Does the Low-Income Housing Tax Credit Encourage Segregation?

The Low-Income Housing Tax Credit Program (LIHTC) is the main federal program for the financing of low-income housing. Through the LIHTC program, affordable housing developers are awarded tax credits that they then sell to investors. Since it’s establishment in 1986, the program has financed almost 3 million apartments and provided homes to roughly 6.5 million low-income families.

However, a recent New York Times investigation found that in large metropolitan areas, projects financed by the LIHTC are disproportionately located in majority non-white communities. This furthers racial and economic segregation. A big reason for this disparity is that when low-income housing is proposed in higher income communities, there is stiff resistance to it. The New York Times cites opposition to an affordable housing project in Houston as an example.

The Baltimore area also has a long history of resistance to affordable housing. In recent years, proposed low-income housing developments in Severna Park and Rosedale were canceled due to local opposition. In Baltimore County, opposition to affordable housing has been so severe that it was sued and entered into a settlement with the federal government.

The LIHTC program provides affordable housing to millions of Americans. At a time when one in four renters spend more than half their income on rent, it is more important than ever. However, developers and elected officials must work to ensure this vital program does not further segregate our communities.

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Gregory Friedman

Gregory Friedman

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