by Bri Gauger
In the summer of 2013, eighteen students conducted research for the California Tax Credit Allocation Committee (CTCAC) as part of a Masters of Planning studio course led by Dr. Jan Breidenbach. Located in the Treasurer’s Office, CTCAC is the state entity responsible for administering the federal Low-Income Housing Tax Credit (LIHTC) program, which serves as the largest source of financing for low-income housing production in the country. The LIHTC establishes two tiers of tax credits for affordable housing production: a four percent credit given automatically to those projects meeting baseline criteria, and a nine percent credit for those chosen through a competitive amenity point process. The driving idea behind this policy is that projects built with credits from the competitive nine percent process will go above and beyond minimum requirements for providing quality affordable housing. But how do we define quality and success in subsidized housing, and is the program achieving this desired effect?
Our research team set out to compare place-based characteristics between the two types of projects in order to analyze the spatial impact of this LIHTC program. The 354 senior, large-family, and non-targeted projects in Los Angeles County that began service between 2002 and 2012 served as our sample. We began by looking at key demographics, economic indicators, and housing market characteristics in LIHTC project neighborhoods. We ranked proximity to amenities like grocery stores, parks, and schools using Walk Score data, and analyzed the performance of individual schools and school districts.
Given the targeted nature of the nine percent credits, it may come as a surprise that our research in LA County found no significant difference between nine percent and four percent projects for nearly all of the variables studied. The most noteworthy results, however, came from our transit research. First of all, an overwhelming majority of all LIHTC projects (83.5% of 4% projects and 91% of the 9% projects) are not located within a quarter mile of a rail station. But we also found that the four percent projects actually performed better than nine percent projects in terms of proximity to transit stops overall. The current policy and planning paradigm incentivizes Transit Oriented Development in California as a way to achieve environmental and economic development goals. If affordable housing incentives do not work in concert with development incentives, as this evidence suggests, then we may not reach desired outcomes.
With the help of Dr. Raphael Bostic and funding from the Bedrosian Center, we are currently expanding this research to the entire state of California. In part, this will serve to address the limited geography of the initial research. But larger governance questions are at stake here: are these findings the result of local government decisions like community investment, or of the LIHTC program itself?
Is this policy structured in such a way that it only addresses one facet of the problems it seeks to mitigate? Does the evaluation strategy confound the desired qualitative results? What are the implications for other levels of government? We will seek to answer these questions in the coming months.
Read the team’s report: Neighborhood Characteristics of CTCAC Projects in LA Co