State LIHTC Programs Grow in Popularity, Production

Published by Michael Novogradac on Wednesday, September 24, 2014 - 12:00am

While the federal Low-Income Housing Tax Credit (LIHTC) program justifiably attracts more headlines than its state-level counterparts, a collection of state-level LIHTC programs are quietly making important contributions to the supply of affordable rental housing.

According to the results of a Novogradac and Company survey of state LIHTC allocating agencies, the annual amount of state LIHTCs awarded has expanded over time. Since states began allocating state LIHTCs, the annual amount of tax credits allocated has grown nearly 900 percent—from approximately $24 million in 1988 to over $240 million in 2013. However, the annual amount of state LIHTCs allocated remains modest compared to the annual volume of federal LIHTC awards. The amount of allocated federal LIHTCs awarded in 2012 (2013 data isn’t yet available) was approximately $755 million, which is more than three times larger than the 2012 state LIHTC total of approximately $222 million.

Cumulatively, approximately $2.2 billion in annual state LIHTCs has been awarded from 1988 through 2012. Annual federal LIHTC allocations over the same period were about $13.6 billion.


Blog Graph Total Annual Nationwide Allocations of State LIHTCs
Click to Enlarge


This increase in state LIHTC awards can be attributed to two key factors. First, the amount of allocations per state program has increased. For example, the amount of annual state LIHTCS allocated in California has grown more than 4,000 percent, from $2.1 million in 1988 to $86.7 million in 2013. Second, the number of state LIHTC programs has increased over time. In 1988, California was the only state that offered a state level LIHTC. In 2000, Arkansas and Vermont joined California. In 2013, 14 states allocated state LIHTCs. (Currently there are 16 active state LIHTC programs, with the addition of Oklahoma and return of Colorado in 2014 and one proposed state LIHTC program.)

More important than the dollar amount of state LIHTCs awarded is the number of affordable housing units produced. Unfortunately, data about affordable housing unit production isn’t available for every state allocating agency and some states’ housing data includes units financed with non-tax credit local or federal subsidies. That said, state LIHTCs can be credited with making significant contributions to the affordable rental housing stock. From 1988 to 2013, more than 100,000 affordable rental housing units were built or preserved using state LIHTCs.


Blog Graph Total Annual Affordable Housing Units Produced Using State LIHTCs (1988-2013)
Click to Enlarge


Much of this affordable rental housing production has occurred recently. From 2009 to 2013, about 40,000 affordable housing units were produced using state LIHTCs. Affordable rental housing units produced with state LIHTCs from 2009 to 2012 (excluding Georgia and North Carolina, for which data was not available) are equal to about 13 percent of all units produced using federal LIHTC in the same time period.


Blog Graph Total Annual Affordable Housing Units Produced Using State LIHTCs (2009-2013)
Click to Enlarge


State LIHTC programs have played an increasingly important role in the production of much needed affordable housing. The recent reinstatement of the state LIHTC program in Colorado, the creation of a new state LIHTC program in Oklahoma, and the potential creation of a LIHTC program in Washington D.C. illustrate how this important tool continues to be developed and adapted by states to address their housing needs.