States can begin to address the estimated 1.125 million supportive housing units needed nationwide by increasing incentives in their low-income housing tax credit (LIHTC) programs, according to CSH (Corporation for Supportive Housing).
In 2018, all states and territories included at least one method for incentivizing housing for vulnerable individuals and families in their qualified allocation plans (QAPs), the rules that guide the allocation of their LIHTCs. Up to 85% of states use the QAP to create housing for vulnerable individuals, and just under two-thirds also consider the types of service enrichments that can be made available on-site or in the nearby community, according to a new analysis unveiled at CSH Summit 2019, the organization’s national conference held this year in Indianapolis.
CSH points out that housing finance agencies (HFAs) often go beyond the statutory requirements of the federal LIHTC program. However, the degree to which they prioritize supportive housing varies greatly from state to state, and more can be done to help create supportive housing.
“For us, the biggest takeaway from the 2018 QAP analysis is states need to reserve designated amounts of tax credit allocations specifically to create quality supportive housing,” says Robert Friant, CSH managing director for external affairs. “Overwhelmingly, current QAPs incentivize affordable housing development for vulnerable people, and that is certainly good news, but our review concludes they must do more to explicitly ensure there is quality supportive housing, prioritizing access to both affordable units and life-changing services for those who need them most.”
CSH offers several recommendations to provide concrete steps HFAs can take to develop a supportive housing pipeline.
1. Prioritize Threshold and Set-Aside Requirements
Although many HFAs use threshold (63% of states) and set-aside (50%) requirements, 93% create scoring incentives that provide varying numbers of points for integrating specified categories. The difference is even greater within categories that prioritize vulnerable individuals served by supportive housing, with under half of states putting forth specific requirements compared with 85% using scoring incentives. It is hard to determine just how meaningful individual points are when compared with the total score needed to receive a tax credit award. As such, HFAs must prioritize threshold and set-aside requirements to ensure enough units are dedicated to those who need them most.
2. Include Requirements for Extremely Low-Income Units
Supportive housing households typically include individuals and families with extremely low incomes at or below 30% of the area median income (AMI). While 81% of HFAs encourage the development of units for those at or below 30% through scoring incentives, less than 10% actually require consideration for this cohort, says CSH. While establishing lower-income limits is not sufficient by itself to meet the definition of supportive housing, it is important for HFAs to recognize how the lower-income limits fit within the ranges of affordability and designate units specifically to meet the needs of low incomes at or below 30% of the AMI.
3. Allocate Tax Credits for Supportive Housing
4. Include Accessible Service Enrichments
5. Adopt Dimensions of Quality
CSH also offers several broader strategies to promote supportive housing in communities, including developing a housing task force that would identify solutions, align resources throughout the state, and promote best practices.