States can begin to address the estimated 1.125 million supportive housing units needed nationwide by increasing incentives in their low-income housing tax credit (LIHTC) programs, according to CSH (Corporation for Supportive Housing).

In 2018, all states and territories included at least one method for incentivizing housing for vulnerable individuals and families in their qualified allocation plans (QAPs), the rules that guide the allocation of their LIHTCs. Up to 85% of states use the QAP to create housing for vulnerable individuals, and just under two-thirds also consider the types of service enrichments that can be made available on-site or in the nearby community, according to a new analysis unveiled at CSH Summit 2019, the organization’s national conference held this year in Indianapolis.

CSH points out that housing finance agencies (HFAs) often go beyond the statutory requirements of the federal LIHTC program. However, the degree to which they prioritize supportive housing varies greatly from state to state, and more can be done to help create supportive housing.

“For us, the biggest takeaway from the 2018 QAP analysis is states need to reserve designated amounts of tax credit allocations specifically to create quality supportive housing,” says Robert Friant, CSH managing director for external affairs. “Overwhelmingly, current QAPs incentivize affordable housing development for vulnerable people, and that is certainly good news, but our review concludes they must do more to explicitly ensure there is quality supportive housing, prioritizing access to both affordable units and life-changing services for those who need them most.”

CSH offers several recommendations to provide concrete steps HFAs can take to develop a supportive housing pipeline.

1. Prioritize Threshold and Set-Aside Requirements

Although many HFAs use threshold (63% of states) and set-aside (50%) requirements, 93% create scoring incentives that provide varying numbers of points for integrating specified categories. The difference is even greater within categories that prioritize vulnerable individuals served by supportive housing, with under half of states putting forth specific requirements compared with 85% using scoring incentives. It is hard to determine just how meaningful individual points are when compared with the total score needed to receive a tax credit award. As such, HFAs must prioritize threshold and set-aside requirements to ensure enough units are dedicated to those who need them most.

2. Include Requirements for Extremely Low-Income Units

Supportive housing households typically include individuals and families with extremely low incomes at or below 30% of the area median income (AMI). While 81% of HFAs encourage the development of units for those at or below 30% through scoring incentives, less than 10% actually require consideration for this cohort, says CSH. While establishing lower-income limits is not sufficient by itself to meet the definition of supportive housing, it is important for HFAs to recognize how the lower-income limits fit within the ranges of affordability and designate units specifically to meet the needs of low incomes at or below 30% of the AMI.

3. Allocate Tax Credits for Supportive Housing

Only four QAPs reserve a designated amount of tax credit allocations explicitly for the purpose of supportive housing. These amounts range between 5% and 30% of the total LIHTCs available in the state. While the vast majority of QAPs incentivize housing for vulnerable individuals and/or families, it is important for HFAs to recognize that supportive housing ensures accesses to both affordable housing and support services. QAPs should clearly define supportive housing and designate an allocation specific to that definition. Based on development costs in state, HFAs should also project the number of units expected to be developed from the supportive housing allocation and report annually on how many units were actualized. These steps are needed to ensure progress toward developing a pipeline and closing the supportive housing gap in the state.

4. Include Accessible Service Enrichments

Supportive housing is most effective when it features close coordination of housing, support services, and property management. Approximately two-thirds of HFAs incentivize service enrichments, with about a third of those required through thresholds and set-asides. Services should be flexible, voluntary, and offer a comprehensive array of support. Services that help tenants sustain housing stability and meet life goals are best. HFAs should request a social service plan (SSP) that outlines the intended services, description of source funding, length of funding, and evidence of sustainable funding beyond the current timeline. The service provider listed on the SSP should also provide evidence of experience serving the intended tenant population and an understanding of the community that the housing development will serve.

5. Adopt Dimensions of Quality

To ensure supportive housing maintains a level of quality, HFAs should require applicants to integrate the dimensions of quality into their development. Quality supportive housing is housing that is (1) tenant-centered, (2) easily accessible to tenants of all backgrounds, (3) coordinated amongst housing partners with a shared goal, (4) integrated with voluntary services and community connections, and (5) sustainable over time. HFAs can integrate these dimensions of quality into the QAP process by requiring developers to, at a minimum, submit a Commitment to Quality checklist as part of the application. By making this commitment, the applicant affirms that each project partner named in the application understands and commits to implementing the project in way that is consistent with the quality standards. HFAs may also require applicants to submit a quality endorsement; which is a third-party review of supporting housing project plans to determine if they meet national quality standards.

CSH also offers several broader strategies to promote supportive housing in communities, including developing a housing task force that would identify solutions, align resources throughout the state, and promote best practices.