The low-income housing tax credit (LIHTC) is a terrible name for such a beautiful creation, as we’ve discussed.

But giving the LIHTC a new name will only go so far. A makeover won’t hide the fact that the LIHTC is now stretched as thin as the crust on Wonder Bread—a Band-Aid pulled 3,000 miles coast-to-coast to heal myriad ills.

In the 1986 Tax Act from whence it came, the LIHTC was aimed squarely at “low-income” households.

And that, presumably, was that.

But over the years—as funding for other affordable housing programs at the local, state, and federal levels has diminished—the LIHTC has grown in importance and is now being applied far beyond its intent, and way beyond our control.

The LIHTC still serves low-income households, true. But it also builds housing for youths aging out of foster care, homeless drug addicts, the formerly incarcerated—low-income households all, sure, but was it the LIHTC’s intent to venture into so many different uncharted territories?

The LIHTC has become almost like a Christmas tree, as Lee Harris, president and CEO of Cohen-Esrey Real Esate Services, is fond of saying. Every year, we hang more and more decorations on it—and those decorations ratchet up the total cost of development—until the whole damn tree is just about to topple over.


The one application that bothers me most is artist lofts. That seems frivolous to me, spending public money to build housing for people who chose their lifestyle.

I went to art school myself so it’s not as though I lack empathy for the starving artist, trust me. I am a big supporter of the arts—mainly poetry. But when I graduated college, the world wasn’t interested in paying top dollar (or, really, any dollar) for my poetry, and I had to pay the rent somehow.

Most artists can get a day job. T.S. Eliot worked as a banker as he worked on his poems at night; Andy Warhol worked in the advertising industry to fund his art.

My point is, there are American families digging through dumpsters to find dinner, and we're spending precious public resources on a hipster who doesn’t want to “sell out” and become a graphic designer?

Give me a break.


The point is, we’ve distorted the meaning of “low-income household,” by hanging all of these various decorations on it.

That’s not to say low-income seniors or teenagers or, yes, starving artists, don’t need affordable housing. Of course they do—and they need more funding from local, state, and federal governments to make it happen.

But whenever a state has a housing problem to solve, it turns to the LIHTC as though it were a Swiss Army knife of solutions.

Christmas tree, Swiss Army knife … the latest analogy I heard was that the LIHTC is a “trash compactor” within which all of society’s ills are crammed together.

Call it what you will, those are all great analogies.

But like an environmentalist who, once a parent, is forced to use cloth diapers rather than disposables, what starts out as a great principle can become … messy once applied.

So, too, has the LIHTC been forged over the last 30 years in the crucible of unintended consequences. The question now is: How can we bring it back to its original intent while building more support for the funding of more affordable housing production?

This article is the third installment of "The Great QAP Debate," a series exploring multiple perspectives about qualified allocation plans.