By any measure, the low-income housing tax credit (LIHTC) is the most powerful tool we have to create and preserve affordable housing, generating over 18,000 units in Illinois in the past five years.
It’s easy to see why the LIHTC is so successful. The program encourages public-private alliances that leverage each partner’s strengths to achieve a common goal—to create better, affordable housing for our residents.
But these relationships also require a careful balance of public and private interests that can make the qualified allocation plan (QAP) a document of contention between housing finance agencies and our partners in the development community, with stakeholders on all sides pulling for their interests and obligations.
But because of its success, the LIHTC has become everything to everyone. And as the program is called on to carry a larger and larger load, the Illinois Housing Development Authority (IHDA)—like other housing finance agencies across the country—is under increasing pressure to use the program to support economic, revitalization and healthcare initiatives that increase demand for a limited resource.
As pressure has increased from the Department of Housing and Urban Development (HUD) and the Department of Justice to create housing in more expensive, high-opportunity areas, our QAP has adjusted to encourage developments in neighborhoods that have lower poverty, better access to jobs and low concentrations of existing affordable housing.
Naturally, the cost of doing business in these areas is higher.
"Opportunity areas" were introduced in the 2015 QAP to ensure our investments promote economic mobility for low-income residents, marking the first time specific areas of need have been so heavily weighted in our plan. And for over a decade, IHDA has used the QAP to offer incentives for developments in communities affected by the Affordable Housing Planning and Appeal Act, a law signed in 2003 that encourages local governments to incorporate affordable housing in their communities.
These changes are a direct result of HUD’s efforts to ensure the LIHTC program is aligned with the objectives of the Fair Housing Act, serving as a counterweight to the cost of building close to transportation, jobs, and services that are critical to the success of our residents.
Meanwhile, the need to create new units is at odds with the demand to preserve the stock of existing affordable housing, both the federally assisted inventory of housing and older LIHTC properties that need reinvestment. With 15,000 units in the pipeline to receive Rental Assistance Demonstration (RAD) approvals in Illinois and HUD continuing its efforts to revitalize aging public housing stock, we adjusted our QAP to limit the number of RAD awards in each allocation round.
And in 2014, as local governments across Illinois struggled with the social and economic costs produced by the foreclosure crisis, IHDA amended its QAP to allow developers for the first time to use the LIHTC to acquire and renovate scattered-site single-family properties in key neighborhoods.
We have not made these changes alone.
In an effort to provide transparency, IHDA hosted a series of QAP summits in 2015 to encourage direct communication with the development community as we work to find common ground. This allowed developers and advocates a chance to actively shape the QAP while giving us a chance to hear new ideas, concepts and concerns well before the plan is drafted each year.
The QAP will continue to evolve as it adjusts to meet the needs of Illinois renters, neighborhoods and developers, but this collaboration is a valuable first step. The process promotes a joint ownership of the goals within the QAP, and the effort has already started to pay off.
Audra Hamernik is executive director of the Illinois Housing Development Authority.
This article is the sixth installment of "The Great QAP Debate," a series exploring multiple perspectives about qualified allocation plans, culminating in a panel session at AHF Live! Housing Developers Forum.