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Introduction
The Low-Income Housing Tax Credit (LIHTC) program is the largest affordable rental housing program in the United States, creating over three million units since the program was created in 1986.1 The program excels at serving low-income households with a range of needs and incomes. While the program primarily serves low-income households with incomes of thirty to sixty percent of the Area Median Income (AMI), close to half of LIHTC households are extremely low-income, with incomes below thirty percent of AMI.2 And at a time when the U.S. political climate is highly polarized, the LIHTC program enjoys strong bipartisan support at both the federal and state levels.3
While the LIHTC program continues to make critical contributions towards meeting the nation's affordable housing needs, thousands of LIHTC units are exiting the program and converting to market-rate rents, at a time when more than a third of all renter households in the United States are rent-burdened.4 As of 2015, close to 50,000 LIHTC units had exited the program nationwide, and the status of an additional 200,000 LIHTC units is unknown because of inconsistent state oversight.5 Without intervention, thousands more units are likely to disappear from our nation's affordable housing supply in the coming decade.6
This article discusses federal and state policies that are fueling the loss of LIHTC properties and offers solutions that federal, state, and local governments, as well as other preservation stakeholders, could implement to advance the preservation of these affordable homes. In Part I, we briefly describe the LIHTC program and the affordability terms for LIHTC properties under federal law. Part II highlights the policy and programmatic reasons for why many LIHTC properties around the country are converting to market-rate rental properties. In Part III, we present national best practices that cities and states around the country are utilizing to ensure the preservation of LIHTC properties. Part IV focuses on efforts to limit the qualified contract process, one of the major barriers to preserving LIHTC properties. Finally, Part V closes with a case study from Texas of barriers to preserving LIHTC properties, as well as a discussion of recent advocacy efforts to remove those barriers.
I.Overview of the Low-Income Housing Tax Credit Program and Affordability Terms
The LIHTC program was created as part of...