by Ryan Maxwell, Managing Attorney
The Low-Income Housing Tax Credit (LIHTC) is an important federal program designed to incentivize the development and rehabilitation of affordable rental housing for low-income households. Established by the Tax Reform Act of 1986, LIHTC offers tax credits to private developers and investors who build or refurbish rental properties that meet specific income and rent criteria. By leveraging private investment, the program addresses the affordable housing shortage without relying solely on government funding. LIHTC has been instrumental in creating millions of affordable housing units, contributing to community revitalization and providing stable housing options for low-income families across the country.
More than ever, advocates are examining the LIHTC program as a vital tool in addressing the nation’s affordable housing crisis at both the systemic and individual levels. This crisis has been exacerbated in recent years by a lack of new public housing construction, disrepair of existing public housing, and the closure of affordable housing projects. In the past several years, we’ve lost three affordable housing options - Washington Townhomes, McKinley Tower, and Victory Square - in Community Legal Aid’s Canton service region alone. Low-income households in communities like Canton, Akron, Youngstown, and Warren are struggling with dwindling options as aging properties are shuttered or converted to market-rate units. This scarcity of affordable units forces low-income families to contend with rising rents and inadequate living conditions, deepening the housing insecurity faced by millions across the country.
Utilized properly, the LIHTC can be one of our next best steps in this crisis. LIHTC incentivizes private investment in affordable housing - leveraging market mechanisms to build and rehabilitate units without heavy reliance on government funding. This has led to the creation of millions of affordable homes, contributing to community stability and economic diversity. This is especially important in our region, as public housing is no longer being constructed and funds for its upkeep are limited.
The LIHTC and its federal regulations also bring important individual and family benefits to low-income households in the form of critical tenant protections ensuring safe, stable, and dignified living conditions. These include:
- Good cause protections in Low-Income Housing Tax Credit (LIHTC) properties that are crucial for tenant stability, preventing unjust evictions, and ensuring housing security. These protections require landlords to have legitimate reasons - like non-payment of rent or lease violations - before evicting tenants.
- LIHTC properties cannot refuse to lease to tenants holding Section 8 Housing Choice Vouchers (HCV). This rule ensures that voucher holders have equal access to affordable housing opportunities provided by LIHTC developments.
- Protections under the Violence Against Women Act (VAWA) to safeguard tenants facing domestic violence, dating violence, sexual assault, or stalking. These protections ensure that victims cannot be denied housing or evicted due to their victim status, and they provide emergency transfer plans for safer accommodations.
- The LIHTC program can offer tenants a potential option to purchase their units, providing a path to homeownership. This opportunity helps build generational wealth by allowing low-income families to accumulate equity and invest in their futures, promoting long-term financial stability and community growth.
- Enforcement of fair housing protections - ensuring equal access to affordable housing regardless of race, color, national origin, religion, sex, familial status, or disability. These protections help prevent discrimination and promote inclusive, diverse communities, supporting the program's goal of providing stable, equitable housing for low-income families.
Despite these sizable benefits, the LIHTC is not without drawbacks. Critics argue that LIHTC projects can be complex and costly, with significant administrative burdens and compliance requirements. Additionally, the program's effectiveness can vary widely by location, sometimes leading to the concentration of low-income housing in a way that doesn’t best meet community needs.
One way to help ensure LIHTC projects best meet the needs of low-income communities is via Qualified Allocation Plan (QAP) Advocacy. QAPs are state-specific guidelines that dictate how LIHTC allocations are distributed, influencing which projects receive funding. Advocacy in this realm is crucial, as stakeholders—ranging from developers to community organizations—work to ensure that QAPs reflect the diverse needs of low-income populations. Effective QAP advocacy can lead to more equitable and strategic use of tax credits, prioritizing projects that address local housing shortages, promote sustainable development, and foster inclusive communities. By actively participating in the QAP drafting process, advocates can help shape policies that maximize the social impact of LIHTC, ensuring that the program not only produces more affordable housing but also promotes broader community development goals.
Northeast Ohio is actively pursuing increases in the affordable housing stock available to our friends and neighbors thanks to new Low-Income Housing Tax Credit (LIHTC) projects that were recently approved or are in proposal form. These could include projects in Wooster, Akron, Tallmadge, Miles, Boardman, Canton, Stow, and Macedonia. Done right, these developments have the potential to revitalize communities by converting underutilized spaces and vacant properties into vibrant, affordable housing units. One example is the 65 Nickel project in Akron, with plans to convert a former industrial site into modern, affordable rental units with a mix of residential options designed to meet the needs of low-income families. Projects like these can make a profound impact by addressing the region’s affordable housing shortage, providing stable homes for low-income families, and fostering economic growth in local neighborhoods.