Do Biases Exist in the Location of Affordable Housing? An Examination of the Low-Income Housing Tax Credit in North Carolina

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  • October 8, 2019
Creator
  • Kiddoo, David
    • Affiliation: College of Arts and Sciences, Department of City and Regional Planning
Abstract
  • This paper first establishes the importance of the Low-Income Housing Tax Credit (LIHTC) as a subsidy for the production of affordable housing in the United States, and then examines LIHTC allocation patterns in North Carolina in an attempt to determine possible biases in the production process. Analysis of allocation data shows a strong correlation between the presence of commercial bank branches and LIHTC allocation patterns on a county-by-county basis, even after controlling for population. Through a detailed analysis of allocation patterns and interviews with key informants in the LIHTC industry, three possible biases are suggested. First, LIHTC developers and properties may be spatially correlated due to time and cost savings as well as a need for specialized knowledge and local relationships. Second, the financial involvement of local government may be an important factor in development decisions both as a result of state finance agency regulations and implications for financial feasibility. Finally, decisions made by LIHTC investors may be playing a role in location decisions, although the extent of this role can be debated. The production of affordable housing through the Low-Income Housing Tax Credit (LIHTC) program is neither perfectly efficient nor of sufficient scope to completely solve housing affordability problems in the United States. However, affordable housing advocates should be aware of the significant victory that the program represents for those in need of housing assistance given the climate that social programs have faced both before and since the creation of the LIHTC in 1986. The combination of an ever-worsening budgetary climate, a continued emphasis on devolution with respect to social programs formerly sponsored by the Federal government, and the shift from the provision of multifamily housing assistance to homeownership assistance by the U.S. Department of Housing and Urban Development (HUD) represent a very real threat to the survival of the LIHTC. Affordable housing advocates would be well advised to protect and maximize the efficient use of resources that are currently available from the Federal government until a political climate that allows for the expansion of social programs arises once again. This paper examines issues surrounding the operation and survival of the LIHTC in two parts. First, the political climate surrounding affordable housing policy over the past four decades is examined, with a goal of establishing the improbability of the creation of the LIHTC as well as an argument for its importance to current affordable housing provision in the United States; and second, allocation patterns of the LIHTC in North Carolina are examined, with an eye on identifying potential program weaknesses that may need to be remedied to promote program efficiency, equity, and survival.
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Rights statement
  • In Copyright
Advisor
  • Quercia, Roberto
Degree
  • Master of City and Regional Planning
Degree granting institution
  • University of North Carolina at Chapel Hill
Graduation year
  • 2003
Language
Location
  • North Carolina, North Carolina, United States
Extent
  • 33 p.
Access right
  • Open access
Date uploaded
  • December 10, 2010

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