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Flexibility Required to Meet Unique Housing Needs

View the full forum here. State and local housing practitioners continue to translate federal funding into tangible results on the ground.

State and local housing practitioners continue to translate federal funding into tangible results on the ground. While the federal government must be a committed partner in the pursuit of affordable housing, it is ultimately states and localities that are granted the flexibility to administer federal funds. This “devolution” provides a crucial opportunity to best serve the unique and various housing needs in localities throughout a nation as large and diverse as the U.S. Essentially, it should be up the federal government to set wide ranging, national housing priorities – such as prioritizing the lowest income populations – while giving individual states and localities the flexibility to develop their own plans to meet the federal housing goals.

One need look no further than our nation’s most successful housing production program, the Low Income Housing Tax Credit (LIHTC), for an example of a successful partnership between the federal government and states and localities. LIHTC accounts for the vast majority of all affordable rental housing acquired, rehabilitated, or constructed for lower-income households in the United States today. Indeed, some states go a step further, delegating a portion of their LIHTCs to localities within their state, completing the decision-making devolution. While the federal government sets general affordability and other rules applicable to all 50 states when allocating tax credits, the responsibility for administering the program is properly delegated to state housing agencies, granting each state the autonomy to address its own unique housing needs. States formalize their housing needs through the Qualified Allocation Plan (QAP). Updated and published annually by each state, the QAP establishes the state’s selection criteria and outlines how it intends to award its tax credits.

By providing the decision-making authority to individual states, the LIHTC program can – and does – address the nation’s diverse housing needs. Michigan, for example, has an abundance of existing housing in need of preservation and substantial rehabilitation. Accordingly, Michigan targets a full 25% of its allocation of tax credits specifically to preservation projects. While this is the right approach for Michigan, it may not be the appropriate policy for another state. With a booming economy and growing population thanks to oil reserves, North Dakota has recently experienced a housing shortage as workers flood the area in search of employment. In response, North Dakota’s 2012 QAP explicitly states that housing tax credits will only be awarded to projects that create additional housing units, thereby attempting to meet this need. Florida has an aging population. Appropriately, Florida specifically targets its LIHTCs towards developments that are designed to attract and serve the elderly.

These are just a few examples of how different parts of the country have vastly different housing needs. Granting states and localities the authority to administer federal funds according to their own priorities ensures that states’ unique needs are met. Regardless of what funding is or isn’t available for affordable housing in the future, this interaction between federal funds and state and local policies will remain crucial to appropriately housing low-income populations.

Michael Bodaken is President of the National Housing Trust.

Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic. Guest posts will feature prominently on BPC’s website, as well as be shared regularly with Housing Commissioners to help inform their work.

Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector.

Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.

2012-11-20 00:00:00
What should be the interaction (if any) between state and local policies that impact housing availability and affordability?

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