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Report Paints LIHTC Picture

AFFORDABLE HOUSING FINANCE • July/August 2009

LOW-INCOME HOUSING TAX CREDIT (LIHTC) developments placed in service in 2006 had an average annual tax credit allocation per unit of $8,321, according to an update to the Department of Housing and Urban Development’s LIHTC database.

The average was highest in the Northeast, $12,000, and lowest in the South, $6,200.

This is the first time that data about the annual LIHTC amounts was collected. The report also paints a portrait of how housing tax credits are used with other funding sources. About 29 percent of the projects placed in service between 2003 and 2006 had HOME funds. Sec. 515 loans were used in nearly 7 percent of the projects, and Community Development Block Grant funds, 6 percent.

Of the 2003 to 2006 projects targeted to specific populations, more than half were targeted to families and one-third were for the elderly. About 12.5 percent were targeted to disabled residents and nearly 5 percent to the homeless, according to the report by Abt Associates, Inc.

LIHTC production averaged about 1,400 projects and 103,000 units annually between 1995 and 2006, according to the report. While the number of projects placed in service each year has remained stable over the years, the number of units has grown steadily from roughly 60,000 units between 1992 and 1994 to about 100,000 units starting in 1999. The increase reflects a boost in the size of the average LIHTC project from 42.4 units in the early years to 83.9 units for properties placed in service in 2003. Project size started to decline in 2004, and in 2006, the average size was 77 units.

The growth in project size is a function of the increase in the number of LIHTC projects with tax-exempt bonds, which are twice as large as the average LIHTC project.

For more information, visit www.huduser.org.