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"Family Housing Opportunities in the LIHTC Program"

July/August 2006 issue of Poverty & Race

Are states using the Low Income Housing Tax Credit (LIHTC) program to enable families with children to live in low-poverty and racially integrated neighborhoods? This is an extremely important question, because, with more than 1.5 million units, LIHTC is a larger government program than public housing. Furthermore, the tax credit program is in effect a block grant to the states, and tax credit authority is allocated to housing developers by state housing finance agencies. Fair housing laws apply to the program, but there is no systematic monitoring of the program for compliance with federal fair housing mandates.

PRRAC and the National Fair Housing Alliance (NFHA) have funded a report, to be released later this month, that uses a national database on LIHTC units placed in service between 1995 and 2003 (the most recent LIHTC database with a full range of data available) to show the extent to which the program produces “family” housing—that is, units that have two or more bedrooms—in low-poverty portions of metropolitan areas. The paper was prepared by Jill Khadduri, Larry Buron and Carissa Climaco of Abt Associates.

Because of the lack of information about who actually lives in LIHTC rental housing, we do not yet know the extent to which LIHTC housing in low-poverty areas is accessible to the lowest-income families, or to African-American and Latino families, but we were able to count the number of units that have at least two bedrooms as a “proxy” for family housing and then look at where those LIHTC units are located. The report focuses on large metropolitan areas, those with more than 250,000 people, because these are the places in which spatial concentration by poverty and race is most likely to occur.

According to the Abt analysis, 22% of LIHTC units developed in recent years in large metropolitan areas are large enough to be occupied by families and are located in low-poverty census tracts. As in the Moving to Opportunity demonstration, low-poverty census tracts are defined as those in which less than 10% of the population is poor. Another 19% of LIHTC units are “family” housing units in census tracts with moderate (10-20%) poverty levels.

LIHTC units that are in low-poverty locations within large metropolitan areas are also likely to be in census tracts with low populations of people of color. Many are also in the suburbs. These neighborhoods are not places where poverty rates are increasing. Rather, LIHTC units that are built in low-poverty neighborhoods are in high-growth parts of metropolitan areas, areas in which a high proportion of all of the housing was built after 1990.

Because LIHTC siting policy is under the control of state housing finance agencies, the paper devotes considerable attention to state-by-state variations in the location of LIHTC family housing. States are ranked by the percentage of LIHTC family units found in low-poverty locations. Because states vary in the overall extent of poverty in their large metropolitan areas, the paper also ranks states by comparing the extent to which LIHTC units are in low-poverty locations with the extent to which all rental housing is in such locations. States vary a great deal by either measure, suggesting that some states are focusing much more than others on the policy goal of increasing opportunities for families with children to live in low-poverty neighborhoods. States that appear to have made positive efforts are Utah, New Hampshire, New York, Wisconsin, Delaware, Nebraska and Colorado. In contrast, Illinois, South Carolina, Kentucky, Pennsylvania, Connecticut, Massachusetts, Idaho, Arizona and the District of Columbia place only small fractions of their LIHTC family housing in census tracts in which fewer than 10% of all people are poor.

The report also examines the extent to which states are selecting LIHTC developments that have the effect of increasing racial integration, by comparing the “minority” populations of the census tracts in which LIHTC units are located with the overall minority populations of the same metropolitan areas. No state is performing well on this measure.

In addition to the comparisons among states, the report includes detailed tables on individual metropolitan areas that readers may find useful for advocacy, and potentially for later studies of who actually lives in LIHTC developments. For multi-state metropolitan areas, tables provide information on LIHTC units located within the portion of each metropolitan area that is within each state—and, therefore, under the control of that state’s housing finance agency. In addition, national rankings for each full metro area will be provided for the key indicators in the report.

PRRAC is continuing to pursue research and advocacy to bring civil rights reforms to the Low Income Housing Tax Credit program. Our partners in this work, in addition to the National Fair Housing Alliance, include the Lawyers Committee for Civil Rights and the Kirwan Institute for the Study of Race and Ethnicity. For more information, see www.prrac.org/projects/lihtc.php.

To request a copy of the report, contact Philip Tegeler at ptegeler@prrac.org.
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