Does the Federal Housing Policy Do Enough to Stop Evictions?

New research calls into question the efficacy of America’s largest affordable housing program. Among working-class families, one in four renter households paid over half their income in rent in 2017.

A row of townhouses in Philadelphia.
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In March, 35 new units of affordable rental housing opened in the Germantown section of Philadelphia, a majority Black neighborhood with a history of divestment and pervasive poverty.

The need for housing aid could not be more obvious. Seven hundred families signed on to try and lease a unit even though the rent subsidies available would, in most cases, still require them to pay more than half their incomes for housing.

“Half of them were paying 70 percent of their income on their rent in their current situations, and some were paying even more than that,” says Nora Lichtash, executive director of the Women’s Community Revitalization Project (WCRP), which developed the new units.

Other prospective residents were doubled or tripled up in a unit meant for one family, overcrowding that could be inconvenient and tense at the best of times but potentially deadly in 2021. Some were living in homes with no heat or running water.

“There are so, so many people with stories like that,” says Lichtash.

As wages have stagnated and housing costs have inexorably increased, such issues have become more common. Housing affordability challenges have expanded to encompass many working-class Americans, with one in four renter households paying over half their income in rent in 2017.

But the families that Lichtash and WCRP are trying to help are among the poorest in Philadelphia and the country and, as new research from the University of Pennsylvania demonstrates, the tools available to help them are extremely limited.

The new WCRP units were largely paid for through funds raised by the Low-Income Housing Tax Credit (LIHTC), the only federal program that still provides support for the construction of new below market rate units. A creation of Ronald Reagan’s administration, it was meant to introduce more market-oriented mechanisms to the subsidized housing realm. Since then, all other federal programs to create new supply of affordable housing have been prevented from adding new units.

“We’re relying on [LIHTC] as our only housing production program to solve all our housing affordability problems and that’s a tall order for any program,” says Vincent Reina, assistant professor of City and Regional Planning at the University of Pennsylvania.

Reina is co-author of a new paper
that examines how well different federal subsidy programs protect low-income tenants from eviction. Policymakers need to consider the nuances of the program, “as the federal government is looking to massively reinvest in housing.”

LIHTC operates by raising money from investors who get tax breaks in exchange for pumping funds into affordable housing projects. The subsidies are based on area median income (AMI), which means in a region like Philadelphia that the affordability provisions are based on metrics that encompass the wealthier suburbs. As a result, the income supports are not as strong as they were in traditional public housing or the expired project-based Section 8 program.

Reina and his co-author Greg Preston found that, after controlling for a variety of factors like race and geography, “[we do] not have sufficient evidence to conclude the risk of eviction in LIHTC properties is statistically different from the risk tenants experience in unsubsidized properties.”

By contrast, those who live in public housing are 21 to 68 percent less likely to suffer an eviction than people of a comparable background living in market rate properties, while those living in project-based Section 8 units were 52 to 76 percent less likely to experience eviction.

But new units have not been added to either of those programs in decades.

Reina and Preston note that LIHTC units seemed to be trending towards lower eviction rates than market rate units, but their data set just didn’t find a statistically significant difference. They speculate that LIHTC’s subsidies are simply not deep enough to prevent eviction among the lowest income populations. Public housing and Section 8 projects, by contrast, are structured to ensure tenants only pay 30 percent of their income on rent, offering much stronger and more flexible protections.

For practitioners, the study’s findings are not surprising, but they say it is difficult to see how to unwind a LIHTC system that has developed a huge economy around itself and that affordable developers have come to rely on.

In Philadelphia, the 35 new units offered relief, paid for by LIHTC, and were a huge break for the lucky few who got them. But they were still paying half of their incomes on rent, because WCRP couldn’t cover its operating costs and charge any less per month without further subsidy. Across the city, as Reina and Preston highlight, the average listed rent for a two-bedroom LIHTC property is $1,013, which is $6 more than the median rent for the city as a whole. The authors argue that this shows the nation’s only federal affordable housing construction program may leave many of the poorest Philadelphians as rent burdened as they would be on the open market.

An eviction notice attached to a board nailed across a front door.
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For most affordable housing professionals, the question of LIHTC’s efficacy is academic. After all, it’s the only game in town when it comes to federal programs.

“LIHTC often becomes the only catalyst for investment in a lot of our neighborhoods,” says Bryan Esenberg, managing deputy commissioner for Chicago’s Department of Housing. “It becomes the driver of economic development in our neighborhoods. It’s not just a housing production tool, it’s [the only way to bring in] money.”

In practice, community developers like Lichtash and government leaders like Esenberg combine LIHTC with state and local incentives. The structure of these complex deals can allow for greater affordability than the program alone can sustain. Groups like WCRP experiment with models like community land trusts, which allow for public control of the land beneath a development and can shield poor tenants from eviction when tax credit subsidies expire.

For Lichtash, no fan of Reagan-era policy, these kinds of compromises within the program are essential because LIHTC isn’t going anywhere.

“It’s a backwards program,” says Lichtash. “It should be a program where tax dollars subsidize housing. Instead, we subsidize tax lawyers who get paid $700 an hour to ensure their clients get the full benefit of the tax credit. But that’s what we have and I don’t see a way of undoing that in my lifetime, because it’s too much of an industry.”

For the first time in recent memory, there seems to be some political interest in expanding the federal government’s toolkit. President Joe Biden’s policy platform included a $100 billion Affordable Housing Fund aimed at reinvesting in deteriorating public housing complexes. It also included a boost to Community Development Block Grants, which often fund affordable housing, and a $10 billion boost to LIHTC. (Far more funds would not go amiss, Esenberg says, noting that Chicago has an affordable housing deficit of 120,000 units and only has the capacity to build 1,200 new units a year.) On the left of the Democratic Party, influential politicians like Bernie Sanders and Alexandria Ocasio-Cortez have introduced a bill that would allow for the construction of new public housing for the first time in half a century.

For Reina and Preston, their research shows that more thought needs to be given to expanding the federal affordable housing toolkit. If a program doesn’t prevent lower income people from being evicted for being unable to afford the rent, perhaps it needs some rethinking.

“The design of these programs matters,” says Preston, who is a doctoral student in urban planning at the University of California, Los Angeles. “One of the primary policy implications of the paper is that there are differences between the programs and that the policies we invest in have real material consequences for households. We can’t treat all these programs as interchangeable.”
Jake Blumgart covers transportation and infrastructure for Governing. He lives in Philadelphia. Follow him on Twitter @jblumgart