Expiring LIHTC Units Could Add to Affordable Housing Crisis

More than 350,000 affordable housing units could vanish from the market during the next five years as housing built with the Low-Income Housing Tax Credit (LIHTC) over the past three decades begins to expire, according to an analysis by The Associated Press.

Launched in 1987, the federal LIHTC program provides tax credits to developers who promise to keep rents low. It is credited with helping bring 3.6 million affordable units to market nationwide. However, the terms of the tax credit usually only require the units to remain in the affordable category for 30 years. The LIHTC expirations come at a time when affordable housing is in high demand and inadequate supply, adding a layer of difficulty to what is already a crisis.

When affordability expires, rents can more than double, putting units out of reach financially for those who live there absent intervention. In some cases, tenants have banded together to force action from landlords and local officials when faced with evictions.

The National Housing Preservation Database predicts that one million units are at risk of losing affordability status by 2040, but not all will revert to the market rate. Additional government subsidies will keep some units in the affordable range. Landlords may opt to keep rents low in some cases, and some states are also addressing the problem through legislation. California, for example, requires all new LIHTC properties to be affordable for 55 years, and landlords in the state must notify state and local governments as well as tenants before their buildings expire.

Local governments and nonprofits may purchase expiring apartments, and new tax credits or subsidies may be applied to extend affordability, according to an Associated Press report on the issue. However, new tax credits are based on population and are limited, which makes it difficult for local governments and nonprofits to raise enough money to buy affordable units and keep them affordable.

This year, Colorado passed a law giving local governments first right of refusal in hopes it could save 4,400 of its 80,000 LIHTC units set to lose affordability protection over the next six years. Under the law, landlords must notify local and state governments two years before affordability requirements are set to expire.

One of the many challenges advocates for affordable housing face is a lack of reliable data on how many affordable units are expiring across the country, a task made cumbersome by the layers upon layers of municipal, state and federal subsidies that each have their own requirements and end dates.