Low Income Housing Tax Credit Toolkit

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 Open Communities Alliance's LIHTC Webinar November 2015 


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 Around the country policymakers and advocates are trying to figure out how to effectively use the LIHTC program to benefit areas that are struggling and increase access to opportunity through leveraging existing resources in high-resource communities. Since the program is skewed towards under-resourced areas in many parts of the country, the challenge is often identifying strategies that will allow the program to create housing in thriving communities. This webinar looked specifically at the question of whether changes at the state level to the  Qualified Allocation Plan (the point system for allocating the credits) that prioritize higher opportunity areas increased the number of applications and developments in those areas.

 
 

 


 Webinar slides:

 
 

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See the webinar 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This Toolkit is designed to provide resources on the Low Income Housing Tax Credit Program (LIHTC) for stakeholders in Connecticut and around the country. It includes:

(1) A summary of the program;

(2) Connecticut-specific information, and

(3) Resources of interest to stakeholders from all over the country.


 LIHTC Program Summary

orange_arrow.png What is the LIHTC program?

The LIHTC program has created or preserved over 2.5 million homes since its inception in 1986. In the first 20 years of the program it created one third of the rental units built in the U.S. At its core, the LIHTC program functions as the federal government's rental housing creation program.

orange_arrow.png How are LIHTCs handed out?

Credits are distributed by the U.S. Department of Treasury to a designated agency in each state. This agency develops a point system (called a Qualified Allocation Plan or QAP) to hand the credits out to developers in a competitive process. Successful developers typically sell the credits they are awarded to investors and use the proceeds of the sale to finance the construction of housing in whole or in part. Learn more about this process here.

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orange_arrow.png Where are units located?

Unfortunately, no matter how you cut it, in most places in the country the LIHTC

program is geographically out of balance. Units tend to be located in areas that are poverty-concentrated, under-resourced, and already have more than their fair share of affordable and subsidized housing.

orange_arrow.png Why is this a problem?

  • the diverse workforce of the future access to the tools needed to reach its full potential.

  • It denies housing choice to low-income families and individuals interested in living in communities with greater access to opportunity.

  • It can stymy the efforts of community members trying to revitalize struggling communities by increasing poverty concentration and preventing the evolution of mixed income neighborhoods. 

orange_arrow.png What is working to change this pattern?

With greater attention brought to the notion of access to opportunity by researchers like Raj Chetty at Stamford and his colleagues at Harvard and litigation such as Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. decided favorably by the U.S. Supreme Court in the summer of 2015, there is increased interest on the part of policymakers in ensuring the LIHTC program is balanced.

This has resulted in an increasing number of states infusing their programs with priorities designed to promote balance. 

This is also leading to changes within the program itself, such as a change in the definition of "Difficult to Develop Areas" which, along with Qualified Census Tracts, allow for a "basis boost" for developments placed in such locations.  

  Legal and Program Resources  
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 LIHTC in Connecticut

Prelim_Connecticut_Opportunity_and_LIHTC_orange.jpgIn Connecticut, the LIHTC program is administered by the Connecticut Housing Finance Authority (CHFA). This means that CHFA determines the priorities for allocating this resource. Connecticut has created approximately 23,000 units through the LIHTC program since the program began in 1987. 

76% of Connecticut's LIHTC units are located in low and very low opportunity areas. Very low opportunity areas comprise only 2% of the land area of the state and yet 50% of LIHTC units are sited there.

To make up for the program's imbalanced history, in 2015, the Housing Committee of the Legislature passed a bill, HB 6640, that would allocate 75% of LIHTC resources to higher opportunity areas and 25% of credits to catalytic, neighborhood-changing developments in moderate and lower opportunity areas. This bill died at the end of the session.

While the bill was active, CHFA produced a legal memo raising concerns that this new proposal promoting housing choice was contrary to the LIHTC federal statute because it would limit the ability to prioritize "Qualified Census Tracts" (QCTs), 97% of which were located outside of higher opportunity areas at the time.

Fortunately, there is no need for such fears. The statute establishing the LIHTC program requires prioritizing developments in certain areas - (1) Difficult to Develop Areas (DDAs) (list available here), and (2) QCTs that are part of a "concerted community revitalization plan," not during the selection of projects to get credits but in the allocation of credits among projects chosen. Connecticut already recognizes this distinction, awarding only 1 point out of 102 in its LIHTC selection process.

  • For OCA's proposed solutions to leverage high opportunity areas for Connecticut's LIHTC placements, click here.
  • Connecticut courts have found that there is no private right of action under the Fair Housing Act, meaning that the local neighborhood organization that fought against the concentration of poverty and reinforcing segregation in the Asylum Hill neighborhood in Hartford did not have standing to attempt to enforce the Fair Housing Act. Asylum Hill Problem Solving Revitalization Association et al. v. Gary E. King (2006).

 orange_arrow.pngNational Resources on LIHTC 

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Lawyers' Committee for Civil Rights Under Law

 

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KIRWAN INSTITUTE

 

 

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  • Open Communities Alliance
  • 75 Charter Oak Avenue
  • Suite 1-210
  • Hartford, CT 06106
  • Phone: 860-610-6040