LIHTC Survey Indicates Program Success

For more than a decade the Low-Income Housing Tax Credit (LIHTC) program has been the Federal Government's primary vehicle for producing rental housing that is affordable to low- and moderate-income households. Because it is an off-budget program involving tax incentives, has a decentralized administration by State (and in a few instances local) agencies, and provides benefits through thousands of private businesses or organizations, there has been little empirical study of the LIHTC. That is now changing, however, as the program's prominence and potential has grown.

The Low-Income Housing Tax Credit Program: National Survey of Property Owners presents the results of a national telephone survey of those who developed and own tax-credit properties placed in service between 1992 and 1994. The survey was conducted to learn more about owners' development objectives, the performance of their properties, and what they intend to do with the properties when the compliance period is over. It also served as a way to test the utility of an existing database for surveying LIHTC properties.

The report contains eight major findings:

• Although the majority of property owners are for-profit businesses that work in multiple neighborhoods in a single State, 3 of every 10 are nonprofit organizations.

• Owners maintain that financial, as well as civic or social, reasons motivated their development decisions.

• Although there is considerable variation among properties, tax-credit properties tend to be small, newly constructed, and managed by their owners. Most are situated in central cities. The properties are intended to serve families, the elderly, and disabled persons.

• Owners obtain tax-credit equity through a syndicator, direct placement, or a combination of these. Development financing sources include tax-credit equity, below-market-rate debt, market-rate debt, and various other public and private resources.

• Tax credits are essential to the owners' deals.

• Property performance meets expectations in a majority of cases. However, one in four owners express concern about cash flow performance.

• The majority of owners plan to maintain low-income occupancy after the compliance period.

• The majority of owners view the tax-credit program as a means for making deals financially feasible, have no regrets about using it, and intend to use the program in the future.

The Low-Income Housing Tax Credit Program: National Survey of Property Owners is available for $5 from HUD USER. Use the order form.