HUD Data Shows LIHTC Continues to Meet Needs of Vulnerable Populations

Published by Peter Lawrence on Friday, April 21, 2017 - 12:00am

The U.S. Department of Housing and Urban Development (HUD) report “Understanding Whom the LIHTC Program Serves: Data on Tenants in LIHTC Units as of December 31, 2014,” released April 11, reveals significant facts about how the low-income housing tax credit (LIHTC) is meeting the housing needs of low-income and disabled households.

It’s important to note that the data in this report, as well as reports produced in previous years, doesn’t present a complete and comprehensive picture of the demographic and economic makeup of all individuals residing in LIHTC financed rental homes because of inconsistent reporting practices amongst states. Nonetheless, HUD’s new report does provide valuable insight into the composition of individuals that benefit from the LIHTC.

Demand Remains High

The 2014 report confirms the strong property performance of LIHTC properties showing an approximately 4 percent vacancy rate, a decrease from the 5 percent reported in 2013. This consistently low vacancy rate among LIHTC properties demonstrates the strong demand for LIHTC housing.

Extremely Low-Income Households Remain Most Common

The LIHTC continues to deeply target lower income families.  In 2014, the number of tenants earning 30 percent or less of area median income (considered extremely low-income tenant or ELI) was 47.4 percent.  Only 11.1 percent of tenants earned between 50 and 60 percent of AMI, while only 7.5 percent of tenants earned over 60 percent of AMI. 

The slight increase in tenants earning over 60 percent of AMI from 2013 to 2014 can be explained by the fact that tenants are permitted to remain in LIHTC units even as their incomes increase over time and exceed the maximum qualifying limits at move-in.  Tenants’ incomes increasing speaks to the success of providing low-income individuals with LIHTC units since they then have the security and stability that an affordable home provides to pursue job opportunities and increase their income.

 

Blog Chart LIHTC Continues to Deeply Target ELI Individuals and Families
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Increase in Rental Assistance Received

The use of rental assistance when combined with LIHTCs reduced rents addresses gaps in affordability.  Rental assistance enables LIHTC properties to serve households whose incomes are below the qualifying LIHTC limits.  As of 2014 an estimated 37.8 percent of LIHTC households received rental assistance, a 1.9 percent increase from 2013.  Some state agencies did not provide rental assistance data for some properties, 6.6 percent and 19.6 percent, for 2013 and 2014 respectively.  As noted in both HUD’s 2013 and 2014 reports, the households that did not or could not provide rental assistance data likely did not receive any rental assistance. 

 

Blog Chart Rental Assistance Received from 2013 to 2014
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Minor Shifts in Race and Ethnicity

HUD’s 2014 data showed a decrease in the number of Caucasian, Asian and Hispanic LIHTC tenants, while there was an increase in the number of African American and Other Race/Multiple Race tenants in LIHTC properties.  More specifically, the number of Caucasian tenants and Asian tenants slightly decreased 0.1 percent from 2013 to 2014, while there was a 0.2 percent decrease in the number of Hispanic tenants.  The number of African-Americans occupying LIHTC buildings increased by 0.4 percent from 22.7 percent in 2013 to 23.1 percent in 2014, while the number of Other Race/Multiple Race increased 0.2 percent from 2013 to 2014.

 

Blog Chart Race and Ethnicity
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Number of Households Containing Persons with Disabilities Grows

Additionally, there was an increase in the number of households that reported having at least one member with disabilities. From 2013 to 2014, there was a 1.2 percent increase from 8.3 percent in 2013 to 9.5 percent in 2014. This figure is only the reported percent; LIHTC units may serve materially more persons with disabilities than indicated.

 

Blog Chart Disability Status
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Historical Observations

A 1997 report from the U.S. General Accounting Office (now Government Accountability Office, or GAO) provides a means to compare the tenant data from 1997 to data from the 2014 report. 

For example, the 1997 report shows that 39 percent of households received rental assistance.  The percentage hovered around this same level in both 2013 and 2014.  Rental assistance was slightly lower in both 2013 and 2014, 35.9 percent and 37.8 percent respectively than in 1997.  This demonstrates that the percentage of LIHTC households receiving rental assistance has not changed substantially.

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 2014 this number was estimated at nearly 30 percent of AMI.

Conclusion

Overall, HUD’s 2014 LIHTC tenant data report illustrates the continued success of the LIHTC, particularly when coupled with HUD and U.S. Department of Agriculture rental assistance programs.  The LIHTC continues to benefit extremely low-income and very low-income households as well as households that contain at least one member with a disability.