Report: State Finance Agencies Address Climate Resiliency
More than half of all states have measures aimed at protecting LIHTC sites from natural disasters, according to a new report from Freddie Mac. The research is part of Freddie Mac’s Duty to Serve plan, a regulatory mandate from the federal Housing Finance Agency to provide leadership and facilitate mortgages for underserved markets such as affordable housing. This new report builds upon last year’s report, “Resiliency Efforts in Affordable Multifamily Housing,” which examined the various public and private programs and initiatives designed to improve climate resiliency.
The LIHTC program administers tax credits to affordable housing projects through each state’s Qualified Allocation Plan (QAP). State QAPs influence these properties by providing incentives for a variety of public policy priorities, such as climate resiliency. The report finds that researching the provisions in LIHTC QAPs can provide insight on how to increase resiliency for low-income renters while maintaining affordability. A site with resilient improvements and design has a greater likelihood of withstanding a natural disaster. This allows more residents to remain safe in their homes and lowers the risk of tenant displacement and the need for temporary housing.
Freddie Mac analyzed all 50 states and Washington, D.C.’s LIHTC QAPs and identified different resiliency approaches that mitigate the effect of disasters (hazard resistance) and/or bolster recovery efforts after disasters occur. Overall, 32 states, including Washington, D.C., have included some hazard-resistance provisions in their QAPs, covering water conservation, wildfire protection, flood mitigation, and storm protection measures. The measures range from flood plain proximity requirements to fire retardant window coverings.
In addition, according to the report, 27 states have provisions that aid recovery, and 17 states have measures in both hazard-resistance and recovery measures. The states with recovery provisions in their QAPs use a variety of incentive types. For example, four states have set-asides for housing recovery after a major disaster declaration. These states are Georgia, Iowa, Louisiana, and Michigan.
Twelve states include a potential set-aside or scoring incentive for a disaster recovery response. And 13 states have disclaimers in their QAPs stating that, in the event of a natural disaster, the housing finance agency can disregard the set-aside and scoring in the QAP to allocate disaster recovery resistance.