What Happens When LIHTC Properties’ Affordability Requirements Expire?

Published by Michael Novogradac on Friday, August 24, 2012 - 12:00am

Since its inception, the low-income housing tax credit (LIHTC) program helped produce more than 2.2 million affordable apartments, accounting for roughly one-third of all multi-family rental housing constructed between 1987 and 2006. A new report by the U.S. Department of Housing and Urban Development (HUD), “What Happens to Low Income Housing Tax Credit Properties at Year 15 and Beyond?,” found that after an initial 15-year required affordability period, the vast majority of these LIHTC properties remain affordable.

The report includes interesting data about the properties in question. For example, here’s a snapshot of the LIHTC properties placed in service between 1987 and 1994: 

Blog Chart Key Characteristics of LIHTC Properties Placed in Service, 1987 Through 1994
Click to Enlarge

 

The report warns that in the worst-case scenario, more than a million LIHTC units could leave the affordable housing stock by 2020, once all additional state and local use restrictions expire in the years to come. However, HUD says that based on interviews with syndicators, LIHTC property owners, and industry experts, as well as analysis of HUD’s LIHTC database and market research, this worst-case scenario is unlikely.

Tune in to the August 28 Tax Credit Tuesday Podcast to hear more about the report’s findings.