Report: Expiring tax credits may mean loss of affordable homes
By Sonam Vashi
Nearly 500,000 affordable homes across the country funded by a federal program will expire by 2030, according to a new report. In Atlanta, more than one-third of the 11,000 homes funded by the program will expire by the same year.
The homes, mostly units in apartment complexes, rely solely on a federal low-income housing tax credit (LIHTC) to provide affordable housing. The 11,000 Atlanta units funded by LIHTC are spread over 100 properties; the affordability restrictions on more than 4,000 of those units will expire by 2030, according to data from the National Housing Preservation Database.
In exchange for the tax credit, the federal government mandates that, for 30 years, the units must stay affordable, usually at 60 percent of the area median income or below (say, a two-bedroom for about $1,000). But by 2030, nearly 500,000 homes across the country—almost a quarter of all current LIHTC units—will reach the expiration date of the affordability restrictions, according to the report from the National Low Income Housing Coalition and the Public and Affordable Housing Research Corp. At that point, many property owners may choose not to re-up.
Apartments in neighborhoods that have become more desirable have an incentive to switch to market-rate housing, and apartments in less desirable neighborhoods might not receive enough funding to fix physical disrepair.
In Atlanta, apartment complexes with expiring LIHTC include those in areas that have recently experienced increased home prices, such as the Grant Park Apartments in Chosewood Park, which has a tax credit that has helped fund nearly 300 units and will expire at the end of 2025. Amberwood Villages in Reynoldstown, where home values have doubled in the last five years, has 30 units supported by LIHTC; its tax credit will expire at the end of 2023. In these areas, owners may have more of an incentive to move to market-rate housing, or to attract funding to rehabilitate older units and increase rents. (See an interactive map of expiring affordable housing subsidies here.)
These tenants, “especially those with the lowest incomes and without additional rental assistance, are likely unable to absorb the financial impact of higher rents and are vulnerable to displacement,” the report says. Other research suggests that LIHTC developments in desirable neighborhoods provide better outcomes in education, employment, and mental and physical health.
Created in 1986, LIHTC is one of the longest-running affordable housing programs in the nation, and it’s the largest, creating more than three million rental units during the last three decades.
Some states have laws that extend the affordability compliance period, though Georgia is not one of them.