The LIHTC Continues to Serve Those Most in Need of Affordable Housing

The low-income housing tax credit (LIHTC), continues to serve the nation’s most vulnerable households, according to “Understanding Whom the LIHTC Program Serves: Data on Tenants in LIHTC Units as of December 31, 2015,” a U.S. Department of Housing and Urban Development’s (HUD) report released March 20, 2018. The report provides insight into households in LIHTC rental homes including information about race, ethnicity, family composition, age, income, use of rental assistance, disability status, and monthly rental payments.

There are several caveats to consider about HUD’s data. First, not all data reported by housing finance agencies (HFA) are collected in a manner consistent with HUD’s demographic data collection standards. Second, what’s reported does not capture all LIHTC households because some HFAs did not submit 2015 data. In addition, the information is requested at the household level or for individual household members, but reporting is not consistent. Still, the data submitted is significantly large enough to be a representative sample and provides useful information about the economic and demographic profiles of households residing in LIHTC properties.

Demand Has Consistently Remained High

As was the case in 2014, the reported 2015 vacancy rate was approximately 4 percent. Taken together with the 5 percent in 2013, the reports confirm consistently low vacancy rates, strong property performance, and high demand for LIHTC housing.

Majority of Tenants Served by LIHTC are Still Extremely Low-Income Households

Though their share of all LIHTC tenants decreased in 2015, extremely low-income tenants (ELI), those making 30 percent or less of the area median income (AMI), still accounted for a large share of the tenants served. The percentage of tenants earning between 30 and 40 percent of AMI remained unchanged in 2015 at 18.2 percent. The other categories, tenants earning from 40 percent of AMI and up, all increased in 2015.

The increases in households earning more than 30 percent of AMI in 2015 can be explained by the fact that tenants are permitted to remain in LIHTC homes even as their incomes increase over time and exceed the maximum qualifying limits at move-in.  Allowing tenants to remain in-place, even as their incomes increase, gives them the sense of security and steadiness that comes from having affordable housing. The opportunities provided by stable housing, like improved job and health prospects, are some of the additional benefits of the LIHTC.

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Historical Observations

A 1997 report from the U.S. General Accounting Office (now Government Accountability Office (GAO)) provides a means to compare the tenant data from 1997 to data from the 2015 report.

For example, the 1997 report shows that 39 percent of households received rental assistance. The percentage hovered around this same level in 2013, 2014 and 2015. Rental assistance was slightly lower in each of the three most recent years than in 1997; in 2013, 35.9 percent of households received assistance, and in 2014 and 2015 the percentage was slightly higher at 37.8 percent and 37.9 percent, respectively.

However, given the increase in percentage of extremely low-income households in LIHTC properties since 1997, it’s possible to conclude that LIHTC properties are more deeply targeting the lowest income renters.  In 1997, GAO found that the average income of LIHTC tenants was 37 percent of AMI; however, in 2015 this number was estimated at about 30 percent of AMI.

Slight Increase in Rental Assistance Received

Since 2013, the percentage of LIHTC tenants receiving rental assistance has increased, though the rate of increase between 2015 and 2014 is smaller than between 2014 and 2013. Still, households receiving assistance accounted for over a third of reported households. Rental assistance increases housing affordability for households in LIHTC rental homes, allowing the program to serve those with incomes lower than the program would normally be able to reach.

The number of households where no data was available increased 9.3 percentage points in 2015 over 2014 and a larger increase was seen in 2014 over 2013. Of the three options available – receiving assistance, not receiving assistance and no data available – the amount is zero for the second in a number of states and there are a substantial number of households where no data is available. The report posits that those not reporting most likely do not receive assistance, though this has not been confirmed.

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Shifts in Race and Ethnicity of LIHTC Households Reported

There were variable changes in 2015 data compared to the year before. The number of Caucasian LIHTC tenants has decreased from 22.9 percent in 2013 to 21.2 percent in 2015. The number of African American tenants also decreased in 2015, after posting an increase in 2014 over the 2013 figure (22.7 percent). Hispanic tenants of any race increased 2.1 percentage points to 11.4 percent in 2015. The percentage of Asian tenants increased 0.5 percentage points in 2015 to 2.5 percent. Tenants reporting “Other” (including multiple race) decreased to 1.2 percent in 2015 from 1.4 percent in 2014. American Indian/Alaska Native and Native Hawaiian/Other Pacific Islander remained unchanged from 2013 to 2015 at 0.7 percent and 0.3 percent, respectively.

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Number of Households Containing Persons with Disabilities Remained Unchanged

In 2015, there was no change in the percentage of households providing disability information. The 2015, and 2014 numbers represented an increase over 2013 when the percentage was 78.0 percent. There was also no change in the percentage of households that reported at least one disabled member. In 2013, the figure was 8.3 percent, 1.2 points lower than the 9.5 percent reported in 2014 and 2015.  As noted in this space last year, this figure is only what’s reported; LIHTC properties may serve materially more persons with disabilities than indicated.

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Conclusion

Tenant data reported by HUD indicates the LIHTC continues to serve those most in need of assistance, namely ELI households and the disabled. The reduced rents provided by the LIHTC, coupled with rental assistance from federal and state programs. The report’s findings illustrate the continued success and necessity of the LIHTC.