Since its creation in 1986, the Low Income Housing Tax Credit (LIHTC) program has become the greatest catalyst for low-income housing production in the United States. By leveraging state, local, and private sector resources, the LIHTC program has produced an average of over 1,386 projects constituting nearly 103,000 housing units per year between 1995 and 2009 (HUD, 2011). Among federal affordable housing programs, the LIHTC program is trumped in size only by Section 8 vouchers, and it is the largest, fastest-growing of the federal programs intended to generate additional affordable housing rentals (Desai et al., 2010). In total, the LIHTC program has helped finance more than 2.4 million low-income apartments.

In spite of its 25-year tenure and relative political popularity, the LIHTC program has been subjected to considerably less scrutiny and evaluation than other federal housing programs (Malpezzi & Vandell, 2002). Much of the previous research has focused on the net effect of the LIHTC program on the overall housing market, but other potential program outcomes have received less attention. For example, little is known about the ways in which housing developments created through the LIHTC program may affect the quality of life of low-income renters. Does the LIHTC program induce greater housing stability? Do LIHTC developments reduce over-crowding? Are rents lower as a result of the LIHTC program? This study seeks to address these questions by evaluating the impact of the LIHTC program on housing-related quality of life indicators such as median area rent, household size, and housing tenure. By assessing if changes in these indicators over time might be attributable to LIHTC development, this study will identify specific aspects of LIHTC program effectiveness (or lack thereof).

This research uses data from the U.S. Department of Housing and Urban Development (HUD) detailing the 33,777 housing developments financed at least partially through the LIHTC program from 1987 to 2009. These data are combined with census tract level data from both the 2000 Census and the most recent (2005-2009) American Community Survey 5-year estimates. The analysis uses both a fixed effects panel model and an adaptation of a regression discontinuity design that takes advantage of HUD’s “qualified census tract” designation. These econometric approaches allow for an evaluation of the LIHTC program that ascribes changes in quality of life indicators to LIHTC program effects.

Desai, M., Dharmapala D., & Singhal, M. (2010). Tax incentives for affordable housing: The low income housing tax credit. Tax Policy and the Economy, 24, 181-205.

Malpezzi, S. & Vandell, K. (2002). Does the low-income housing tax credit increase the supply of housing? Journal of Housing Economics, 11, 360-380.

U.S. Department of Housing and Urban Development [HUD]. (2011). New low-income housing tax credit property data available. Retrieved November 26, 2011, from http://www.huduser.org/portal/ datasets/lihtc/topical9509.pdf/.