Comparing the Efficiency and Equity Advantages of Low Income Housing Tax Credit Program (LIHTC) with Section 8 Voucher Pro...
Research Question <ul><li>How should limited government housing subsidies be directed </li></ul><ul><ul><li>via supply-sid...
Two Sets of Evaluation Criteria <ul><li>Which approach is better at providing quality neighborhoods and economic opportuni...
Organization Of This Presentation <ul><li>Case Study Identification and Data  </li></ul><ul><li>How the LIHTC differs by  ...
Case Study Identification and Data
Case Study Regions <ul><li>Four case study regions: </li></ul><ul><ul><li>Tight Markets : San Jose PMSA, Boston PMSA  </li...
Data for this Research   <ul><li>LIHTC Database, collected from the following state agencies: </li></ul><ul><ul><li>Florid...
How Many LIHTC Projects?  Where?
Other Data Sources <ul><li>Section 8 Voucher / Certificate Data, from  A Picture of Subsidized Households in 1998 , HUD </...
How the LIHTC differs by  MSAs
Miami vs. Cleveland :  For-profit New Construction dominates in Miami.  It’s the opposite in Cleveland.  New Construction ...
San Jose vs. Boston :  New Construction dominates in San Jose, the opposite in Boston.  Non-profits dominate in both. New ...
LIHTC projects tend to be larger in Miami and San Jose than in Cleveland and Boston.  Especially for new construction.  NC...
Development costs vary widely by region, with Miami at the low end and Boston at the high end. (Dollar in 1996 Value)
Comparison of Spatial Outcomes   (LIHTC vs Tenant Based Section 8) <ul><li>Neighborhood Income  </li></ul><ul><li>Neighbor...
Except for San Jose, most of LIHTC and Section 8 units are located in very low income and low Income neighborhoods Miami C...
Tenant-based Section 8 program not always works better than LIHTC program in bringing low income families to middle income...
(Except for Boston) similar proportions of assisted families are located in the most segregated neighborhoods,  regardless...
In Miami, 80% of LIHTC units are proximate to low-quality schools, vs. 51% of Section 8 units   (Quality is standardized a...
In Cleveland, 70% of both LIHTC units and Section 8 units are proximate to low quality schools, but more LIHTC units close...
In San Jose, the school quality distribution of LIHTC units and Section 8 units are very similar
In Boston, 80% of LIHTC units are proximate to low quality school, vs. 60% of Section 8 units
Comparison of Cost Effectiveness  (LIHTC vs Tenant Based Section 8)  <ul><li>Average Development Subsidy across Regions </...
The Subsidy Story in Dollars :  The required subsidy in Boston is more than twice what is in Miami. (New Construction Proj...
In Boston and Cleveland,the LIHTC development subsidy is greater than 30-year Section 8 voucher subsidy, but the opposite ...
In Miami, projects targeting larger family units tend to be more cost effective  (New Construction Projects in the Late 90...
In San Jose, LIHTC Projects have become more cost effective over time  (New Construction Projects) Cost Effectiveness Rati...
In San Jose, projects targeting lower income families also tend to be more cost effective Cost Effectiveness Ratio = A Pro...
Concluding Remarks: <ul><li>Differences in spatial outcomes between LIHTC and Section 8 tend to be modest, and the result ...
I Need Your Help!!!  <ul><li>Does anyone here have rent and stock characteristic information for market rate rental housin...
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urbanpolicy.berkeley.edu

  1. 1. Comparing the Efficiency and Equity Advantages of Low Income Housing Tax Credit Program (LIHTC) with Section 8 Voucher Program ---- A Regional Difference Lan Deng Dept. of City and Regional Planning University of California at Berkeley
  2. 2. Research Question <ul><li>How should limited government housing subsidies be directed </li></ul><ul><ul><li>via supply-side investment programs such as public housing or the LIHTC program? </li></ul></ul><ul><ul><li>or by demand-side programs like housing vouchers? </li></ul></ul>
  3. 3. Two Sets of Evaluation Criteria <ul><li>Which approach is better at providing quality neighborhoods and economic opportunity to low-income families? </li></ul><ul><li>Which approach is more efficient in terms of lifetime costs? </li></ul>
  4. 4. Organization Of This Presentation <ul><li>Case Study Identification and Data </li></ul><ul><li>How the LIHTC differs by MSAs </li></ul><ul><li>Comparison of Spatial Outcomes (LIHTC vs TB-Section 8) </li></ul><ul><li>Comparison of Cost Effectiveness (LIHTC vs TB-Section 8) </li></ul>
  5. 5. Case Study Identification and Data
  6. 6. Case Study Regions <ul><li>Four case study regions: </li></ul><ul><ul><li>Tight Markets : San Jose PMSA, Boston PMSA </li></ul></ul><ul><ul><li>Balanced Markets : Miami MSA, Cleveland PMSA </li></ul></ul><ul><li>Differences among these regional housing markets: </li></ul><ul><ul><li>Growth difference </li></ul></ul><ul><ul><li>New regions vs. established regions. </li></ul></ul><ul><ul><li>Difference in the severity of housing segregation and discrimination </li></ul></ul>
  7. 7. Data for this Research <ul><li>LIHTC Database, collected from the following state agencies: </li></ul><ul><ul><li>Florida Housing Finance Corporation </li></ul></ul><ul><ul><li>Ohio Housing Finance Agency </li></ul></ul><ul><ul><li>California Tax Credit Allocation Committee </li></ul></ul><ul><ul><li>Massachusetts State Dept. of Housing and Community Development </li></ul></ul><ul><li>Dataset 1 : General Project Information for all LIHTC projects in each region from 1987 to 2000. </li></ul><ul><li>Dataset 2 : Financial Structure, Unit Composition, Rent Information for available projects, extracted from a project’s Final Cost Certification File or Underwriting Reports etc. </li></ul>
  8. 8. How Many LIHTC Projects? Where?
  9. 9. Other Data Sources <ul><li>Section 8 Voucher / Certificate Data, from A Picture of Subsidized Households in 1998 , HUD </li></ul><ul><li>1990 and 2000 census data, Summary Tape File 3 </li></ul><ul><li>Public school performance data, from the Education Department in individual state. </li></ul><ul><li>Also, </li></ul><ul><ul><li>Fair Market Rent and Area Median Family Income, HUD </li></ul></ul><ul><ul><li>R.S. Mean’s Historic Construction Cost Index; </li></ul></ul><ul><ul><li>Historic 30-year conventional mortgage rate from Federal Reserve Bank </li></ul></ul>
  10. 10. How the LIHTC differs by MSAs
  11. 11. Miami vs. Cleveland : For-profit New Construction dominates in Miami. It’s the opposite in Cleveland. New Construction Acquisition & Rehabilitation Both NC and A/R For-profit Miami Cleveland
  12. 12. San Jose vs. Boston : New Construction dominates in San Jose, the opposite in Boston. Non-profits dominate in both. New Construction Acquisition & Rehabilitation Both NC and A/R For-profit San Jose Boston
  13. 13. LIHTC projects tend to be larger in Miami and San Jose than in Cleveland and Boston. Especially for new construction. NC: New Construction A/R: Acquisition/Rehabilitation Miami Cleveland San Jose Boston
  14. 14. Development costs vary widely by region, with Miami at the low end and Boston at the high end. (Dollar in 1996 Value)
  15. 15. Comparison of Spatial Outcomes (LIHTC vs Tenant Based Section 8) <ul><li>Neighborhood Income </li></ul><ul><li>Neighborhood Racial Composition </li></ul><ul><li>School Quality </li></ul>
  16. 16. Except for San Jose, most of LIHTC and Section 8 units are located in very low income and low Income neighborhoods Miami Cleveland San Jose Boston
  17. 17. Tenant-based Section 8 program not always works better than LIHTC program in bringing low income families to middle income neighborhoods % of Units in Middle Income Neighborhoods
  18. 18. (Except for Boston) similar proportions of assisted families are located in the most segregated neighborhoods, regardless of program type . Ghettos: over 80% are blacks over 10% are blacks
  19. 19. In Miami, 80% of LIHTC units are proximate to low-quality schools, vs. 51% of Section 8 units (Quality is standardized according to the average metropolitan school performance scores)
  20. 20. In Cleveland, 70% of both LIHTC units and Section 8 units are proximate to low quality schools, but more LIHTC units close to the worst schools
  21. 21. In San Jose, the school quality distribution of LIHTC units and Section 8 units are very similar
  22. 22. In Boston, 80% of LIHTC units are proximate to low quality school, vs. 60% of Section 8 units
  23. 23. Comparison of Cost Effectiveness (LIHTC vs Tenant Based Section 8) <ul><li>Average Development Subsidy across Regions </li></ul><ul><li>Development Subsidy vs. 30-year Voucher Subsidy </li></ul>
  24. 24. The Subsidy Story in Dollars : The required subsidy in Boston is more than twice what is in Miami. (New Construction Projects in the Late 90s.) TDC: Total Development Cost 56% of TDC 67% of TDC 74% of TDC 68% of TDC
  25. 25. In Boston and Cleveland,the LIHTC development subsidy is greater than 30-year Section 8 voucher subsidy, but the opposite holds in San Jose and Miami.
  26. 26. In Miami, projects targeting larger family units tend to be more cost effective (New Construction Projects in the Late 90s) Cost Effectiveness Ratio = A Project’s Total Development Subsidy / 30-Year Voucher Subsidy
  27. 27. In San Jose, LIHTC Projects have become more cost effective over time (New Construction Projects) Cost Effectiveness Ratio = A Project’s Total Development Subsidy / 30-Year Voucher Subsidy
  28. 28. In San Jose, projects targeting lower income families also tend to be more cost effective Cost Effectiveness Ratio = A Project’s Total Development Subsidy / 30-Year Voucher Subsidy
  29. 29. Concluding Remarks: <ul><li>Differences in spatial outcomes between LIHTC and Section 8 tend to be modest, and the result of local factors. </li></ul><ul><li>Contrary to the conventional wisdom, a supply subsidy program like LIHTC can actually be more cost-effective than a demand subsidy program like Section 8. Regional variations influence the efficiency and equity advantage of different government housing programs. Relevant factors might include </li></ul><ul><ul><li>Local housing supply and demand. </li></ul></ul><ul><ul><li>Local Family Income. </li></ul></ul><ul><ul><li>Different government practices in administering LIHTC program. </li></ul></ul><ul><ul><li>The existence of housing segregation and discrimination in local housing markets. </li></ul></ul><ul><ul><li>Specific project design. </li></ul></ul>
  30. 30. I Need Your Help!!! <ul><li>Does anyone here have rent and stock characteristic information for market rate rental housing properties in Boston, Cleveland, Miami, or San Jose? </li></ul><ul><li>Thank you!! </li></ul>
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