Page 19 - Balancing Priorities

BALANCING PRIORITIES: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30 pro t ownership, or potentially even public ownership, would help ensure that LIHTC properties continue to operate as affordable housing and serve the public interest. Another reform to protect the supply of affordable housing is to eliminate the QC option from the LIHTC program. The option for owners to opt- out of LIHTC affordability restrictions after 15 years has led to a substantial loss of units from the program. Along with these reforms, data about LIHTC properties should also be improved to allow stakeholders to better evaluate success and make strategic decisions about future efforts. HUD’s LIHTC database, the primary data source about LIHTC properties, does not include information regarding state or locally-imposed affordability restrictions beyond the federal requirement of 30 years. In addition, long-term tracking of LIHTC properties is made dif cult by the extent to which HFA monitoring and enforcement of program compliance after the compliance period (i.e., after Year 15) varies and, in many cases, is unknown. HFAs should report to HUD property-level affordability restrictions in addition to tenant characteristics. Also unclear is how well the LIHTC database re ects changes to a property ownership structure over time. While LIHTC reforms are important, a broader vision for federal affordable housing policy is needed in order to secure an adequate housing safety net that addresses concerns associated with both preservation and mobility. Lengthening affordability restrictions would keep LIHTC housing in the affordable housing stock, but would not address the need for physical rehabilitation and renovation of units as they reach 30 years of age and beyond. The need for capital investment likely poses a greater threat to preservation than expiring affordability restrictions.Far greater expansion of funding would likely be needed to both preserve all LIHTC units and to increase the supply of units in higher opportunity areas to facilitate mobility. Such a further expansion of funding is not only unlikely, but it would be inef cient and still not provide a robust safety net to protect the lowest income renters from housing instability without a corresponding increase to deeply targeted rental assistance programs. Our current funding environment is unlikely to preserve all LIHTC units as affordable housing while suf ciently expanding the supply in higher opportunity areas. Moreover, the LIHTC program often relies on tenant-based rental assistance to meet the housing needs of the lowest income renters. These facts make it clear the program requires a safety net for tenants. The HCV program should be fully funded to serve as a housing safety net for all extremely low-income and very low- income households. With open enrollment for vouchers, the most vulnerable LIHTC tenants would either already possess or have immediate access to housing assistance in the event of a LIHTC property leaving the affordable housing stock due to expiring affordability restrictions, conversion to another use, foreclosure, or physical deterioration. Additionally, vouchers help the lowest income tenants afford LIHTC rents because voucher- holders’ contribution toward rent is limited to 30% of their adjusted household income. Vouchers, at their best, can also promote neighborhood choice by allowing tenants to choose to remain in their current homes and neighborhoods, or take their housing assistance elsewhere, regardless of preservation efforts. To an extent, the choice of whether to invest rental housing assistance in a preservation effort, or whether to move to a neighborhood offering different opportunities would be left to the tenants themselves. There is general consensus that vouchers are typically more cost-ef cient than production subsidies, though the degree of ef ciency depends on the local availability of housing with rents at or below the voucher payment standards (Deng, 2005; McClure, 2005; Khadduri et al., 2003; GAO, 2002). NATIONAL LOW INCOME HOUSING COALITION AND THE PUBLIC AND AFFORDABLE HOUSING RESEARCH CORPORATION 19