CFED Assets & Opportunity Scorecard
|Preservation of Affordable Rental Housing|
States that Require LIHTC Affordability for 30 Years
With roughly 53% of renters in the United States spending one-third or more of household income on housing costs, the need for affordable rental housing remains high. The Low Income Housing Tax Credit (LIHTC) is the largest source of federal subsidy to promote affordable housing in the United States. This tax credit provides incentives for developers and owners to build and preserve the affordable housing stock, particularly in large urban areas. It works by reducing the tax liability of developers and owners who build or own rental housing for families who earn less than 60% of area median income. Although federal tax credits are designed to incent 30 years of affordability, developers and owners of LIHTC-financed properties can opt out after only 15. States, however, can restrict the ability to opt out, thus ensuring longer-term preservation of affordable housing.
What States Can Do
Each year, state housing finance agencies (HFAs) must submit Qualified Allocation Plans to the federal government that describe how the HFA will distribute tax credits among developers of affordable housing projects. Although most states give preference to developers that maintain affordability for longer than the federally-mandated 15 years, those states that set a minimum standard of 30 years of affordability, with no opt-out, are most effective at preserving affordable rental housing.
Strength of State Policies: Preservation of Affordable Rental Housing
|Does the state require tax credit recipients to |
maintain affordability for at least 30 years? 1
|State||30 year LIHTC affordability|
|District of Columbia|
Notes on the Data
1. Marla Nelson and Elizabeth Sorce, "Supporting Permanently Affordable Housing in Low-Income Housing Tax Credits," National Community Land Trust Network, January 2013.
What States Have Done
Although nearly all states encourage extended affordability in some manner, fewer than half (22 states) require at least 30 years of affordability. Two states—New Hampshire and Utah—require developers receiving the Low Income Housing Tax Credit funding to maintain affordability in perpetuity.
CFED thanks Melora Hiller and Emily Thaden from the National Community Land Trust Network for their input and expertise on this policy issue.