Housing Expert Forum: The LIHTC

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 are 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.

QUESTION: This month marks the 27th anniversary of the federal Low Income Housing Tax Credit (LIHTC) program. Throughout the program’s tenure, what lessons have we learned? What key components continue to make it a successful program?

Despite Efficiency, Tax Credit Under Renewed Pressure
By Kent Watkins

There is no doubt that the tax credit in general, and to the housing industry that depends on it, is perceived to be in the fight of its life, despite claims of its efficiency and production prowess. To those, however, who see severe ?mission creep’ and backdoor efforts to avoid direct appropriations by legislative committees, it is a cancer to be eradicated or at least tamed.

Read the full post here.

Give the LIHTC the Credit It Deserves
By Bill Kelly

The Low Income Housing Tax Credit has been an outstanding success. We have learned that its mix of affordable housing requirements and private investor discipline is a model for public/private partnerships. Delivering the credit through state housing agencies has sharply increased the capacity of those agencies, who now also have the capability to run state programs and to take on new responsibilities for federal programs.

Read the full post here.

Time to Re-think the Low Income Housing Tax Credit
By Mark Calabria

There may be no federal housing program with a greater disconnect between practitioners and researchers than the Low-Income Housing Tax Credit (LIHTC). Practitioners express almost universal support for the LIHTC, while a number of academic studies raise serious questions as to its effectiveness.

Read the full post here.

LIHTC Fundamentally Changed Production and Preservation of Affordable Housing
By Conrad Egan

The Low Income Housing Tax Credit fundamentally changed the dynamics of affordable housing in the following ways:

It established a self-enforcing mechanism to ensure performance?the serious penalty that the investors would incur upon default?in contrast to the previous enforcement mechanisms that I, from personal experience, can attest to their inadequacy.

Read the full post here.

A Different Kind of Money
By David A. Smith

LIHTC has thrived because it, like other investment tax credits (historic, New Markets) is a different kind of money with three beneficial features no appropriated program can duplicate ? true risk transfer, collectible recapture, and outcome-based compliance ? that catalyze a fourth benefit ? genuine market tension.

Read the full post here.

Flexibility for States and Localities Key to Success
By Michael Bodaken and Laura Abernathy

The Low Income Housing Tax Credit (LIHTC) remains the nation’s largest and most successful affordable rental housing production tool, accounting for the vast majority of all affordable rental housing acquired, rehabilitated, or constructed for lower-income households in the United States today. Twenty-seven years after its inception, LIHTC has created over 2.6 million rental homes throughout the nation.

Read the full post here.

A Look at the Housing Credit’s Success on Its 27th Anniversary
By Ali Solis

As the Low-Income Housing Tax Credit (Housing Credit) enters its twenty-eighth year, it boasts a remarkable track record of doing exactly that which it was intended to do ? producing 2.6 million safe, decent affordable homes for low-income households and counting. But its impacts go far beyond the construction of these homes: it has created over 3.6 million jobs and leveraged over $100 billion in private investment since its inception, to name a few. The Housing Credit doesn’t just do its job. It has actually exceeded the expectations established for it by Congress.

Read the full post here.

Program Mutually Beneficial for Developers and State and Local Governments
By Brian Montgomery

There continues to be a need for affordable rental housing and the LIHTC is one of the flagship programs meeting this challenge. According to Harvard University, rental housing construction costs would need to drop to one-third of their current levels to be considered affordable for minimum wage households. Moreover, according to American Community Survey, nearly half of all renters are in need of more affordable housing costs. During economic recessions, the LIHTC also has played a critically important counter-cyclical role to ensure housing affordability.

Read the full post here.

LIHTC Works Well, But Could Be Strengthened Further
By Barbara Sard

The Low-Income Housing Tax Credit has worked well as a means to finance affordable housing development and rehabilitation. Going forward, federal housing policy will depend on LIHTC to promote goals from ending homelessness to facilitating independent living for a growing low-income elderly population.

But like most successful programs, LIHTC has room for improvement. Here are three steps federal and state policymakers could take to make LIHTC even more effective.

Read the full post here.

An Essential Preservation Tool for Public Housing
By Sunia Zaterman

The Low-Income Housing Tax Credit (LIHTC) has proven to be an essential tool in redeveloping distressed public housing across the country. Federal appropriations for the maintenance and capital repair of public housing has declined severely over the past several years, making it impossible even to keep up with the new repair needs that arise each year for public housing properties.

Read the full post here.

Happy Anniversary Housing Credit!
By Garth Rieman

This month marks the 27th anniversary of the Tax Reform Act of 1986, the legislation that created the Low Income Housing Tax Credit (Housing Credit). Though no one could predict its future at the time, the Housing Credit has become the most successful rental housing program in history, with over 2.6 million units of affordable, quality apartments constructed and preserved in rural, suburban and urban areas across the country.

Read the full post here.

How to Create Affordable Housing for 27 Years
By Ethan Handelman

The federal government has tried many different ways to create homes and meet the need for affordable housing: direct grants, loans, rental assistance, block grants, and more. Among these, the Low Income Housing Tax Credit, or Housing Credit, stands out as uniquely effective. Simply put, the Low Income Housing Tax Credit has proven itself over the past 27 years in ways unmatched by any other affordable housing program.

Read the full post here.

Preserve and Expand the LIHTC
By Amy Anthony

Since its creation in the Tax Reform Act of 1986, the federal Low Income Housing Tax Credit (LIHTC) program has been consistently effective at leveraging private capital to fund the development and preservation of high quality affordable rental housing. At my organization, POAH, we strive to rescue and restore some of the United States’ most ?at risk’ rental housing, and the LIHTC has been the essential capital source in the great majority of our 70+ preservation transactions.

Read the full post here.

Support for the Low-Income Housing Tax Credit Cuts Across Urban and Rural Divides
By Bob Rapoza

At this time, President Barack Obama and House Speaker John Boehner (R-OH) are struggling to find a solution to end the government shutdown and raise the debt ceiling. Some have suggested that the only way to reach a deal is with a broader agreement on reforming the tax code. Yet, finding a bipartisan agreement on tax reform is not an easy task for any Congress, let alone this one.

Read the full post here.

Past Forums

July 2013: Who are unconventional stakeholders who can help rally support for housing?

May 2013: What should the federal government’s role be in helping prepare consumers to make financial decisions?

April 2013: Which of the recommendations in the BPC Housing Commission’s report should receive highest priority?

November 2012: What have we learned from past disaster recovery efforts that could be applied in the way of housing assistance following Hurricane Sandy?

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

September 2012: What statement(s) related to housing?policy, or otherwise?would you want to hear in the presidential debates?

August 2012: What is the role of housing education and counseling in the future housing economy and finance system?

July 2012: Do alternative forms of homeownership, such as shared equity models and rent-to-own programs, present viable alternatives for future homeownership?

June 2012: What are the best options for the millions of single-family homes that may be left behind by Baby Boomers as they age, many of which are in suburban or exurban communities?

May 2012: What can we learn from current or previous efforts to link evidence-based outcomes to policy or program development?

April 2012: What lessons can the U.S. learn from housing programs, policies, or regulatory frameworks in other countries?

March 2012: How can housing policy be responsive to today’s urgent needs and simultaneously address long-term trends?

February 2012: What are some of the key characteristics of a healthy housing system? And how can the success of these features be measured?

January 2012: What should the federal government do to address the inventory of foreclosed properties?

December 2011: What are the most pressing issues in housing policy today?