New research published in Housing Policy Debate examines how states shape affordable housing policy in response to risks and damage from hurricanes through their Low-Income Housing Tax Credit (LIHTC) qualified allocation plans (QAPs). The article, “Weather or Not: Tracking Hurricanes and Changes to Low-Income Housing Tax Credit Program Plans,” finds that states impacted by major hurricanes made few changes to their QAPs in response. The authors conclude that these states missed important opportunities to mitigate against threats to affordable housing and protect residents from the risks of hurricanes and climate change.
State housing finance agencies (HFAs) are required to develop LIHTC QAPs setting forth criteria for competitively awarding tax credits to developers. HFAs often choose application criteria and preferences that reflect important affordable housing policy objectives and weight them accordingly. Many state HFAs, for example, give greater weight to LIHTC applications for projects that achieve deep income targeting or seek to preserve existing affordable housing.
The authors reviewed QAPs in states impacted by 12 major hurricanes over the last 20 years. QAPs were collected from three years before and three years after a hurricane and reviewed for changes such as new preferences for project locations, construction techniques, disaster preparedness, or other hurricane or climate change related responses.
The researchers found that state HFAs rarely responded to hurricanes by making significant changes to LIHTC QAPs. When QAP revisions did occur, they were typically made in response to federal legislation or specific funding opportunities, such as the Gulf Opportunity Zone Act after Hurricane Katrina. There were, however, limited cases in which states proactively changed QAPs to incentivize rebuilding and recovery efforts in impacted communities or created incentives for energy efficiency or green building practices to address climate change. For the most part though, changes were not made to mitigate future risk of hurricanes or climate change.
The authors conclude that state HFAs missed significant opportunities to improve affordable housing development policy in response to growing risks from hurricanes and climate change. State HFAs could make many changes to LIHTC QAPs to account for these threats in the development of affordable housing, particularly when it comes to it location, design and construction, and energy use. QAPs should be used to shape development patterns in response to damage or future risks from hurricanes and climate change, incentivize building designs or construction materials that are resistant to severe weather, and incentivize energy efficient building practices.
“Weather or Not: Tracking Hurricanes and Changes to Low-Income Housing Tax Credit Program Plan” is at: https://bit.ly/3jVemCv