Novogradac
By Thom Amdur
4 min read
Program Serves Diverse Constituency
The Novogradac Low-Income Housing Tax Credit Showcase, released in January to commemorate the 30th anniversary of the federal drive to encourage affordable housing, shows the LIHTC program in action by profiling 72 LIHTC developments in 34 states and territories. The featured developments include housing for veterans, people with disabilities, homeless individuals, and communities that are rebuilding after a natural disaster. LIHTC developers are as diverse as the people who call their properties home. The program has helped build “multi-story buildings, garden-style apartments, single-family lease-purchase, single room occupancies (SROs), and the adaptive re-use of historic buildings.”
The Showcase answers questions about the program that anyone – from legislators to potential investors to an average citizen – might ask. How does the program work? Who lives in LIHTC housing? What kind of return have LIHTC investors seen? The report reveals a tool that brings together many parties – developers, residents, syndicators, investors, and housing finance agencies – to produce housing that is affordable for residents whose paychecks do not add up to their area’s median income.
“For 30 years, the LIHTC has helped America’s less-fortunate citizens find quality, safe, affordable housing and this report highlights why and how it works,” said Michael J. Novogradac, CPA, managing partner in Novogradac’s San Francisco office. “As one developer says, the LIHTC is the ‘sun that all the other affordable housing programs revolve around.’ This report shows how that happens–and it also highlights the benefits to the nation as a whole.
When looking at who lives in LIHTC properties, Novogradac found that the program serves residents at several income levels. This section of the report draws from a study completed by the U.S. Department of Housing and Urban Development and was released in early 2015.
- 45% of residents’ incomes are at or below 30% of Area Median Income.
- 19% are between 30 and 40% of AMI.
- 17% are between 40 and 50% AMI.
- 13% are between 50 and 60% of AMI.
- 6% are at or above 60% of AMI.
- 36% of LIHTC households have had at least one member under 18 years old.
- 33% of households have had an elderly member.
In addition to a diversity of income levels, the report revealed that LIHTC serves a diversity of ages. More than a third of LIHTC households have at least one member younger than 18 years. At the same time, about a third of LIHTC households have an elderly member. The head of household for 29% of LIHTC properties is at least 62 years old.
Novogradac’s report considers how the program has grown stronger and more successful over the years since it was enacted in 1986. The report maps the changes in credit pricing, starting close to 40 cents on the dollar and climbing to an average of 95 cents today. Developers and investors alike tout the success of the program. The report is chock full of quotations from industry leaders on LIHTC’s impact.
“[LIHTC is] extremely important. It’s probably the most successful housing program ever enacted in our country, as evidenced by the past 30 years or so,” said Raoul Moore, the Senior Vice President of tax credit syndication for non-profit Enterprise Community Partners. “It’s the only housing program that provides affordable housing on any real scale.”
The program has attracted $100 billion dollars in private equity capital to finance quality affordable apartments since the tax credit’s inception. Over the history of the program, less than 1% of LIHTC properties have foreclosed.
With this report, Novogradac demonstrates the tremendous bipartisan support that has made LIHTC a tool that “provides virtually all low-income affordable rental housing developed in the United States.” The program was enacted under President Reagan, made permanent under President Clinton, and expanded under President Bush. While this is not included in the report, it is important to note that the minimum rate for the 9% LIHTC was set under President Obama.
Peter Lawrence, Novogradac’s director of public policy and government relations in Washington, D.C., said the special report comes at a crucial time. “As Congress considers significant tax reform, this showcase reminds us of how successful the LIHTC has been for decades,” he said. “People all over the nation have had their lives enriched by housing that was built only because of the LIHTC. In light of its achievements, it makes sense for Congress to consider an increase in LIHTC resources to help meet the tremendous need and demand for affordable rental housing.”
