Page 10 - Balancing Priorities

BALANCING PRIORITIES: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax Credit Program Beyond Year 30 LIHTC rents can be similar to market-based rents in softer markets or less desirable neighborhoods. In these neighborhoods, expiring affordability restrictions or physical deterioration could pose less of a threat to housing stability for higher income LIHTC tenants, or those with portable rental assistance, who could move to other housing. Absent rental assistance, however, the lowest income households nd it dif cult to afford unsubsidized market-rate rents in any market (NLIHC, 2018a). LIHTC and Neighborhood Opportunity While neighborhood characteristics bear directly on preservation risks for LIHTC units, these characteristics are also relevant to other housing policy objectives such as desegregation and mobility. A growing body of research documents the critical role neighborhood characteristics play in long term outcomes for low-income residents. Recent research, for example, sheds light on the negative effects of concentrated poverty on long term physical and mental health outcomes among adults, and educational and economic outcomes among children (Chetty, Hendren, & Katz, 2016; Ludwig et al., 2012). Other studies have found correlations between child outcomes and speci c neighborhood characteristics like access to healthy food and exposure to crime (McArdle & Acevedo-Garcia, 2017). Yet, there is an historical pattern of subsidized housing in racially segregated and higher poverty neighborhoods (McClure & Johnson, 2014; Rohe & Freeman, 2001; Galster, 1999). This pattern extends to LIHTC properties, although LIHTC properties are less likely to be sited in high poverty neighborhoods than public housing (McClure & Johnson, 2014; McClure, 2006). Until recently, little attention has been paid to how the preservation of affordable housing relates to other neighborhood characteristics (Lens & Reina, 2016). Methodology We used a range of data sources to estimate the number of LIHTC units expected to reach the end of all of their affordability restrictions by the end of 2029, and their neighborhood characteristics in terms of desirability and opportunity. We de ne neighborhood desirability as the preference for and quality of a given neighborhood. Opportunity represents the degree to which the neighborhood provides access to transit, jobs, quality education, and a positive health environment which are thought to be pathways for economic mobility. Measuring Property Characteristics We used the National Housing Preservation Database (NHPD) to identify LIHTC properties reaching the end of their extended use period. The NHPD is a national database of federally-assisted properties, which includes property-level information like contract or affordability expiration dates, loan maturity dates, recent physical inspection scores, number of units, type of owner, and address and census tract. For LIHTC properties, the NHPD identi es subsidy start and end dates, as well as the presence of other federal subsidies that might carry additional affordability restrictions. We reviewed 2016-2017 QAPs from every HFA in all 50 states and the District of Columbia to determine the presence of voluntary incentives or requirements for affordability restrictions extending past 30 years. For the nine states that require affordability beyond 30 years, we reviewed past QAPs and contacted HFA staff to determine when those requirements were imposed. We included these longer affordability periods in our nal estimates. The earliest start year we observed for such a requirement was 2000, so the impact of state-level affordability requirements beyond 30 years will likely not be realized until at least 2030. Incorporating NATIONAL LOW INCOME HOUSING COALITION AND THE PUBLIC AND AFFORDABLE HOUSING RESEARCH CORPORATION 10