Rethinking “Opportunity” in the Siting of Affordable Housing in California: Resident Perspectives on the Low-Income Housing Tax Credit

ABSTRACT

In 2017, California revised its Qualified Allocation Plan to encourage more Low-Income Housing Tax Credit (LIHTC) development in high-opportunity neighborhoods, with the goal of improving residents’ economic mobility. However, very little research exists on LIHTC residents, their barriers to economic mobility, or their neighborhood preferences. In this article, I draw on qualitative surveys and interviews with residents living in 18 LIHTC developments across California to explore the linkages between housing affordability, neighborhood conditions, and access to educational and economic opportunity. Although largely exploratory, the research sheds light on the experiences of LIHTC residents and reveals both the benefits of affordable housing and the barriers households face to improving their economic circumstances. The findings problematize the idea of high-opportunity neighborhoods, revealing that residents’ barriers to opportunity are driven not necessarily by neighborhood factors but rather by the lack of a ladder in labor and housing markets. Further, residents’ own perceptions of desirable neighborhoods are significantly more nuanced than the opportunity maps—which will determine where California’s LIHTC investments go—can capture. The article discusses the policy implications of these findings, and calls for more research to specifically understand the linkages between LIHTC subsidy, neighborhood conditions, and access to opportunity for lower income households.

KEYWORDS:

• Low-Income Housing Tax Credit
• neighborhood
• opportunity

Acknowledgment

I would like to thank the members of the research team and the affordable housing developers who made this study possible, as well as the three anonymous reviewers for their careful and constructive comments. I would also like to thank Mary Kaiser at the California Community Reinvestment Corporation for her enthusiasm and intellectual leadership on this project, as well as for her financial support. And most of all, I would like to thank all the residents who participated in the study for their time and expertise, and for sharing their experiences with our team.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1. This article, as well as much of the research cited below, focuses on the 9% program, which generally goes toward new construction and is allocated through a competitive application process.

2. Historically, projects in Qualified Census Tracts (QCTs)—areas where either 50% or more of the households have incomes below 60% of the area median gross income, or the poverty rate is at least 25%—were eligible for a basis boost of up to 30%. Since 2009, allocating agencies are allowed to add a 30% basis boost to any project that requires it to be financially viable, so the concern about QCTs concentrating LIHTC properties in higher poverty areas may no longer be relevant. However, California still provides a basis boost for projects located in QCTs, as well as an extra 2 points on the application score.

3. A few earlier studies that focused on LIHTC tenants include a Government Accountability Office study for 423 randomly selected tax-credit projects placed in service between 1992 and 1994 (U.S. Government Accountability Office, 1997), an Abt Associates survey of 39 LIHTC properties placed in service between 1992 and 1994 in five metropolitan areas (Abt Associates, 2000), and two studies on LIHTC residents in Florida (Williamson, 2011; Williamson et al., 2009).

4. The Rental Assistance Demonstration, passed in 2012, seeks to address this lack of investment in the public housing stock (Reid, 2017), suggesting that the difference in building quality between LIHTC and public housing may decline over time.

5. Initially, we randomly sampled properties from the list, but had to deviate from a fully random sample. For example, one property initially selected was undergoing rehabilitation, and another had the property manager quit unexpectedly, meaning that the developer would not have been able to provide on-the-ground support and outreach.

6. The pilot site was not one of the 18 developments targeted for the study.

7. We first tried to incorporate these details into additional survey questions or answer options, but then we found that the survey took over an hour to administer. Residents also often had questions about the survey itself, for example asking “What do you mean by ‘affordable,’” or “Do you want information about my job in the mornings or the one I do in the evenings?” By adding on the interview component, we were able to address these questions and gain more insights into LIHTC residents’ lives.

8. We tested various incentives during the research design phase, including providing a direct-incentive payment for each survey ($10). However, we found very little impact of the structure of the incentive on the survey response rate. In fact, at one site, we forgot to bring the raffle tickets and still had a comparable response rate with sites where we did conduct the raffle. Building layout and the engagement of resident services staff appeared to have a much greater impact on response rate.

9. The survey instrument is available on request.

10. HUD data in 2015 for California suggest that 31.1% of LIHTC residents were Hispanic, 20.3% were White, 13.9% were Black/African American, and 10.8% were Asian (U.S. Department of Housing and Urban Development, 2018). In addition to selection bias in terms of who responded to the survey, the difference between our sample and the data reported for California could also be a function of the fact that the HUD tenant data include all properties, not just family developments, and that we only requested information about the race/ethnicity of the survey respondent, not all members of the household. In addition, HUD data are only available for 80% of California LIHTC properties.

11. Unfortunately, a direct comparison isn’t possible, since these other studies include LIHTC tenants with any form of additional rental assistance, which includes project-based rental assistance, not just housing choice vouchers. We only asked whether residents had a housing choice or Section 8 voucher.

12. The HUD tenant report shows that nationally, approximately 21% of LIHTC residents are Black or African American, and only 14% are either Asian or Hispanic. In contrast, the statewide percentages for California are 13.9% for Black/African American, and 41.9% for Asians and Hispanics (U.S. Department of Housing and Urban Development, 2018).

13. For residents with a Housing Choice Voucher, moving into LIHTC was not specifically associated with affordability (since their rents are pegged to their incomes), but rather was almost always related to the higher quality of the building compared with what was available to a voucher holder on the private market.

14. It part, this may be due to some gender bias in who managed the finances in the household, with some female residents noting that their husbands were the ones who controlled the household income and rent payments. Interestingly, residents also often debated our use of the word affordable in the context of their unit, asking what we meant or pointing out that the rent was higher than when they had moved in, making it less affordable than it had been in the past.

15. The environmental domain in the TCAC maps is derived from the state’s Enviroscreen tool, which includes information about air quality (which tends to be worse in dense, urban areas) but also about agricultural and point source pollutants, which tend to be worse in California's Central Valley.

16. One potential explanation for this discrepancy is that the residents in the more suburban, lower poverty neighborhoods may have had more access to private vehicles. Although the survey question specifically asked about public transportation (“I can easily access transportation [bus, subway, train]”), it is possible that residents interpreted the question to mean any form of transportation. We did not ask whether residents own a car.

17. Goetz (2003) has made a similar point, arguing that the focus on large, distressed public housing projects has ignored the role of smaller, well-managed public housing buildings that comprise the majority of the public housing stock in the United States.

Additional information

Notes on contributors

Carolina K. Reid

Carolina K. Reid is an assistant professor in the Department of City and Regional Planning at University of California Berkeley and the Faculty Research Advisor for the Terner Center for Housing Innovation.