The Geography of Absence: Cities, Towns, and Suburbs with No LIHTC Housing

Abstract

The Low-Income Housing Tax Credit (LIHTC) is the largest affordable housing production program in the United States. The program has been the subject of some criticism because it has done an unimpressive job of placing low-income renter households in high-opportunity neighborhoods, especially in suburban jurisdictions. This research examines, at the municipal level, what kinds of communities do not contain LIHTC properties. Communities with no LIHTC properties are compared with places that include LITHC housing in terms of geographic, demographic, socioeconomic, and housing-stock characteristics. The analysis focuses on all municipalities in the US and those that grew in population and multifamily housing from 2010 to 2019. It finds that 72% of all municipalities, and 52% of all growing municipalities contain no LIHTC housing. A logit analysis of the factors that influence the likelihood that LIHTC housing is absent from a municipality finds that the most important predictors are population size, being a suburb in a large metropolitan area, and the percentage of rental and multifamily housing.

Keywords:

• Low-income housing Tax Credit
• municipalities
• location of affordable housing
• fair housing

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 The above discussion pertains to the allocation of so-called 9% LIHTCs. The allocation process differs for the smaller 4% credit. Most 4% credits are awarded automatically to properties with tax-exempt private activity bond financing. Competition for the latter has intensified in recent years, especially in such states as California, Massachusetts, New York, and Texas (Kimura, 2020; Novogradac, 2019).

2 While we know of no studies of the geography of LIHTC housing at the municipal level, there is a limited body of research on locally-funded affordable housing. For example, Basolo (1999), drew on a survey of municipal officials to estimate the effects of intercity competition and intergovernmental housing subsidies on the likelihood that a municipality would draw from its own funds to provide affordable housing for low-income people. The study focused on a sample of 1,070 municipalities with populations of 25,000 or more. In a related study drawing from the same survey Basolo (2000) estimated the likelihood that municipalities would invest their own resources for economic development as opposed to affordable housing. These studies are somewhat analogous to our research, but it should be noted that LIHTC is a federal program that does not require any investment on the part of the locality. Also, our study covers municipalities of all sizes.

3 The “place” variable in the ACS includes incorporated places such as cities, towns, and villages and unincorporated “census-designated places” (CDP). The latter are defined as “closely settled, unincorporated communities that are locally recognized and identified by name” (U.S. Bureau of the Census, 2022a). It was not possible to remove CDPs from the analysis.

4 The US Census Bureau defines Micropolitan statistical areas as “the county or counties (or equivalent entities) associated with at least one urban cluster of at least 10,000 but less than 50,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties” (U.S. Bureau of the Census, 2022b).

5 In January 2023, after the completion of this article, the Biden Administration announced that it will propose a new Rule for Affirmatively Furthering Fair Housing. The new Rule, if approved, would restore key aspects of the Obama rule, while easing some of its technical requirements.