A PRRAC & Abt Associates Inc. Report (February 2013). By Jill Khadduri (Principal Associate).
Excerpt: “The Low Income Housing Tax Credit (LIHTC) is a federal program administered by the Treasury Department that subsidizes the development of rental housing projects for low-income households. LIHTC is the predominant “supply-side” or “project-based” component of U.S. rental housing policy, while the “demand-side” or “tenant-based” component is the Housing Choice Voucher program, providing subsidies that households can use to rent housing units they find in the private market. Since its creation by the Tax Reform Act of 1986, LIHTC has developed about 2.4 million units; since the early 1990s, LIHTC has been the only program that has added substantial numbers of subsidized projects to the U.S. rental housing stock. The housing voucher program currently assists about 2.5 million households—with some overlap, since vouchers frequently are used to rent units in LIHTC projects [Furman Center for Real Estate and Urban Policy 2012]. This paper is based on the premise that an effort is needed to create a better balance between locating LIHTC projects in “high-opportunity” communities and locating them in neighborhoods where substantial numbers of poor people and minorities currently live. After examining the basis of that premise, the paper then focuses on the way in which the administrators of LIHTC—agencies of state governments—can use the systems through which they allocate tax credit authority to change the balance of LIHTC locations so that the program does a better job of helping low-income families and racial minorities live in areas with good schools, superior public services and health care, and access to jobs.”