The Joint Center For Housing Studies of Harvard University has issued a new policy brief, “Long-Term Low Income Housing Tax Credit policy Questions.” This paper has three parts:

  1. A discussion of LIHTC policy issues, including program targeting;
  2. An examination of current issues surrounding tax credit investment demand;
  3. A brief discussion of ongoing capital needs and asset management for LIHTC properties.

The report finds that industry informants believe is that the LIHTC program is a durable, politically resilient, and popular program that benefits significantly from its enabling legislation as part of the tax code, its wide geographic scope, and its state-level implementation. It also acknowledges that some academic and government reviewers expressed misgivings about the efficiency of LIHTC. Most of these had to do with concerns about the relative merits of housing production programs versus demand-side subsidies such as housing vouchers.  Key discussion questions and topics addressed in the report include:

  • Where does LIHTC fit in national affordable housing policy?
  • Should the tax credit be made flexible enough to reach those with the lowest incomes or encourage mixed income developments?
  • Should the LIHTC program provide special incentives to produce housing in middle and higher income communities?
  • What are the benefits and drawbacks of the LIHTC program structure?
  • Is the LIHTC program transparent enough to support housing policy research and evaluation?
  • What additional federal policy objectives could the LIHTC program serve?
  • Investor Demand and Tax Credit Pricing
  • How broad should the LIHTC investor base be?
  • How can LIHTC be redesigned to mitigate “tax liability” risk?
  • Can the housing tax credit be made more liquid?
  • Is there any way to address geographic differences in demand?
  • Asset Management and Oversight
  • Do program regulations and incentives effectively support operating costs and future capital needs of LIHTC properties?
  • Is there adequate provision made for asset management during the initial 15-year compliance term?
  • Are incentives aligned for the best outcomes at the end of the initial compliance period?

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