Updating the Low-Income Housing Tax Credit (LIHTC) Database: Projects Placed in Service Through 1999

The Low-Income Housing Tax Credit (LIHTC) enables states to issue Federal tax credits for the acquisition, rehabilitation, and new construction of affordable rental housing. Since its inception, the LIHTC program has been the principal mechanism supporting the production of new and rehabilitated rental housing for low-income households. From 1995 to 1999, approximately 1,300 projects representing 86,000 units were placed into service each year. The LIHTC provides state and local housing agencies with the equivalent of nearly $5 billion in annual budget authority for use in leveraging capital.

Due to the decentralized nature of the LIHTC program's administration, information about the characteristics of completed projects are not automatically catalogued and must be collected from the 58 independent organizations, typically state housing finance agencies, that administer the program. To facilitate the analysis of these data, HUD created the LIHTC database. A new report, titled "Updating the Low-Income Housing Tax Credit (LIHTC) Database: Projects Placed in Service Through 1999," presents the results of the most recent update to the database of LIHTC properties placed in service through 1999 and provides more complete coverage of properties placed in service in 1998.

The report is divided into five chapters. Chapters one and two provide an overview of the LIHTC program and a description of the data collection process, respectively. Chapter three presents the characteristics of tax credit projects placed in service from 1995 through 1999. Chapter four presents information about the location of tax credit properties placed in service from 1995 through 1999. Chapter five summarizes key findings. The appendices present findings by state, the data collection form, and a detailed description of the database. Findings from the report include:

• Thirty-nine percent of LIHTC projects have more than 50 units, compared to two percent of typical apartment complexes.
  
• Nearly 24 percent of LIHTC project units have three or more bedrooms, compared to 11 percent of apartment units nationally, and 16 percent of all apartments built between 1990 and 1997.
  
• The number of LIHTC projects placed in service remained constant over the study period, yet the number of units increased, reflecting a larger average project size.

The database enables regional development patterns to be analyzed with geo-coded LIHTC data. This analysis shows that the distribution of LIHTC projects mirrors that of rental housing units in general. For example, the South accounts for both the largest percentage of the U.S. population and the largest share of LIHTC projects. Geographical placements were also similar. The locations of tax credit units placed in service between 1995 and 1999 mirror the location of all rental units, as shown in the table below.

Location	LIHTC Units	All Rental Units
Central City	46%	46%
Suburb	41%	38%
Non-metro	14%	15%

In 1989, as part of the Omnibus Reconciliation Act, Congress added provisions to the LIHTC program to increase the production of LIHTC units in hard-to-serve areas. Specifically, the Act permits projects located in Difficult Development Areas (DDAs) or Qualified Census Tracts (QCTs) to claim greater eligibility for the tax credits. The characteristics of projects in DDAs and QCTs can be analyzed using the geo-coded LIHTC data. According to the report, projects in DDAs and QCTs are more likely to include rehabilitation, whereas projects outside of these designated areas are more likely to include new construction. The percentage of projects in QCTs that have a nonprofit sponsor is nearly twice that of projects not in QCTs or DDAs.

The creation and maintenance of the LIHTC database is part of an effort by HUD to enable the entire research and policy community to participate in the analysis of Federal programs by making specific data available. A complete copy of "Updating the Low-Income Housing Tax Credit (LIHTC) Database: Projects Placed in Service Through 1999" is available for $5.00 from HUD USER. Please use the order form on the back of this newsletter. You can also download the form from the HUD USER Web site at www.huduser.gov/datasets/lihtc/report9599.pdf.