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Building the Case: Low-Income Housing Tax Credits and Health

Wednesday, November 29, 2017

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Safe, secure, affordable housing provides a foundation that allows individuals, families, and communities to thrive. While there are multiple mechanisms to encourage the production and preservation of affordable housing, a robust body of evidence supports the positive impact that affordable housing can have on economic security, educational attainment, the overall quality of neighborhoods, and job development.1 2 A newer area of research has focused on the linkages between affordable housing and health behaviors and outcomes. The evidence is building that housing affordability, neighborhood conditions, and conditions within the home are all important determinants of health.3

The evidence is building that housing affordability, neighborhood conditions, and conditions within the home are all important determinants of health.

The vast majority of new federally-financed supply is created through the Low-Income Housing Tax Credit (LIHTC), which provides tax credits to private investors to support the development of affordable, multifamily housing. Since its inception in 1986, the LIHTC has helped to finance roughly 3 million affordable rental units, which have served approximately 7 million low-income households, many including children and individuals with disabilities.4 The LIHTC has historically received strong bipartisan support, and in 2017 two pieces of bipartisan legislation were introduced in the House and Senate to provide states more flexibility, support LIHTC development in challenging markets, and establish a minimum 4 percent rate for credits used to finance acquisitions and housing-bond-financed developments. The Senate bill also includes a 50 percent increase in LIHTC funding.

Research has shown that properties financed through the LIHTC have contributed to social, economic, and educational benefits for communities and families, as well as helped reduce homelessness. In the growing field of research around social determinants of health, affordable housing has been shown to help low-income families free up valuable dollars to spend on healthy food and health care services. It also has contributed to positive health outcomes, particularly for populations with special health needs such as HIV, asthma, or substance use disorders. To date, not much of the exploration into the linkages between affordable housing and health has focused on LIHTC properties specifically, or looked into whether certain affordable-housing financing mechanisms affect health in different or better ways than others.

Supportive housing, or combining affordable-housing assistance with wraparound services to assist people experiencing homelessness, joblessness, disability, or health problems, has been shown to improve health outcomes for residents, and may have the potential to reduce health care costs for patients and the health care system as a whole. Many LIHTC properties have begun to incorporate services and supports into their development projects as a way to help address health and housing simultaneously. States and affordable housing development organizations have begun to look at ways that the LIHTC can be used to improve health, though most of these efforts are very new and will require time and evaluation to determine whether they can move the needle on improving health outcomes, shifting health behaviors, or even potentially reducing health care costs.


Conclusion

The LIHTC has helped finance millions of affordable homes for low-income individuals across the country, and it has also benefited local economies. While limited data directly connects the LIHTC to positive health outcomes for residents, the robust evidence base linking affordable housing to better health outcomes, and possibly lower costs, makes it reasonable to believe that the LIHTC contributes positively to the nation’s public health.

The Low-Income Housing Tax Credit has helped finance millions of affordable homes for low-income individuals across the country.

This analysis supports the following conclusions:

1. More research should be undertaken to explore the specific ways in which tax-credit-funded projects can impact health and well-being for residents and communities.

2. Collaborations among states and federal agencies could be especially helpful to accelerate research efforts—particularly partnerships among the Centers for Medicare and Medicaid Services, the Department of Housing and Urban Development (HUD), and the IRS—to link health-claims data with residents of LIHTC-funded properties.

3. More health impact assessments of state Qualified Allocation Plans (QAPs) should be conducted, and states should incorporate these findings into their QAPs to maximize the LIHTC’s impact on community health.

4. Given that housing is a critical determinant of health, and given the lack of supply of affordable housing in this country, expansion of the LIHTC is a laudable public health policy tool.

KEYWORDS: LOW-INCOME HOUSING TAX CREDIT, HEALTH, AFFORDABLE HOUSING, HOMELESSNESS

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