The Weakness of Neighborhood Revitalization Planning in the Low-Income Housing Tax Credit Program: Warnings from Connecticut

Abstract

The Low-Income Housing Tax Credit (“LIHTC”) is the nation’s largest program to produce and preserve subsidized housing. To ensure that LIHTC avoids harmfully concentrating poverty, entrenching segregation, or inefficiently deploying resources, federal law requires that states prioritize allocating credits to projects located in high-poverty locations that contribute to a “concerted community revitalization plan” (“CCRP”). In high-poverty neighborhoods, tax credit developments are meant to facilitate broader neighborhood revitalization, not only to benefit the residents of the housing itself. This paper provides new, empirical support for long-standing concerns that the CCRP process is ineffectively enforced.

Looking at each application for competitive tax credits to be used in high poverty neighborhoods in a representative state (Connecticut) over a ten-year period, we find little revitalization planning that meets either the terms or the intent of the statute. Almost no applications referenced any discrete revitalization plan, and many applications lacked even the basic elements of revitalization planning. Yet even so, every single application that sought credit for contributing to a CCRP received it. Moreover, we observe little difference in the revitalization planning described in applications located in high-poverty neighborhoods and applying for the CCRP priority point, on the one hand, and those located in low-poverty neighborhoods not eligible for that priority, on the other. We therefore see little indication that the CCRP process either crossed an absolute threshold of meaningful revitalization planning or that it materially increased revitalization planning relative to what would otherwise have taken place.

We conclude by offering suggestions for how the CCRP process might be reformed to better leverage federal and state investments for broader neighborhood gain—and to vindicate this important Congressional mandate.

Keywords: housing, affordable housing, Low-Income Housing Tax Credit, LIHTC, Fair Housing, Neighborhood Revitalization, Urban Planning, Subsidized Housing