Responding to the Challenges of Preserving Low-Income Housing Tax Credit Projects: Lessons From New York City

Abstract

The year 15 presents a critical moment for the preservation of Low-Income Housing Tax Credit (LIHTC) properties. While there have been studies looking into the year-15 challenges in weak housing markets, there has been little research on strategies and contexts that have led to successful preservation outcomes. While different localities may require different strategies depending on local contexts, there are common challenges shared by LIHTC properties due to the program structure. This paper aims to examine how New York City has been responding to some of these common challenges through its LIHTC (Year-15) Preservation Program which has been quite successful in preserving expiring LIHTC properties. Through a combination of data analysis on LIHTC and New York City’s Year-15 Program, interviews with government officials, and an examination of approximately 530 land documents of 107 expiring LIHTC properties in New York City, this study takes an in-depth look into the development process, strategies, and outcomes of the program. By doing so, future challenges and lessons are highlighted that are helpful for New York City and beyond.

Keywords:

• Affordable housing
• preservation
• LIHTC
• tax credit
• New York City

Acknowledgments

I would like to thank my advisor Michael Tomlan for his support and guidance that made this study possible. I also extend my gratitude to my committee members Crocker Liu and Suzanne Charles who have greatly expanded my knowledge in real estate and housing policy. Also, Duncan Barrett, for guiding me through New York’s affordable housing system. Lastly, I am grateful for the insightful and thoughtful comments offered by Josephine Ennis and the three anonymous reviewers. The expertise and critical observations provided by each and every one have greatly improved this paper.

Disclosure Statement

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

Notes

1 HPD has its own QAP but the plan must be approved by HCR. Also, HPD must submit periodic reports and summary information on the tax credit program to HCR.

2 The analysis used HUD’s LIHTC data that was updated in May 2021 and the Furman Center’s data that was updated in June 2021.

3 One property has 638 units, increasing the unit count substantially.

4 This does not include cases where private lenders would participate in providing construction loans as a participation loan.

5 The 2022 QAP gives points for affordable housing preservation projects. Eligible affordable housing projects are units acquired through NY Third Party Transfer Program, Multifamily Preservation Loan Program, physically or financially distressed properties, subsidized properties with expiration in less than 10 years, or HUD-assisted 202 projects.

6 For a complete and detailed history and overview of New York City’s rent stabilization policy, please refer to Gehnrich (2021).

7 In weak housing markets, rents that target 50–60% AMI may be compatible with market rate housing and in sufficient supply (Tighe, 2015), resulting in lesser demand.

Additional information

Funding

This study was supported by the Center for the Study of Inequality.

Notes on contributors

Euna Kim

Euna Kim is a doctoral student at Cornell University in the Department of City and Regional Planning. Her research focuses on the intersection of preservation, real estate development, and affordable housing.