Study Finds 40% Utilization Rate of LIHTC Units by Extremely Low-Income Residents
An analysis by NYU’s Furman Center for Real Estate and Urban Policy and its Moelis Institute for Affordable Housing Policy was recently released. The policy brief found that the Low Income Housing Tax Credit (LIHTC) program serves a substantial number of households with incomes far lower than the program requires. Researchers analyzed income data for tenants in 16 states, covering more than 12,000 properties. This is about 38 percent of the total LIHTC housing stock. According to “What Can We Learn About the Low-Income Housing Tax Credit Program by Looking at the Tenants?,” the properties are fairly representative of the overall LIHTC universe.
Forty percent of LIHTC units house extremely low-income (ELI) households with incomes below 30 percent of the area median income (AMI), even though program rules allow the developments to serve households with incomes up to 60 percent of the area median income.
Of the 30 percent of extremely low-income households who do not receive rental assistance, more than half pay more than half of their income as rent, which is considered a severe rent burden. Overall, “LIHTC tenants experience lower rent burdens than other households of similar incomes but higher rent burdens than other Department of Housing and Urban Development tenants.” Looking at slightly higher-income households, those with incomes between 30 percent and 40 percent of the AMI, the study found that only 30 percent of these families receive rental assistance. Rent burdens are highest for this income group.
The findings present several policy implications, according to the report. This includes examining and minimizing any administrative obstacles developers face in combining rental assistance in LIHTC properties. The significant number of extremely low-income households in tax credit properties also means that these developments should be included in larger discussions about targeting services to these residents.