What projects get built? The distinctive characteristics of Low-Income Housing Tax Credit projects in high-opportunity neighborhoods

Source abstract

Only 12% of the country’s Low-Income Housing Tax Credit (LIHTC) units are located in high-opportunity neighborhoods, despite explicit state policies encouraging their construction there. Affordable housing developers face numerous legislative, political, and physical challenges to building in high-opportunity neighborhoods, and this paper takes a new approach to studying these obstacles. We ask, how do LIHTC projects built in high-opportunity neighborhoods differ—both administratively and physically—from those built elsewhere? To answer this question, we analyze a national database of 12,992 LIHTC projects built between 2006 and 2022 using a logistic regression. We find that high-opportunity-sited LIHTC projects are more likely to have units with fewer bedrooms, to be newly constructed, targeted toward elderly or disabled populations, financed using the 4% tax credit, and owned by for-profit companies. To test hypotheses about additional physical characteristics, we analyze a random selection of 240 projects in three metropolitan areas. This analysis shows LIHTC projects in high-opportunity neighborhoods are more likely to be low-density, low-rise, and to have a suburban architectural style than those built elsewhere. The conclusion outlines policy lessons for increasing affordable housing production in high-opportunity neighborhoods.