Revisiting the economic impact of low-income housing tax credits in Georgia
A recent study conducted by the Center for Housing and Community Research at the University of Georgia on behalf of the Georgia Affordable Housing Coalition has shed light on the economic impact of the Low-Income Housing Tax Credit (LIHTC) program in Georgia. The LIHTC program provides an important source of affordable housing at a time when housing has become increasing out of reach for low and moderate-income renters in Georgia.
According to the study, Georgia currently faces a shortage of 118,338 housing units. The situation is even more critical for households with incomes at or below half of the area median income (AMI), with a shortfall of 216,577 units. One of the key factors contributing to the rising housing prices is the insufficient production of housing affordable for low and moderate-income households. The LIHTC program plays a crucial role by generating capital for the construction of market-quality housing with affordable rents. The program provides tax credits to investors based on their investment returns, creating a source of equity for workforce rental housing in the United States.
However, the LIHTC program does come at a cost to the state of Georgia. By providing tax credits to developers of affordable housing, the state foregoes the collection of those taxes. To determine the economic impact of the LIHTC program, researchers at UGA examined the economic impact of LIHTC developments brought into service since the program's inception.
Key Findings from the Study
The study's key findings revealed a positive economic impact resulting from the LIHTC program. For every net $1 of state income tax lost to LIHTC, an additional $5.79 of economic activity was generated on average. The construction and ongoing operation of LIHTC housing between 2001 and 2019 resulted in a total economic impact of $12.03 billion for Georgia. These developments also created an average of 4,284 new jobs per year, primarily in the construction sector. If the LIHTC program were eliminated, Georgia could potentially lose nearly 4,300 jobs annually, underscoring the program's significance in supporting employment.
The Georgia LIHTC program facilitated the construction of 40,997 units of affordable housing from 2001 to 2019, with additional units in progress. The distribution of LIHTC developments is geographically widespread, with the highest concentration observed in the south Atlanta metropolitan area. Notably, rural and non-metropolitan areas saw a proportional increase in new LIHTC developments during the period analyzed.
Despite the cost of implementing the LIHTC program, the study concluded that its benefits far outweigh the expenses. The economic impact of LIHTC developments is evident through the creation of jobs, increased tax revenues, and the injection of disposable income into local economies. The study also highlighted the improved quality of life experienced by hundreds of Georgians residing in these affordable housing developments.
Study Impact and Link:
As Georgia continues to grapple with its affordable housing crisis, the findings of this study provide valuable insights into the importance of the LIHTC program in addressing the shortage and fostering economic growth. Efforts to expand affordable housing options and support programs like LIHTC could prove instrumental in improving the lives of low and moderate-income individuals throughout the state.