On Tuesday, the Senate Finance Committee will hold a hearing to discuss affordable housing. The committee will debate whether to expand the Low‐Income Housing Tax Credit (LIHTC), a program that ineffectively subsidizes affordable housing. A bill co‐sponsored by Senator Cantwell and Senator Hatch would expand the program by 50%.
Unfortunately, the program usually sidesteps scrutiny because it is not part of the discretionary budgeting process. But the Senate Finance Committee has a unique window of opportunity to ask hard questions of LIHTC during the hearing. As a result, Tuesday’s hearing is arguably more important than usual.
What questions should the senators ask? Below are a list of ten questions to get the conversation started:
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Does LIHTC subsidize units that would be provided by the private market in its absence? How will the program improve the real number of affordable housing units produced?
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Why should Congress expand a program that GAO reports is not well managed? How does this bill increase oversight?
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Is LIHTC a band‐aid solution for destructive local zoning and land use regulation policies? Should states be required to reduce local land use and zoning regulation in order to qualify for LIHTC?
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How will the bill reduce the amount that developers benefit from LIHTC?
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How does the bill improve the cost‐effectiveness of LIHTC? Is LIHTC the most cost‐effective way to subsidize housing? (Research suggests it is not.)
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Why must LIHTC be used in conjunction with other subsidies?
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Will non‐profit developers continue to be provided preferential treatment in the credit allocation process? Even if they are less efficient at building affordable units?
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Given finite federal resources, why does LIHTC subsidize moderately low‐income individuals rather than extremely low‐income individuals?
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Why aren’t Housing Finance Authorities (HFAs) required to monitor project compliance during the latter half of the 30 year “extended use” period?
- How will the bill reduce corruption and fraud?
It’s essential that LIHTC is given the scrutiny it deserves. The Senate Finance Committee should make sure it happens.