What is the Low Income Housing Tax Credit (LIHTC)?

Created in 1986, the Low Income Housing Tax Credit (LIHTC) program has become the largest single source of funding for the production of rental housing for low-income families and individuals. The LIHTC program works through five basic steps:

1. Each year, the Internal Revenue Service (IRS) allocates a specific dollar amount of LIHTC to each state.
2. Through a competitive process, the state then awards these credits to specific affordable housing projects proposed by developers who must agree to meet LIHTC "affordability" requirements for a 15-year compliance period.
3. Affordable housing developers awarded these tax credits then proceed to sell them to private investors- such as banks, corporations, etc. The investors use the credits to reduce the amount of federal income tax they owe.
4. The developer then uses the money received from the sale of the credits- referred to as "tax credit equity"- to help finance the project. LIHTC projects can be used either new construction of rental housing or rehabilitation of existing housing.
5. Once a LIHTC property is completed, and for the duration of the 15-year "tax credit compliance period," the owner/manager must select low-income tenants who are eligible for the affordable units, which must be included in all LIHTC properties.

Why is LIHTC program important to the disability community?

1. The owners of LIHTC-financed properties are required to accept Section 8 vouchers.
2. States are increasingly using LIHTC in combination with an array of other affordable housing resources in order to achieve what is called "deeper income targeting"- which means they are trying to serve people with much lower incomes than 50-60% of area median income.
3. The LIHTC program is being used more and more to create permanent supportive housing for people with disabilities.
4. The program also contributes to the supply of accessible housing needed by people with mobility or sensory impairments. Newly constructed or substantially rehabilitated properties financed with LIHTC are required to have 5 % of the units accessible to people with mobility impairments and an additional 2 % of units accessible to people with sensory impairments.¹

To find LIHTC properties, see:
HUD Low Income Housing Tax Credit Property Database

HUD has created a Low Income Housing Tax Credit (LIHTC) property database that holds information on nearly 22,000 projects containing more than 1.14 million rental housing units. The database includes properties developed between 1987-2002 and does not include more recent properties developed in 2003 and 2004.

The database allows the user to extract information on projects such as the address, number of total units, number of low-income affordable units and bedroom distribution.
Additionally, the database can be sorted by various fields, including the year the project was "placed in service" (meaning the year the project was first available for occupancy by tenants), whether the project was new construction or rehabilitation, sources of project financing, etc.

To use the database, go to http://lihtc.huduser.org.

Step 1: Begin at the upper left box labeled SELECT THE VARIABLES YOU WANT TO EXTRACT FROM THE DATABASE.
Step 2: Under PROJECT IDENTIFICATION, un-check the box for HUD ID NUMBER. Check the box for PROJECT NAME AND ADDRESS and PROJECT CONTACT INFORMATION.
Step 3: Scroll down to PROJECT CHARACTERISTICS and check the box for TOTAL UNITS, LOW-INCOME UNITS and UNIT BEDROOM DISTRIBUTION. Leave the rest of the boxes un-checked.
Step 4: The lower left box is labeled SELECT A SINGLE STATE OR MULTIPLE STATES. This section allows the search to be refined by a single state or multiple states. In order to select multiple states, make the first selection and then hold down the control button and click the additional selections. Once you select a state or states, the screen on the right side will allow you to refine your search.
Step 5: If you click on a single state, you will be able to refine your search by city or county. To make multiple selections for city or county, use the control button.
Step 6: The database will default to "No restrictions" for the fields, PLACED-IN SERVICE YEARS, CREDIT ALLOCATION YEARS, CREDIT TYPE, QCT/DDA INCREASE IN BASIS, SPONSORSHIP, CONSTRUCTION TYPE, FMHA/RHS SECTION 515 LOAN AND TAX-EXEMPT BOND FINANCING. TAC recommends keeping "No restrictions" checked in order to extract the most information.
Step 7: The results will provide the project name, address and bedroom distribution as well as the contact company's name, address and phone number. Advocates may call the contact company to find out further information on the project.

Please note that the database does not provide information on actual vacant units that are available for rent. In order to determine whether there is an affordable housing unit available for rent in one of the properties listed, or to find out how to make an application, advocates must call the project's property management office directly.

1 Sincere thanks to Ann O'Hara at the Technical Assistance Collaborative and the Consortium for Citizens with Disabilities (CCD) Housing Task Force for producing the newsletter Opening Doors: A Housing Publication for the Disability Community. See the full text of Ann O'Hara's article, including recommendations on making the LIHTC more beneficial to people with disabilities. Information for this article was taken from the April 2005 edition, available at http://www.c-c-d.org/od-April05.htm.