The Rural Housing Coalition of New York commissioned a report by the Regional Plan Association on New York State’s allocation of Low-Income Housing Tax Credits to rural areas of the state during a five-year period (2019-2023).
There are three main types of Low-Income Housing Tax Credits used to finance affordable housing development in the state; 1) 4% federal tax credits which are allocated to projects receiving tax-exempt bond financing, 2) 9% federal tax credits which are awarded through a competitive process and, 3) State Low Income Housing Tax Credits (SLIHC) which are paired with the federal tax credits.
The report found that when it comes to affordable housing financed with 4% tax credits, rural areas lag well behind the rest of the state, with only 20% of affordable housing units being built in rural areas, even though rural areas contain 36% of the state’s population outside of NYC.
This finding is not all that surprising since 4% tax credits typically are awarded to larger projects that are not suitable for rural areas or smaller communities that lack either the infrastructure or the local capacity to apply for and administer a complex housing deal that involves tax-exempt bond financing. The report found that the distribution of the 9% tax credit program is more equitably distributed and more closely reflects the rural population’s portion of the state total. This is due in part to the smaller size of the projects funded by the 9% tax credits. However, because 4% tax credits fund approximately 70% of all tax credit units, this more equitable distribution of the 9% credits does not make up for discrepancies in the 4% allocation.
“This report indicates that more needs to be done to fund housing programs that target smaller and rural communities that are left out of a major funding source for affordable housing development. State policymakers need to continue to invest in programs targeted to rural and smaller communities like the Small Rental Development Initiative (SRDI), the USDA 515 Rural Preservation Program, as well as insure that the allocation of all types of tax credits are more fairly distributed,” said Michael J. Borges, RHC Executive Director.
Have all the Finger Lakes news from Finger Lakes News Radio delivered to your email every morning for FREE! Sign up by clicking here
