Almost half a million low-income housing tax credit (LIHTC) units will reach their 30-year mark and the end of their federally mandated affordability restrictions between 2020 and 2029, according to a joint report by the National Low Income Housing Coalition (NLIHC) and the Public and Affordable Housing Research Corp. (PAHRC).
According to the report, this amounts to nearly one-quarter of all current LIHTC units. These 486,799 LIHTC units, which are located in over 8,400 properties, do not receive other types of subsidies that would extend their affordability. In addition, without new capital investment for rehabilitation, these units also are at risk of physical deterioration.
Based on data from the National Housing Preservation Database and other sources, Balancing Priorities: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30 details what’s at risk, the challenges that lie ahead for preserving the existing affordable housing stock, and solutions for a housing safety net.
The report delves into the balancing act between the need for affordable housing preservation and efforts to provide greater access to higher-opportunity neighborhoods. It also explores the neighborhood desirability—measured by the percentage of households with incomes above $200,000, the percentage of the population in poverty, median home values, the personal crime index, and the housing vacancy rate—and opportunity—measured by the degree to which neighborhoods provide amenities key to economic mobility, such as educational opportunity, transit and job access, and a healthy environment—for the at-risk LIHTC units.
“These data are an important planning tool for local planners, policymakers, and housing professionals to better understand what resources are needed to preserve the affordable stock in their communities,” said Keely Stater, PAHRC director of research and industry intelligence.
Approximately 42%, or 199,316, of expiring LIHTC units between 2020 and 2029 are most concentrated in neighborhoods that rank low in both neighborhood desirability and opportunity. Demand for preservation resources may be greater for owners seeking to address the physical deterioration of the units in these neighborhoods. However, these units might be less desirable for preservation on the policy side if access to opportunity and desegregation are priorities.
On the other end of the spectrum, 9%, or 40,509, of expiring LIHTC units that rank high or very high in neighborhood desirability and opportunity also are at serious risk. These units are at greater risk of converting to market-rate housing with higher rents and would be difficult to replace in the same neighborhoods or other neighborhoods with a similar degree of opportunity.
In addition, 13% of expiring LIHTC units in this time frame are in neighborhoods that rank high or very high in opportunity but moderate, low, or very low in desirability. The units might be less likely to convert to higher-rent, market-rate housing, but owners could face challenges meeting capital needs because of lower rental income.
“The quickly approaching Year 30 deadline creates urgency for solutions,” said NLIHC president and CEO Diane Yentel. “We must move beyond the status quo of needlessly scarce resources and commit to a longer-term and bolder vision for a comprehensive national housing policy that ensures affordable homes for our nation’s more than 11 million extremely low-income renter households.”
Included in the report’s broader vision for a housing safety net are reforms to the LIHTC program, increased subsidies for the preservation and production of affordable housing to markets and populations most in need, and expanded access to Housing Choice Vouchers.