Since its creation in 1986, the Low-Income Housing Tax Credit (LIHTC) Program has produced nearly 3 million housing units, making it the most important source of funding for affordable housing. Yet despite the importance of LIHTC to the field of affordable housing, there has been remarkably little research that has focused on the residents living in LIHTC developments. Instead, much of the research influencing housing policy has been developed through studies focused on residents living in HUD-subsidized housing programs, for example, through the research conducted as part of the Moving to Opportunity demonstration project and the HOPE VI panel study.

But HUD-subsidized housing programs—including both project-based public housing developments and housing choice vouchers—are different from LIHTC in several important ways. First, the public housing projects that were subject to HOPE VI and MTO intervention were characterized by significant distress resulting from a legacy of discriminatory siting, long-term isolation, structural racism, chronic underfunding, and stigmatization. LIHTC properties haven’t been subject to this same legacy of isolation and disinvestment: while in general LIHTC properties are located in neighborhoods with higher rates of poverty than the average neighborhood in the United States, they have benefited from consistent financing, and the buildings tend to be well-managed and more integrated into the neighborhood fabric. Second, rent calculations in LIHTC properties operate differently from public housing and housing choice vouchers. In HUD-subsidized programs, rents are generally set at 30 percent of the tenant’s income, but in the LIHTC program, the rents are set at the unit level (at 30 percent of either 50 or 60 percent of AMI). While this could result in higher rent burdens for LIHTC residents, it also means that there isn’t an increase in rent when the resident starts to earn more (and therefore, no work disincentive). Third, LIHTC properties are often managed by mission-driven nonprofit and for-profit developers, who have both the capacity and the resources to provide resident services. These differences suggest that the experiences of residents in LIHTC buildings might vary from those living in public housing.

In this study, we fill a significant gap in the literature by explicitly studying the experiences of residents living in LIHTC-funded buildings. We conducted interviews and surveys with over 250 residents living in 18 family properties located in both lower and higher poverty neighborhoods across California. The goal of the study was to:

a) understand the role that LIHTC plays in stabilizing housing for low-income families;
b) explore the relationship between living in affordable housing and economic mobility; and
c) solicit residents’ perspectives on their neighborhood’s characteristics and the opportunities afforded by them.

These questions align with contemporary policy debates regarding LIHTC’s future, specifically those related to the links between housing subsidies and economic mobility as well as fair housing concerns related to the siting of LIHTC properties in lower-income, minority neighborhoods. While exploratory, the study provides important insights into how residents experience LIHTC, and ultimately gets at what should really matter: how does affordable housing impact the lives of low-income households?

The report proceeds as follows. First, we provide a brief overview of the LIHTC program and review the existing literature on LIHTC impacts. Second, we present our research methodology and provide background statistics on the residents who participated in the study. We then turn to our findings, combining quantitative and qualitative insights to reveal how residents perceive their housing, economic trajectories and neighborhood conditions. In the final section, we discuss the policy implications of this research.