The Distribution of Location-Efficient LIHTC Housing

Is Low-Income Housing Tax Credit (LIHTC) housing built in location-efficient areas (i.e., neighborhoods or sites accessible to everyday destinations)? Arlie Adkins and his colleagues analyze this question for LIHTC units built between 2007 and 2011 because transportation costs generally constitute a household’s second-largest expense after housing. Using seven criteria to measure location efficiency, including factors related to transportation and proximity to employment and retail, the authors created a dataset that determined the share of LIHTC units located in Census Block Groups (CBG) that were considered location efficient. This allowed them to average the proportion of LIHTC units in location-efficient CBGs for each state and nationally. Finding that location efficiency for LIHTC housing varied by state, the authors created a second dataset to examine this variation by analyzing the effects of eight factors, such as rent premiums and the presence of a nonprofit sponsor. The authors’ analysis revealed that LIHTC units were built in more location-efficient CBGs than overall housing stock, but most new LIHTC housing was built in CBGs that were not location efficient.

Key findings

• Low-Income Housing Tax Credit housing was approximately twice as likely to be sited in a CBG that was considered location efficient than housing generally.
• The average number of location-efficient LIHTC units varied significantly by state, with denser states in the top quartile of absolute location-efficient LIHTC housing.
• The location efficiency of LIHTC units improved in states that employ policies prioritizing access to everyday destinations during LIHTC credit allocations and states with increased percentages of LIHTC units developed by nonprofits. But location efficiency of LIHTC housing could be improved through land-use, housing, and transportation policies.