Affordable Apartments Funded by LIHTC are Cost-effective

Housing Credit Successfully and Cost-Effectively Produces Affordable Apartments for People Who Need Them

On September 10, 2018, Stockton Williams, executive director of the National Council of State Housing Agencies (NCSHA) wrote in an opinion piece in The Hill that “The evidence is on a cost-effective way to build affordable apartments.”

“A new study by Abt Associates and analysis by the National Council of State Housing Agencies (NCSHA) reveals that affordable apartments financed by the Low-Income Housing Tax Credit—commonly referred to as the Housing Credit—cost about the same, on average, to develop as all apartment buildings, despite complying with a host of policy constraints that don’t apply to market-rate developments.” According to NCSHA, the Housing Credit is the most important public policy that directly addresses the shortage of rental apartments for low-income renters.

The Housing Credit has helped build more than 3 million affordable homes across the country over the past 30 years. “A public-private partnership, it uses tax dollars to incentivize an activity that otherwise does not happen while harnessing the entrepreneurial spirit and accountability of the private sector.”

  • According to Abt’s research, the national average cost of building affordable apartments using a Housing Credit for financing between 2011 and 2016 is about $209,000 per apartment.
  • This cost is only $5,000 higher than average development cost of all apartments.

“The evidence also suggests that the cost to develop Housing Credit apartments has grown more slowly in recent years than it has for apartments overall – we believe due in part to sound administration of the program by the states.”

Williams concludes that “In other words, the Housing Credit, a public-private partnership, is doing what it is supposed to – producing affordable apartments for people who need them – just as cost effectively as the private sector is in meeting the needs of higher-income renters. At a time of skepticism about government’s role in the housing system, and a false choice about supposedly better alternatives, this is good news for the tax payers – and the millions in America who lack a decent affordable home.”

The ACTION Campaign is working to expand and strengthen the Low-Income Housing Tax Credit.

Abt Associates Report

NCHSA Analysis

Action Campaign

The Hill Op-ed

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