only one in four eligible low-income renters receives the assistance they need (NLIHC, 2018a; Fischer & Sard, 2017). The insuf cient resources we commit nationally to affordable housing leads to dif cult policy choices between preserving the affordability and quality of existing affordable housing and maintaining housing stability for current tenants, on one hand, and promoting desegregation and access to opportunity (i.e. mobility) through new development, on the other. While we need to preserve as much of the existing affordable housing stock as possible, given the signi cant shortage, we must also make efforts to provide greater access to higher opportunity neighborhoods for disadvantaged households. The con ict between preservation and mobility, however, would not exist if we committed adequate resources to meet the needs of low- income renters. Looking beyond the status quo, we conclude with a vision for a housing safety net that provides expanded access to Housing Choice Vouchers (HCVs) and targets expanded supply-side subsidies for the preservation and production of affordable housing to markets and populations where they are most needed. Vouchers, ideally, provide recipients with greater mobility as long as housing is available and landlords are willing or required to accept them. Vouchers also help the lowest income renters afford LIHTC units and potentially protect them from harm if their housing drops out of the rent-restricted housing stock. At subsidies like the national Housing Trust Fund (HTF) and the Public Housing Capital Fund provide capital investment in housing for low- income renters that would otherwise not exist in some markets. the same time, LIHTC and other supply-side NATIONAL LOW INCOME HOUSING COALITION AND THE PUBLIC AND AFFORDABLE HOUSING RESEARCH CORPORATION 5 LIHTC Background Conceived as part of the Tax Reform Act of 1986, LIHTC is the largest affordable housing production program in the U.S. Unlike other affordable housing programs like Public Housing or HCVs, LIHTC is not funded through the Congressional appropriations process. Instead, Congress provides the Internal Revenue Service (IRS) with the authority to issue tax credits to each state based on its population size. The credits are administered by state-designated entities, typically state housing nance agencies (HFAs), who allocate their credits to speci c housing developments. Each state must have a quali ed allocation plan (QAP), developed by the HFA with public input, which sets forth application guidelines, eligibility criteria, and funding priorities for the allocation of the credits. At least 10% of a state’s tax credit allocation