HUD LIHTC Tenant Report Highlights its Continued Positive Impact for Vulnerable Populations

Published by Peter Lawrence on Friday, April 3, 2020 - 12:00am

While affordable housing advocates continue to fight for the expansion of low-income housing tax credit (LIHTC) to address the critical lack of affordable rental housing, especially in the context of the COVID-19 pandemic, it is important to argue that the LIHTC also serves those most vulnerable households who need it.  

Under the Housing Economic and Recovery Act (HERA) of 2008, state agencies are required to submit demographic and economic data on LIHTC tenants to the U.S. Department of Housing and Urban Development (HUD). Published in late March 2020, this fifth release of Understanding Whom LIHTC Serves: Data on Tenants in LIHTC Units covers data on residents of LIHTC properties placed in service through December 31, 2017. In May to August of each year, the HUD updates the LIHTC placed in service database  and then a survey is sent out to the state housing finance agencies. Data is collected and the report is then published the following year. Due to the government shutdown that occurred in the winter of 2018/2019, the tenant survey that could have been released with data through 2016 was postponed; the recently released report includes the 2016 data that would have been provided by the 2019 report along with the 2017 data in the recently released report.

This most recent release, similar to previously reported tenant survey data, finds that the LIHTC serves the most vulnerable populations. Between 2016 and 2017, an additional 75,646 LIHTC homes were included in the HERA-mandated tenant data. This change is due to both an increase in the stock of LIHTC homes and the addition of newly reported homes that were missing from the 2016 collection. Data was provided for nearly 2.2 million LIHTC homes in the 2017 report. The vacancy rate of reported LIHTC homes was 4.5 percent, which is similar to the vacancy rates reported in 2013, 2014 and 2015, demonstrating that demand for LIHTC homes remains high.

In addition to similar vacancy rates, the recent HUD report highlights the similar trends that both 2015 and 2017 LIHTC residents follow in race, income, rental assistance received and disability status. A vast increase in reporting is also apparent, which bodes well for the future data collection of LIHTC residents.

Income Data shows the LIHTC Continues to Serve Low-Income Households

Similar to year’s past HUD LIHTC tenant report, this year’s continues to debunk the myth that LIHTC only serves households who earn 50-60 percent average median income (AMI). In actuality, LIHTC serves households at a much lower income level, and section 42(m) of the IRS code requires states to provide preferences for LIHTC properties that serve the lowest income households for the longest period of time. According to this year’s report, the percentage of LIHTC residents who are extremely low-income (those at or below 30 percent AMI) are nearly identical for 2015 and 2017, at 44.5 percent and 44.4 percent, respectively. In 2015, 79.8 percent of LIHTC households reported income. By 2017, the report rate had increased to 86 percent. Trends in LIHTC residents’ income have remained relatively unchanged. In 2015, 18.2 percent of LIHTC residents earned between 30 to 40 percent of AMI (compared to 17.8 percent in 2017), 16.3 percent earned between 40 to 50 percent of AMI (16.3 percent in 2017), 12.7 percent earned between 50 to 60 percent of AMI (12.3 percent in 2017), and 8.7 percent earned 60 percent of AMI or more (9.2 percent in 2017).

The slight increase in tenants earning 60 percent or more of AMI is due to the fact that LIHTC tenants may remain in LIHTC homes even if their income rises. The allowance of tenants to remain in LIHTC homes ensures that residents continue to benefit from the security that comes from having affordable housing, such as improved job and health outcomes. Additionally, in 2017, the LIHTC Average Income Test (AIT) was not yet authorized. The AIT allows tenants who earn up to 80 percent AMI to move into LIHTC housing. The AIT will be in effect for the 2018 PIS properties–the expectation is that 30 percent and 40 percent AMI tenants will increase much more so than 50 and 60 percent AMI residents. In 2017, the majority of LIHTC residents (62 percent) earn 40 percent of AMI or less–this majority illustrates that LIHTC homes are continuing to serve the population it was created to serve. See the graphic below for the full breakdown of LIHTC residents by income.

LIHTC Continues to Deeply Target Extremely Low-Income Individuals and Families
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Race and Ethnicity Trends of LIHTC Residents Remain the Same

The share of African American and Caucasian tenants in LIHTC homes have increased since 2015. In 2017, 28.2 percent of LIHTC tenants were white (higher than 2015’s 21.1 percent), and 30.8 percent were black (higher than 2015’s 21.5 percent). While these percentage changes may seem significant, the distribution in race remains about the same–the black and white populations make up the majority of LIHTC residents, with Hispanic tenants comprising the third largest category. The large numerical changes in demographics may be due to the huge increase in the reporting of this data in 2017. In 2015, 41.4 percent of LIHTC properties did not report race and ethnicity, which is drastically higher than the non-response rate of 19.9 percent in 2017. See the graphic below for a full breakdown of LIHTC residents in 2017 by race.

Race and Ethnicity
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Rental Assistance

In addition to the reduced rent charged in LIHTC properties, many LIHTC residents also receive federal, state or local rental assistance. This rental assistance guarantees helps make LIHTC housing affordable to the lowest income households. In 2017, the most common federal rental assistance received by LIHTC tenants was HUD Housing Choice Vouchers. Overall, 39.9 percent of LIHTC residents were receiving some form of rental assistance in 2017, which is slightly higher than the reported 37.9 percent of tenants in 2015. The percentage of LIHTC residents not receiving rental assistance in 2017 was 35.3 percent, and in 2015, 33.2 percent of residents did not receive rental assistance. While the data for other demographics has become greatly more available, the data collection for rental assistance received has only improved slightly. In 2015, 28.9 percent of the data was unavailable, and in 2017, 24.8 percent of the data was unavailable. As HUD’s report notes, if rental assistance data is not reported, it is most likely because those residents are not receiving rental assistance. See the graphic below that illustrates the changes of rental assistance received over time.

Rental Assistance Received from 2013 to 2017
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Disability Status

According to the report, the number of LIHTC residents with disabilities has increased from 2015 to 2017. In 2017, 83.5 percent of LIHTC households provided disability information and 12.1 percent of households had at least one member reported as disabled. Both of these percentages are higher than the numbers reported for 2015, when 80.6 percent of households reported disability information and 9.5 percent had at least one member reported as disabled. These numbers likely understate reality, as the Fair Housing Act ensures that tenants are not required to respond to the question on disability status. See the table below to compare the disability status numbers throughout the years.

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The recent HUD LIHTC tenant report is an important resource as it confirms that the LIHTC assists those it intends to serve, including the lowest income households. Since 2015, reporting has increased, and the small changes in demographics shows that the LIHTC is consistent each year at serving vulnerable populations–such as low-income households and those with disabilities. Data collection reports such as these are important, as they can and should be used to advocate for policies that will fortify and expand the LIHTC. Policies such as a basis boost for extremely low-income households will ensure deeper income targeting. This basis boost policy and other important provisions were included in the Affordable Housing Credit Improvement Act, originally introduced in 2016, 2017 and then again in 2019. This Act would ensure that the LIHTC continues to work for the low-income households it serves, and will strengthen the LIHTC to impact even more households. While the act was not passed, optimism remains as some of these provisions may be included in COVID-19 response and/or infrastructure legislation expected to be considered in the coming months.