An Upward Lift: New York City LIHTC Developments Boost Values, Residents

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Tax Credit Advisor, August 2010: Low-income housing tax credit developments in New York City have had a positive economic impact on the neighborhoods in which they are located, including raising property values, according to a new study released on June 23.

Commissioned by the Local Initiatives Support Corporation (LISC) and Enterprise Community Partners (Enterprise), the study concludes that affordable housing development is a proven economic stimulus that can expand neighborhood spending power, raise surrounding property values, and help low-income families stabilize their economic outlook.

The study reflects an analysis of data by the Furman Center for Real Estate and Urban Policy at New York University and independent consultants. Researchers analyzed home prices for properties near all 660 LIHTC properties in New York City, assessing the impacts from each development in a several block radius. The study also incorporated interviews with developers and residents of two sample projects in the Bronx.

The study, which assessed the impact of new and rehabilitation low-income housing projects on their residents and on the surrounding neighborhoods, drew three main conclusions:

  • Higher property values. LIHTC project investments increase adjacent property values and help generate additional property tax revenue. They increased the value of surrounding properties by 6 percentage points immediately, and fostered subsequent consistent additional gains.
  • Family financial stability. Families in affordable housing more than double their discretionary income, allowing them to pay for health care, pay down debt, or save. Researchers found a 12% immediate annual return to residents of one Bronx LIHTC development, from increased disposable income.
  • Increased local purchasing power. Affordable housing boosts business for nearby merchants. By paying rent within their means, residents of a cluster of Bronx rental developments expanded estimated local purchasing power by more than one-third.

The positive impacts were felt in low-, moderate- and high-income communities alike, with clusters of small projects having the most significant effect, the study found.

“The research shows no evidence of the significant reductions in property values that communities sometimes fear when new subsidized housing is proposed,” said Ingrid Gould Ellen of the Furman Center. “To the contrary, the research finds these developments can lead to increases in nearby property values over time.”

(Study: http://www.enterprisecommunity.com)