Study Finds Neighborhood Opportunity Around LIHTC Properties Changes Over Time, Challenging the Assumptions Underlying Site Choice

By Elizabeth Workman, NLIHC Research Intern 

An article published in Housing Policy Debate, “Shifting Sites of Opportunity: Changes in Neighborhood- and School-Based Poverty Around LIHTC Properties Over Time,” examines how schools and neighborhoods surrounding Low-Income Housing Tax Credit (LIHTC) properties change over time. The authors find that neighborhoods with LIHTC developments experience greater changes in poverty rates than those without LIHTC developments, but also that conditions in schools do not always align with changes in neighborhood conditions. These findings indicate that measures of neighborhood opportunity used to evaluate potential LIHTC property locations should account for long term neighborhood change rather than relying solely on existing conditions at the time when a LIHTC project is sited. 

Because LIHTC properties have historically been concentrated in higher-poverty neighborhoods, many states now award points to LIHTC developments in “high-opportunity” neighborhoods, generally those with low poverty rates and strong schools. However, these designations tend to rely on a snapshot of neighborhood conditions, even though LIHTC properties often remain affordable for 30 to 55 years while the surrounding neighborhoods can change considerably. 

This study focuses on LIHTC properties in U.S. metropolitan areas placed in service between 1990 and 2009. The authors use HUD’s National LIHTC database to identify properties and match them with census tract data on neighborhood poverty from the 1990 and 2000 decennial census and multiple 5-year estimates from the American Community Survey (ACS). The analysis focuses on changes in neighborhood poverty rates over time through 2023 and compares changes in neighborhoods with LIHTC developments to those without LIHTC developments. To measure school conditions, the authors use data from the Longitudinal Imputed School Dataset (LISD). The percent of students within nearby elementary schools who are free lunch eligible (FLE), or students whose household income is below 130% of the federal poverty line, serves as a measure of school poverty.  

The authors found that neighborhood poverty levels around LIHTC properties change a lot over time. From 2017 to 2023, 40% of LIHTC neighborhoods saw poverty rates fall by at least five percentage points, while 14% saw increases. Patterns of change varied by the neighborhood’s starting poverty rate. Low-poverty neighborhoods were the most stable, while 44% of LIHTC neighborhoods with poverty rates above 30% in 2000 had poverty rates below 30% by 2023. However, poverty persisted in neighborhoods with the highest starting poverty rates, with 41% of LIHTC neighborhoods with poverty rates above 40% remaining in that category.  

When examining geographic differences across states, the authors found higher shares of LIHTC neighborhoods with considerable declines in poverty relative to their surrounding neighborhoods in states like DC, New York, and California. In contrast, LIHTC neighborhoods more closely mirrored changes in other neighborhoods in states with relatively little change in poverty during the study period, such as Vermont, Kansas, and Alaska. 

The authors also found that changes in school poverty over time, measured by FLE rates, do not always correspond to neighborhood trends. Throughout the 1990s and 2000s, changes in neighborhood poverty were moderately associated with changes in school poverty. However, after 2010, neighborhood and school poverty rates became increasingly disconnected, which the authors suggest may reflect the expansion of school choice programs weakening the relationship between neighborhoods and schools.  

The authors conclude that neighborhood and school conditions surrounding LIHTC developments often change over time, which challenges the assumption that a neighborhood’s opportunity stays fixed after a LIHTC property is built. The authors suggest further research to understand how changes in neighborhood and school conditions affect the long-term educational and economic futures for children in those neighborhoods. The findings encourage policymakers to assess neighborhood change over time, rather than rely on a measure at a single point in time, when evaluating neighborhood opportunity and deciding where to develop LIHTC properties.  

Read the full report.