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Low-Income Housing Tax Credit

Enterprise Point of Contact:

Emily Cadik
Director, Public Policy
 

The Low-Income Housing Tax Credit

The Low-Income Housing Tax Credit (Housing Credit) is one of the primary tools that Enterprise Community Partners uses to create opportunity for low-income families. Over the past three decades, Enterprise has invested over $10 billion in Housing Credit equity in communities across the country, financing over 130,000 affordable homes.

Along with the National Council of State Housing Agencies, Enterprise co-chairs the A Call to Invest in Our Neighborhoods (ACTION) Campaign, a coalition of over 1,300 national, state and local organizations and businesses urging Congress to expand and strengthen the Housing Credit.

 

The Housing Credit's Impact

The Housing Credit is our nation’s most successful tool for encouraging private investment in the production and preservation of affordable rental housing. Since it was created in 1986, it has financed nearly 3 million affordable apartments, providing homes to roughly 6.5 million low-income householdsThe Housing Credit is responsible for virtually all affordable housing production in the U.S. – without it, it is simply uneconomic for the private sector to build homes that are affordable to the families who need them most.

The Housing Credit also stimulates local economies. In a typical year, the Housing Credit supports nearly 96,000 jobs, most of which are in the small business sector, and adds $3.5 billion in taxes and other revenues to local economies, according to the National Association of Home Builders.

 

The Growing Affordable Housing Crisis

Though the Housing Credit finances roughly 100,000 affordable homes for low-income households each year, the unmet need for affordable rental housing continues to far outstrip the available resources. An unprecedented 11 million low-income renter households – more than one in four renters in the U.S. – spend more than half of their monthly income on rent, meaning they have to make difficult trade-offs between food, medical care, transportation and simply keeping a roof over their heads.

The affordable housing supply gap will continue to grow unless we act now. Roughly 400,000 new renter households are expected to enter the market each year over the next decade, while in the last decade we have lost 650,000 apartments from our existing affordable stock. For these reasons, the number of rental households who are severely cost burdened will continue to grow, and may increase up to 14.8 million by 2025, according to a recent study by Enterprise and Harvard University’s Joint Center for Housing Studies.

 

Legislative Priorities and Current Policy State

Enterprise urges Congress to expand the Low-Income Housing Tax Credit. Despite the growing need for affordable housing, viable and sorely needed Housing Credit developments are turned down each year because of resource constraints. In 2013 – the most recent year for which data is available – state Housing Credit allocating agencies received applications requesting more than three times their available Housing Credit authority.

Though the need for Housing Credit-financed housing has long vastly exceeded its supply, Congress has not increased Housing Credit authority since 2000. To make a meaningful dent in the affordable housing supply gap, we urge Congress to increase Housing Credit allocation authority by at least 50 percent. Such an expansion would support the preservation and construction of 350,000 to 400,000 additional affordable apartments over the next decade.

In March, Senator Maria Cantwell (D-Wash.) announced her plan to introduce legislation to significantly expand the Housing Credit. Her proposal to increase Housing Credit allocation authority by 50 percent would finance the development or preservation of approximately 400,000 additional units of affordable housing nationwide over the next 10 years. The legislation will also contain other changes to make the Housing Credit more streamlined and flexible, including allowing income averaging in Housing Credit properties to enable the program to reach households with a broader range of income levels, and providing states more flexibility in financing developments that target homeless individuals or extremely low-income families. The ACTION Campaign is urging Congress to support this effort to extend the reach of this critical program, and in coordination with Senator Cantwell’s announcement, sent a letter to Congress on behalf of more than 1,300 organizations calling for an expansion of the Housing Credit. 

For the millions of families paying more than half of their income towards housing - choosing between paying the rent or their medical bills, making repairs to their cars, or enrolling in job training classes - an expansion of the Housing Credit cannot come soon enough.

 

Resources

Visit the ACTION Campaign website to:

  • Join the campaign to expand the Housing Credit
  • Sign up to receive updates about the Housing Credit and our campaign to increase Housing Credit resources
  • Access our advocacy toolkit, which includes:
  • State and district fact sheets showing the impact of the Housing Credit and the affordable housing needs that remain in all 50 states and all 435 congressional districts
  • Fact sheets, background and talking points
  • Housing Credit data and reports
  • Tips for planning Housing Credit ground breakings, ribbon cuttings and other events