Factors Affecting Spillover Impacts of Low-Income Housing Tax Credit Developments: An Analysis of Los Angeles

Brian Y. An
Georgia Institute of Technology

Andrew Jakabovics
Enterprise Community Partners

Jing Liu
Econsult Solutions

Anthony W. Orlando
California State Polytechnic University, Pomona

Seva Rodnyansky
Occidental College

Richard Voith
Econsult Solutions

Sean Zielenbach
SZ Consulting

Raphael W. Bostic
Federal Reserve Bank of Atlanta

Andrew Jakabovics is employed by Enterprise Community Partners, whose subsidiary, Enterprise Community Investments (ECI), syndicates low-income housing tax credits. Although ECI may have syndicated tax credits attached to properties analyzed in this study, all the data came from public datasets and independent proprietary sources. No ECI employees or resources participated in the research. JPMorgan Chase & Co. supported this work. The funders were not involved in conducting this research or in the preparation of this article. The views in this paper do not necessarily reflect the views of the Federal Reserve Bank of Atlanta or the Federal Reserve System.

The Low-Income Housing Tax Credit (LIHTC) program is one of the largest sources of financing for affordable housing in the United States. Contrary to many residents’ fears, research typically shows that LIHTC-financed properties generate positive spillover impacts in their surrounding communities in the form of increased housing prices. Some critics yet suspect that the overall positive effects obscure the properties’ negative impacts for a significant subset of neighborhoods. This article examines these concerns by assessing the housing price effects of LIHTC properties in Los Angeles. The authors explore how the effects differ based on various characteristics of the LIHTC property and of the surrounding neighborhood. The authors supplement these statistical analyses with interviews of key affordable housing developers to understand their decisionmaking process regarding the siting and structuring of LIHTC properties. Regardless of the property or neighborhood characteristics, LIHTC developments in the region have positive spillover price effects. These findings can help inform policymakers who strive to maximize the secondary benefits of affordable housing developments.