tax credit compliance
BY ANDREW JAKABOVICS AND PETER LAWRENCE
Housing Credit Properties Serve
Lower Incomes than Assumed
rent burdened. It should be noted, however,
awards to developers specifying deeper
that almost 31 percent of ELI households
income targeting below the statutory
NYU’s Furman Center examines the
without rental assistance in Housing Credit
maximum, which makes sense given the
rents and incomes of tenants in Lowapartments paid more than half their
Housing Credit statute’s requirement
Income Housing Tax Credit (Housing
income for housing. However, this is less
Credit) developments and corrects many that states include criteria in their qualithan half the rate among all ELI renters.
fied allocation plans giving preference to
commonly held misperceptions about
The study also found that Housing
projects with the deepest income targetwho the Housing Credit serves.
Credit developments do a fair job of
ing and serving such qualified tenants for
In the absence of national data on
creating mixed-income communities. A
the longest period of time (See section
Housing Credit tenants, the study’s
quarter of all units were in developments
42(m)(1)(B)(i)(I and II) of the Internal
authors collected data from 15 states,
with at least 20 percent ELI occupants
Revenue Code). In addition, owners of
which included approximately 480,000
and at least 20 percent above 50 percent
rental homes across 8,000 properties. Prior Housing Credit apartments routinely
of AMI. By comparison, fewer than four
set rents below the maximum allowable
to the study, it was generally assumed
percent of public housing rental homes
to ensure affordability, and the study
that most tenants had household incomes
are in developments that meet those
demonstrated that about 34 percent of
near the top of the allowable income
range, and that the Housing Credit does not reach
The study also found that Housing Credit developments do a fair
families below 40 percent of
job of creating mixed-income communities.
area median income without
additional rental subsidy.
Program criteria mandate that a minimum Housing Credit tenants pay rents that are criteria. Conversely, under 23 percent
of Housing Credit rental homes had
at least 20 percent below the maximum
of 20 percent of a development’s units
concentrated poverty, defined as 75
allowable rent.
be affordable to households earning 50
percent ELI or greater; more than half
The study found that over 43 percent
percent of area median income (AMI)
of all public housing rental homes are in
of Housing Credit tenants were extremely
or a minimum of 40 percent of the units
developments considered concentrated.
low income (ELI) households (defined
be affordable to households earning up to
The Housing and Economic Recovery
as having incomes at or below 30 per60 percent of AMI. (In practice, because
Act of 2008 required Housing Credit allocent of AMI). While below the roughly
of the incentives associated with the
cating agencies to submit Housing Credit
three-quarters of residents who meet this
tax credits, most developments are 100
tenant data to HUD on an annual basis.
definition in public housing or voucher
percent Housing Credit units.)
NYU’s study is based on data submitted
programs, the data show that there is a far
It was similarly assumed that lower
directly to NYU by state HFAs in addigreater range of incomes than is generally
income tenants were rent burdened
assumed. Moreover, only one in five Hous- tion to their HUD submissions. We expect
because rents are not linked to a parNYU to update the study as it obtains more
ing Credit tenants have incomes above 50
ticular tenant’s income. Housing Credit
data from the rest of the states. NN
percent of area median. Indeed, it is worth
rents are set at 30 percent of the applipointing out that there were more housecable area median income level for each
Andrew Jakabovics is Enterprise’s Senior Director, Policy Development and Research, and
holds served with incomes below rather
unit as specified in the allocation award.
Peter Lawrence is Enterprise’s Senior Director,
than above 40 percent AMI.
This is different than the standard that
Public Policy and Government Affairs.
Nearly 46 percent of Housing Credit
most rental assistance programs use,
Reprinted with permission of Enterprise Community
households receive additional rental assiswhich is 30 percent of the adjusted tenPartners. This article first appeared on the Enterprise
tance, which should alleviate some conant household income.
blog, @theHorizon, which can be accessed at http://
Moreover, many states often will make cerns that lower income households are
enterprisecommunity.typepad.com/enterprise.
A NEW STUDY RELEASED BY
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