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Anand Parekh & Caitlin Krutsick: Low-Income Housing Tax Credit Boosts Health Policy

Roll Call

Monday, November 27, 2017

Read the opinion piece below as originally published in Roll Call


Despite partisan fights continuing to play out over various pieces of the tax code, the Low-Income Housing Tax Credit, or LIHTC, has enjoyed decades of strong bipartisan support. This $8 billion in annual federal funding provides incentives for investors to develop, construct and rehabilitate affordable rental housing. It has helped finance more than 3 million affordable rental units serving about 7 million low-income households since it was created in 1986.

Both the House-passed tax bill and the plan approved by the Senate Finance Committee continue LIHTC. Robust evidence links LIHTC investments to positive economic growth for communities, social and educational benefits for families and reductions in homelessness.

This week, the Bipartisan Policy Center will release a report summarizing research linking affordable housing, the majority of which is financed through LIHTC, to improvements in health behaviors and outcomes. The evidence is building that housing affordability, the neighborhood’s environment and conditions within the home are all important determinants of health. This has stimulated states and affordable housing development agencies to begin looking at ways LIHTC may be used to improve health. Therefore, we strongly support greater federal investment in this important program.

Research suggests that families with high housing cost burdens are unable to spend money on necessary health care services, prescriptions and nutritious food, and therefore often have poorer self-reported health, higher prescription drug nonadherence rates and lower food security than their peers with lower housing costs.

LIHTC credits may also be used to refurbish affordable housing units. Studies have shown that upgrading building materials and improving ventilation positively affects health outcomes for residents, especially for those with asthma or respiratory issues.

The most direct collaboration between the affordable housing community and the health and service communities is through the creation of supportive housing, which combines affordable housing assistance with wraparound services to assist residents experiencing homelessness, joblessness, disability or health problems. One study showed that this combination of housing and services could save an average of $6,000 a year, per person, in health care costs.

Several exciting new data collection efforts are underway that will help provide better evidence for how LIHTC investments are specifically impacting health for individuals, families and communities.

One is a partnership between Columbia University and the New York City Department of Housing Preservation and Development to conduct a longitudinal study tracking a variety of metrics, including health data, which will compare outcomes for individuals who received affordable housing to their peers who were eligible but were not placed in an affordable unit.

They hope to stratify the results such that LIHTC residents could also be compared with residents in affordable housing funded through other means.

The LIHTC’s competitive allocation process also provides a unique way to encourage development of affordable housing that takes health into consideration. Each state creates a Qualified Allocation Plan, or QAP, containing certain mandatory criteria all applications must meet to be considered and additional criteria reflecting state priorities that, if met, will result in bonus points awarded to applications. In Georgia, the state utilized a Health Impact Assessment conducted by the Georgia Health Policy Center to evaluate how its LIHTC program was taking public health into account.

The research team made recommendations to the state on how it could alter its QAP to encourage development projects to consider the health of low-income residents, and Georgia’s QAP revisions since 2015 now include health priorities. Other states should look to Georgia’s model for innovative ways to encourage “health in all policies” by incentivizing LIHTC investments that foster better health.

As Congress considers tax reform legislation, a key debate to watch will be balancing business tax reform with incentives to provide affordable housing. For example, if business developers face lower overall tax burdens, the relative value of receiving the tax credit could be reduced, and there might be less of an incentive to develop or make investments in affordable housing.

If business tax rate reductions come to pass, legislative improvements to LIHTC may be needed to maintain production and preservation of LIHTC units at current levels. The Bipartisan Policy Center’s Housing Commission recommended a 50 percent increase to the program at a $1.2 billion annual cost. The administration should follow suit and substantially increase federal support for the LIHTC program to help finance the production and preservation of additional units of affordable rental housing.

Strengthening the connection between LIHTC and positive health impacts can provide a powerful new argument for greater federal investment in this important program. Promoting better integration of health and housing policy should be a desirable bipartisan goal.

Anand Parekh, M.D., is chief medical adviser at the Bipartisan Policy Center. He was previously deputy assistant secretary for health (science and medicine) at the Department of Health and Human Services.

Caitlin Krutsick is project manager for the Bipartisan Policy Center’s Prevention Initiative.

KEYWORDS: LOW-INCOME HOUSING TAX CREDIT, SENATE FINANCE COMMITTEE, ANAND PAREKH, 115TH CONGRESS, HEALTH CARE, CAITLIN KRUTSICK