Post-proceso de datos

This is not the first study to examine the outcomes for LIHTC developments after 15 years. In 2004 and 2005, Alex Schwartz and Edwin Meléndez interviewed seven LIHTC syndicators and other tax credit experts and, based on those interviews and on published literature on LIHTC, described the factors that would influence what happened to older LIHTC properties over time. They concluded that “the biggest threat to the long-term viability of tax credit housing as a resource for low-income households stems less from the expiration of income and/or rent restrictions and more from the need for major capital improvements. A relatively small segment of the inventory is likely to convert to market-rate occupancy—primarily housing built during the earliest years of the program, housing located in the most expensive housing markets, and housing that is not subject to addi- tional regulatory restrictions” (Schwartz and Meléndez, 2008: 263).

Schwartz and Meléndez emphasized the small portion of the LIHTC inventory for which tax credits were allo- cated before 1990, before use restrictions that extended through Year 30 were in effect, and the fact that as many as one-half of those earliest properties were thought to have affordability restrictions other than those mandated by the LIHTC statute. They also cited expert opinion that few owners of LIHTC properties for which tax credits were allocated in 1990 and later would try—or succeed—in opting out of the 30-year use restrictions by asking the HFA to try to find a buyer for the property willing to pay a QC price. Finally, they pointed to the very small fraction of LIHTC properties that are located in census tracts where median rents are greater than the metropoli-

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tan median rent. Their view was that only owners of properties in such locations would have a strong incentive to leave the LIHTC program to seek market rents (Schwartz and Meléndez, 2008).

The research questions for this study are essentially the same as those suggested by Schwartz and Meléndez, now examined at least five years later and after many more properties have passed the 15-year mark:

• How many properties leave the LIHTC program after reaching Year 15?

• What types of properties leave, and what types remain under monitoring by HFAs for compliance with program rules?

• What are owners’ motivations for staying or leaving?

• How are properties that remain in the LIHTC program performing physically and financially?

• What are the implications of properties leaving the LIHTC program for the rental market? To what extent do properties that leave the LIHTC program continue to provide affordable housing?

• How do ownership changes and financing affect whether LIHTC properties continue to provide affordable rental housing and whether they perform well?

In answering those questions, we focused on properties that would have reached Year 15 by 2009—that is, properties placed in service under LIHTC between 1987 and 1994. Given the time frame for data collection for this study, 2010 and early 2011, we anticipated that we would have data collected from HFAs on the universe of LIHTC properties through 2009 and that we would have interview-based information on properties that had reached Year 15 in 2009 or earlier.

We also decided to examine the outcomes after Year 15 primarily for those properties that do not have either project-based rental subsidies from Section 8 or similar programs or RHS Section 515 loans. Those federal sub- sidy programs carry other use restrictions and, perhaps more importantly, a different set of incentives. Instead, we focus on properties governed primarily by the rules and incentives of the LIHTC program itself.

Originally, we also decided to focus on properties that had not used LIHTC a second time. As data collec- tion for the study progressed, however, it became clear that the extent to which LIHTC developments will be recapitalized and resyndicated with new tax credits is central to the future of LIHTC properties after Year 15. The further use of tax credits—both those allocated competitively by HFAs and the 4-percent credits that are available automatically to rental properties financed with tax exempt bonds—is an important dimension of how financing affects the future performance and affordability of LIHTC properties. Schwartz and Meléndez (2008) noted that additional tax credits were one way to meet an older property’s capital needs, without offer- ing a view as to how common this would become.

Many of the research questions are about LIHTC properties that are leaving the program, which we define as no longer being monitored by an HFA for compliance with LIHTC rules. However, the earliest properties, those that received LIHTC allocations before 1990, had use restrictions that lasted only 15 years. For those properties, no longer reporting to an HFA may imply nothing about whether a property continues to pro- vide affordable housing. Owners may stop reporting simply because they no longer are required to do so. The properties may have other affordability restrictions, or they may continue to charge rents that are at or below the LIHTC standard because those are market competitive rents. For properties subject to 30 year use restric- tions as well, no longer being monitored by the HFA may have ambiguous implications, because some HFAs do

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not require reporting between years 15 and 30, instead relying on owners to comply with the use agreements to which they committed. Despite these ambiguities, we consider properties no longer monitored by HFAs to be those that potentially have left the LIHTC program and potentially are no longer affordable. Therefore, this is a useful group of properties to examine to answer some of the research questions.