LIHTC Program Helps Residents

Created as part of the Tax Reform Act of 1986, the Low Income Housing Tax Credit (LIHTC) program is currently the largest affordable rental housing construction program in the United States. It is estimated that the program has produced nearly 1 million affordable units since its inception.

Although there have been some major studies of the LIHTC program, few have focused on residents and neighborhoods. The Office of Policy Development and Research recently released Assessment of the Economic and Social Characteristics of LIHTC Residents and Neighborhoods, Final Report, which provides new information on LIHTC tenant and project characteristics in relation to the neighborhoods where the properties are developed. This study presents an assessment of the economic and social characteristics of residents and neighborhoods in 39 LIHTC developments located in 5 metropolitan areas—Boston, Kansas City, Miami, Milwaukee, and Oakland—that were put into service between 1992 and 1994.

The properties included in this study indicate that the program serves households with low incomes. Ninety-four percent of the units studied were reserved for tenants with incomes below 60 percent of their area's median family income. LIHTC may be used to subsidize developments that have as few as 20 percent of their units reserved for lower income families, but 37 of the 39 developments studied serve a predominantly low-income population.

Although the LIHTC properties serve a low-income population, there was a mix of incomes in the developments. For example, in more than half of the developments at least 20 percent of the families were in poverty, and at least another 20 percent of the families had an income of at least 1.3 times the poverty level. And although the LIHTC developments serve families with low incomes, on average these families had higher incomes than residents of public housing or those receiving Section 8. There is some overlap between LIHTC and Section 8, as 37 percent of the LIHTC residents in this study also received Section 8 assistance.

This study also examines the rent burden experienced by residents of the developments, the characteristics of the residents relative to their neighborhoods, and the impact of the developments on the neighborhoods in which they are located. This report is a useful first look at how this important housing development program benefits the people it is intended to serve.

Assessment of the Economic and Social Characteristics of LIHTC Residents and Neighborhoods, Final Report, is available from HUD USER for $5. Use the order form.