What Is the Low Income Housing Tax Credit?

We’re talking about housing for four weeks, thanks to the support of the RWJF! In the last episode, we introduced you to the pathways by which we might think about improving housing for low-income individuals. Today we’re going to get specific.

One policy which focuses on affordability is the Low-Income Housing Tax Credit. TR Goldman wrote a great policy brief about it in Health Affairs. It’s also the topic of this week’s HCT.

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[Loathomar]

I am not sure there is much long term impact from this tax program. The issue in impacted area is that is covers a laughable small percent of low income families who qualify. In LA, the AMI is $64K, making 60% of AMI ~$39K, which accounts for ~30-35% of households, which means 3-3.5M people but there are less then 100K of "affordable apartments" for rent in Los Angeles County, meaning only between 1 in 50 to 1 in 70 people who could qualify for affordable housing will get it. At best we help 2% of the people who we claim to want to help. The other 98% get no help at all and effectively pay higher taxes to pay for other people's housing, even though they earn the same income. It is like putting a bandaid on a compound fracture, I wouldn't say it is "doing nothing" but it clearly is not doing anything substantive to address the real issue.

[TheIdentifiedPatient]

A 1-bedroom at the Arbors of Bowling Green (Ohio) is $700 before utilities. It is a LIHTC program property.

Low income apartment my ass.

It's one of the most expensive places in town. Not the most expensive, but much closer to that end of the spectrum than the cheaper side.

The landlords (T&R Properties) are more than happy to utilize the government assistance that some tenants are getting in order to jack up the prices. So on top of getting squeezed for all I am worth, I'm also paying the rent for many of my neighbors. Fantastic.

Beautiful system we have here.

Currently I'm trying to get a 2-bedroom for $530 elsewhere. Compared to the $700 1-bedroom option... why not?

[shelbytownsend]

Hi can you explain how the AMI works. You mentioned at least 40% of the rental units must be reserved for households making 60% or less of the AMI or 20% of the units must be reserved for households making 50% or less of the AMI. How do you determine what AMI amount is for your area and are there stats I can get online that discuss or mentions what the current stance is in terms of the waiting list? I working on a paper for affordable housing and I need to if someone can share where to find AMI and statistical data for MD, DC and VA I could use.

[juanramirez]

Honestly, LIHTC has significant issues. Typically, it does not provide enough funding for a single project to be completed. This makes it so that organizations receiving the funds have to obtain supplementary funding from other programs, where available. Not to mention, that there have been cases where it does not appear that the money was actually used to build housing. I think the US would better off, if we borrowed from the UK, German, Singapore, and French models for low-income housing. Our low-income housing, even after having been privatized during the 70s (i.e., relying on non-profits and for-profit developers rather than Public Housing Authorities), is still fraught with controversy.

[mswilteach]

can you do an update since Biden? How can I start an education and apartment housing for the workforce and economic development professional resource center built-in?

[mactastic]

It was introduced twice. S.1136 - Affordable Housing Credit Improvement Act of 2021 was read twice and referred to the Committee on Finance. Nothing came out of it.

[ChosenOne]

If the rental unit is less than the 60% AMI the owner would have to raise rents to capitalize the write the off? It doesnt make sense.

[johnelliott]

Question I am in the military and does our bah and bas count as income for the tax credit

[danceballetacro]

WOW EXCELLENT VIDEO! do you think that middle income families are benefitted by the LIHTC?

[lizw]

This is needed however banks are choosing to invest in these projects vs giving loans to minorities which is the first step towards generational wealth. These programs are often in isolated areas and food desserts with little to no opportunity 🙃😔

[whollymary]

Yes but where is the low income housing I just still see tent cities especially in Portland, Oregon

[DragonTalkShow]

Purely from an affordable housing stock perspective, LIHTC is simply not a big enough program. The relative pittance it contributes—and its vulnerability to exploitation by developers—makes it hilariously ill-equipped to solve the massive shorting in affordable housing in the US. Much more robust public housing initiatives will be necessary to provide anything like the necessary stock. Some have even suggested that large municipalities could get the ball rolling since the federal government doesn't seem like it's going to be getting anything together any time soon.

[msdony]

How about getting more rules & taxes for Greedy land lords ! 800- $. & up is NOT low income rent

[marioa.i.]

What about contracting retail banks balance sheets, and cutting red tape for housing zoning, as restricting house flipping by taxing everyone who sell houses withing 5 years from initial purchase, and by the way making sure that real estate cannot be used as a money laundry vehicles.

[starydancer]

my credit score is 0. I need a place to live

[michaelyurkovskiy]

LIHTC is actually a very terrible idea. The reason being is it leads to income restricted apartments. While providing housing for low income individuals in theory is a good idea, you are leaving out the middle income earner a chance to live in decent housing, forcing them to move to more low income neighborhoods which can create other problems. Many of these middle income individuals are young working adults, some college grads, that are trying to get started in the work force and live separately from their parents. Tax credits like this work against those individuals. This needs to be abolished

[Eris-_]

That is a lot of shitty math for tax payers. A discount of 60-70% when the building only needs to be 40-50% low-income. And being in mixed housing has some economic and safety benefits...but also has negative consequences socially-emotionally due to the class separation (low-income residents are often barred from accessing the full amenities of a mixed housing building such as the gym, sauna, pool, etc. and their units are often grouped together on the lowest floors.)

[woodchuck]

According to US Census data 614K, new houses were sold in sold and 667K in 2018. The 2018 tax cuts don't seem to be disincentivizing affordable housing through a lower corporate tax.
Construction of private units is up from even 5 years ago. Some of the criticism seems unfounded. However, I do think the should be more incentive to build low and medium income housing.

[dvklaveren]

What I am most worried about is that affordable housing projects make homes that are, well, inhumane. I don't think that it's right for people to live in one-bedroom apartments. Yet, that is the affordable housing that I have seen and often, those are still priced far, far above cost, meaning that for the bare minimum, the tenants are not just paying with their sanity, but also disproportionately with their own money. That creates a quality of life gap between classes that can be hard or even impossible to bridge as people fall into poverty spirals.

Just so we don't get terminology confused; bedroom can refer to an area designated to sleep in, but when buying a home, it refers to any room that's a potential bedroom.

[LiquidDemocracyNH]

In this channels attempt to endorse a non-partisan solution to our housing crisis, they've mistakenly endorsed a Tax Credit. This Tax Credit, like most, came into existence after an unwillingness among neoliberals to endorse a genuinely public program, in this case public housing. When governments fail to endorse public programs they attempt to meet that same need by providing money directly to private companies. Usually this is in the form of subsidies, but Tax Credits do the same thing from another direction. Instead of handing companies money they reduce how much they're taking from them. The result is the same though, public revenue that could be spent on valuable programs is reduced and unaccountable private companies are handed a free check