An article by NLIHC was published in a new issue of HUD’s Cityscape journal as part of a symposium celebrating the fiftieth anniversary of tenant-based rental assistance. The article, “The Role of Vouchers in the Low-Income Housing Tax Credit Program,” explores the relationship between the Housing Choice Voucher (HCV) and Low-Income Housing Tax Credit (LIHTC) programs, two of the most significant sources of federal funding for affordable housing. The authors find that the use of vouchers in LIHTC units raises a number of questions for federal policy related to housing affordability and stability, preservation, voucher success and mobility, and efficiency. Answering these questions is essential for determining whether and how the voucher and LIHTC programs might be coordinated to improve a range of outcomes, but significant data challenges stand in the way.
Regarding affordability and housing stability, vouchers might make LIHTC rents more affordable or help promote housing stability within the LIHTC program. At the same time, in cases where the voucher payment standard exceeds the maximum LIHTC rent, vouchers might contribute to preservation by providing additional rental income to a property, though additional income could also be used to cross-subsidize other units or simply be realized as a profit without being reinvested in the property. Since the LIHTC program lacks tenant protection vouchers, LIHTC tenants with vouchers might also have some additional protection from housing instability when preservation efforts fail. Because LIHTC owners are required to accept vouchers and LIHTC rents are meant to be below market rate, LIHTC units might also provide opportunities for voucher holders to lease up when they might not otherwise be able to do so because of discrimination or limited stock renting near the fair market rent. This could contribute to voucher success rates or even mobility. All these possibilities raise questions about whether the coordination of the programs can impact a range of outcomes.
Beyond questions about how the coordination of HCVs and LIHTC might affect different housing policy outcomes, the overarching question of efficiency is also a concern. It is unclear whether LIHTC units offer voucher holders a degree of affordability they would not be able to attain with vouchers alone in the private market. If, for example, voucher holders in LIHTC units have a higher prevalence of cost burdens than voucher holders in the private market, then the “doubling-up” of subsidies might be relatively inefficient. Efficiency could also vary across housing markets. Answering the question of efficiency may be key to understanding whether the voucher and LIHTC programs should be coordinated.
Existing data sources, such as LIHTC tenant data collected by HUD, can provide limited insights into some of these questions. Using a sample of 660,840 households across 34 states derived from 2019 LIHTC tenant microdata provided by HUD, the authors find that rental assistance in general plays a role in making LIHTC rents more affordable to the lowest-income renters. Nearly half of LIHTC households in the sample have incomes of 30% or less of area median income (AMI) and 69% of these households receive some form of rental assistance. Among the lowest-income LIHTC households without any rental assistance, though, nearly 60% are severely cost-burdened, spending more than half their incomes on rent and utilities.
Information on specific types of federal rental assistance (e.g. vouchers) utilized in LIHTC units, however, is far less complete in HUD’s LIHTC tenant data. The authors argue that more complete LIHTC tenant data are needed to definitively answer other basic questions about the relationship between the LIHTC and voucher programs, as well as more complex questions relating to preservation, voucher success and mobility, and efficiency. Further research with more complete, nationally representative data – whether sourced through careful sampling, innovative approaches to matching LIHTC and voucher administrative datasets, or improvements to HUD’s existing LIHTC tenant data – is key to understanding whether and to what ends two of our most significant affordable housing programs should be coordinated.
Read the article at: https://tinyurl.com/4ycpuc76