Shaping Healthier Rental Housing through the Low-Income Housing Tax Credit

8.7.2018
Commentary
LIHTC

When we talk about an affordable housing crisis in the United States, what we are really talking about is a shortage of safe, decent, and affordable housing for renters. Research shows that housing has long-term consequences on people’s health and well-being.

Federal housing spending and subsidies disproportionately benefit  homeowners and households with higher incomes. Yet those with greatest housing cost burdens and associated well-being deficits are low-income renter households.  

That’s where the Low-Income Housing Tax Credit (LIHTC) program comes in, potentially acting as a powerful lever for improving the health and well-being of low-income families. Authorized by the Tax Reform Act of 1986, LIHTC is the nation’s primary resource for affordable housing development. The program incentivizes private equity investments in affordable rental housing through federal income tax credits.  Between 1987 and 2016, LIHTC was used to preserve or build more than 3 million housing units.

Given LIHTC’s outsized role in affordable housing production, our research seeks to understand the extent to which the program supports occupant health and well-being.

LIHTC works by state and local housing authorities evaluating project applications and awarding tax credits through what’s known as a Qualified Allocation Plan. A QAP outlines the agency’s specific criteria and eligibility requirements and establishes a scoring system to evaluate applicant projects and align outcomes with agency priorities.

Because each allocating agency develops its own QAP, the housing developed and constructed reflects local conditions and priorities, including how best to improve occupant health outcomes.

To determine whether QAPs are requiring or encouraging healthy housing among LIHTC applications, we developed a checklist of 65 healthy building provisions and reviewed QAPs from housing agencies in all 50 states. We also surveyed key staff members at state housing finance agencies on policies and processes that could lead to healthier housing built or rehabbed through LIHTC. 

States proactively support occupant health through LIHTC

What we have found is that many state housing finance agencies (HFAs) are going beyond building and life-safety codes to support occupant health through the LIHTC program.

State population and health demographics, local approaches to housing development, and social, economic, and political contexts inform the various ways states choose to advance healthier affordable housing. Nearly half of survey respondents said their state has incorporated healthy housing provisions in their LIHTC program since 2016.  More than one-third said discussions on doing so are underway.

Our preliminary review of state QAP criteria shows that the following healthy building provisions are more likely to be required rather than being optional: building materials and fixtures with minimal toxicity; resident safety with respect to crime; indoor air flow and ventilation; and building practices and materials that minimize moisture, mold, and allergens.

HFAs use three mechanisms to advance healthy housing design and construction through the QAP process:  green building certifications such as Leadership in Energy and Environmental Design (LEED); state architecture and construction standards for LIHTC and other state-funded housing projects; or healthy housing criteria in the QAP scoring process such as on-site recreation areas for children or universal design criteria that exceed Fair Housing and Americans with Disabilities Act (ADA) standards.

Not all green certifications are equally healthy

The HFA staff we surveyed consider green building certifications one of the most effective means of developing healthier housing through LIHTC.  However, green building certifications vary widely in the extent to which they cover design and construction criteria relevant to occupant health. A comparison of the Energy Star, Enterprise Green Communities, and LEED illustrate this point.

Thus, blanket reliance on green building certifications does not always translate to support for improved occupant health. We found that state architecture or construction standards or healthy housing criteria in the QAP process offer additional mechanisms to ensure occupant health through LIHTC.

While there is no single best practice to develop healthier affordable housing across all 50 states, we have found inventive and varying ways in which they are embedding health provisions in the LIHTC process.

Given current heightened awareness of the housing and health intersection, now is the time to share knowledge, data, and practices that improve health effectiveness of affordable housing policy. The LIHTC program holds promise in helping us achieve the goal of healthier housing for low-income families.

 

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