Links Between Affordable Housing and Economic Mobility

Transcript

1 Links B etween Affordable Housing and The Economic Mobility The Experiences of Residents Living in Low- Income Housing Tax Credit Properties May 2018

2 About the Terner Center Authored by: The Terner Center formulates bold strategies to Reid K. Carolina house families from all walks of life in vibrant, Faculty Research Advisor sustainable, and affordable homes and communities. Our focus is on generating constructive, practical strategies for public policy makers and innovative tools for private sector partners to achieve better results for families and communities. www.ternercenter.berkeley.edu For more information visit: Table of Contents Introduction ... ... ... ... 1 ... Background on the Low -Income Housing Tax Credit ... ... ... 2 ... Methods ... ... ... ... 5 Findings ... ... ... ... 8 ... ... ... ... Policy Implications ... 22 ... Acknowledgments This project was a collaborative effort from beginning to end! First, we would like to thank Mary Kaiser and the Board of the California Community Reinvestment Corporation for their intellectual and financial support of this project. We would also like to thank Silicon Valley Bank for their Secon d, we would especially like to thank the six financial contribution towards this work. developers —Abode Communities, BRIDGE Housing, Eden Housing, Mercy Housing, META Housing and MidPen Housing —for participating in the study, with a special thanks to the resident services and property managers who assisted us with scheduling and coordinating the on- site survey work. Third, this study wouldn’t have been possible without the help of an amazing team of UC Berkeley students. Nabihah Azim, Echo Bergquist, Malena Leon Farrera, Philip Verma and Amy Young were critical partners in developing, planning and conducting the research, with Liana Arnold, Hayley Raetz, Sean Doocy and Fiona Colleen Ruddy providing invaluable survey support. We’d also like to thank the Terner team, particularly Elizabeth Kneebone and Sara Draper - Finally, we’d like to thank all the residents who Zivetz, for their helpful comments on this paper. participated in the surveys and interviews for their time and thoughtfulness.

3 Introduction ng Tax Credit (LIHTC) Program has produced Since its creation in 1986, the Low -Income Housi 1 making it the most important source of funding for affordable nearly 3 million housing units , 2 Yet despite the importance of LIHTC to the field of affordable housing, there has been . housing research that has focused on the residents living in LIHTC developments. Instead, remarkably little much of the research influencing housing policy has been developed through studies foc used on residents living in HUD -subsidized housing programs, for example, through the re search conducted 3 . as part of the Moving to Opportunity demonstration project and the HOPE VI panel study But HUD programs —including both project -based public housing developments -subsidized housing and housing choice vouchers— are different from LI HTC in several important ways. First, the public housing projects that were subject to HOPE VI and MTO intervention were characterized by significant distress resulting from a legacy of discriminatory siting, long -term isolation, structural 4 racism, chronic under funding, and stigmatization. LIHTC properties haven’t been subject to this same legacy of isolation and disinvestment: while in general LIHTC properties are located in States, they neighborhoods with higher rates of poverty than the average neighborhood in the U nited have benefit -managed and more ed from consistent financing, and the buildings tend to be well integrated into the neighborhood fabric. Second, rent calculations in LIHTC properties operate differently from public housing and housing choice vouc hers. In HUD -subsidized programs, rents are generally set at 30 percent of the tenant’s income, but in the LIHTC pro gram, the rents are set at the unit level (at 30 percent of either 50 or 60 percent of AMI). While this could result in higher rent burden s for LIHTC residents, it also means that there isn’t an increase in rent when the resident starts to earn more (and therefore, no work disincentive). Third , LIHTC properties are often managed by mission -driven nonprofit and for -profit developers, who have both the capacity and the resources to provide resident services. These differences suggest that the experiences of residents in LIHTC buildings might vary from those living in public housing. explicitly studying the experiences of In this study, we fill a significant gap in the literature by residents living in LIHTC -funded buildings. We conducted interviews and surveys with over 250 residents living in 18 family properties located in both lower and higher poverty neighborhoods across California. The goa l of the study was to a) understand the role that LIHTC plays in stabilizing -income families; b) explore the relationship between living in affordable housing housing for low and economic mobility; and c) solicit residents’ perspectives on their neighborho od’s characteristics and the opportunities afforded by them. These questions align with contemporary policy debates regarding LIHTC’s future, specifically those related to the links between housing subsidies and economic mobility as well as fair housing concerns related to the siting of LIHTC properties in lower - income, minority neighborhoods. While exploratory, the study provides important insights into how residents experience LIHTC, and ultimately gets at what should really matter: how does affordable housing impact the lives of low -income households? The report proceeds as follows. First, we provide a brief overview of the LIHTC program and review the existing literature on LIHTC impacts. Second, we present our research methodology and provide 1

4 d statistics on the residents who participated in the study. We then turn to our findings, backgroun combining quantitative and qualitative insights to reveal how residents perceive their housing, economic trajectories and neighborhood conditions. In the final sect ion, we discuss the policy implications of this research. Background on the Low -Income Housing Tax Credit The Low -Income Housing Tax Credit (LIHTC) program was established in 1986 as part of the Tax Reform Act, and over the past 30 years has become the mo st important source of funding for the creation and preservation of affordable rental housing in the United States. Unlike public housing —the two other primary federal programs for rental subsidy and the voucher program —LIHTC is partment of the Treasury instead of the Department of Housing and administered through the De Urban Development. LIHTC includes two types of federal tax credits —nine percent and four percent —which refer to the approximate percentage of a project’s “qualified basis” an investor or k may deduct from their annual federal tax liability in each of ten years that follow an investment ban or loan. This paper, as well as much of the research cited below, focuses on the 9 percent program which generally goes toward new construction. Every year, states are provided tax credits based on a per capita allocation; in 2018, states were allocated $2.40 per person. Affordable housing developments can qualify for the tax credits if at least 20 percent of tenants have incomes below 50 percent o f area median income (AMI) or if at least 40 However, in practice, the tax credit percent of tenants have incomes below 60 percent of AMI. 5 incentives are such that the overwhelming majority of developments are 100 percent affordable. ams that limit rents to approximately 30 percent of household income, Unlike most HUD progr LIHTC rents are not tied to the income of the occupants. Rather, unit rents are set at 30 percent of the applicable income limit (50 or 60 percent of AMI) under which the unit qualified for tax credits. Developers proposing projects located in HUD -designated Difficult to Develop Area (DDA) or 6 are eligible for 30 percent higher credits than for developments not Qualified Census Tract (QCT) located in DDAs or QCTs. These incentives were de signed to ensure that LIHTC resources were targeted to those in need and to offset the competitive disadvantage of impoverished central -city 7 neighborhoods, yet have recently been criticized for contributing to the disproportionate siting of sing in lower -income neighborhoods. affordable hou While some programmatic guidelines (such as the affordability criteria) are set at the federal level, states have the ability to tailor the LIHTC program to local policy goals through their Qualified Allocation Plan (QAP), which sets forth the regulations and criteria on which an application for credits will be judged. In California, where the demand for tax credits significantly exceeds supply, the extent to which a project meets the QAP guidelines is critical in dete rmining which projects get funded and built. California has increasingly used its QAP to achieve a wider set of policy goals related to health, environment and economic mobility. California’s current QAP advantages applications that demonstrate public -priv ate financing, developer experience and capacity, projects that have location amenities (for example, located near a public transit stop, park or grocery store), 2

5 projects that offer resident services (for example, after school computer classes) and project s that 8 . incorporate energy efficiency standards In addition, i n 2018, California’s Tax Credit Allocation Committee (TCAC) took a bold step to incorporate fair housing goals into its QAP regulations. TCAC’s move comes on the heels of the Supreme Court case Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. In this case, The Inclusive Communities Project alleged that the Texas tax credit agency had intentionally discriminated against African Americans by disproportio nately siting its tax credit projects in majority minority neighborhoods —for example, 92.29 percent of all housing units built in Dallas using LIHTC were located in majority -minority census tracts. The court ruled that policies that segregate minorities in poor neighborhoods, even if they do so unintentionally, violate the Fair Housing Act and can be subject to disparate impact claims. Justice Kennedy, in writing the majority opinion, pointed to the importance of the disparate impact standard for combatting systematic racial segregation. Since the case, there has been an expanded interest in ensuring that LIHTC projects are built in “higher” opportunity neighborhoods. In the revised California regulations, large family developments (in contrast to project s that focus on senior housing or that are smaller in scale) located in a census tract designated on the TCAC/HCD Opportunity Area Maps as Highest or High Resource receive an extra 8 points on their application. Although the maps use several different indi cators to characterize a tract’s resource level, in general, Highest and High resource tracts tend to be lower poverty, more suburban and have a greater share of non -Hispanic White households. These have also seen fewer LIHTC developments in the past: in C alifornia, only five percent of large family 9 percent LIHTC units placed in service between 2003 and 2015 were located in the state’s most -fifth of the state’s -rich neighborhoods, even though such neighborhoods account for one opportunity The new TCAC policies are intended to address and begin to correct that historical census tracts. -resourced neighborhoods is also aligned imbalance. TCAC’s decision to incentivize building in higher in neighborhoods of with research that increasingly points to the negative effects of living 9 concentrated pov erty, particularly for children. LIHTC provides low Indeed, a significant body of research has tried to assess whether -income households with access to higher opportunity neighborh oods (such as those with higher -qualit y schools or access to employment) or whether it perpetuates patterns of racial and economic 10 segregation. The fact that developers receive a “boost” in tax credits for siting a project in QCTs or 11 DDAs (both of which by definition have higher rates of poverty) , coupled with higher land costs, ning practices all increase the NIMBY opposition to affordable housing projects and exclusionary zo likelihood that LIHTC properties are concentrated in higher -poverty neighborhoods. On balance, this is borne out by empirical findings. Studies have generally found that LIHTC units are built in neighborhoods with higher rat es of poverty and a larger share of minority residents than 12 the average neighborhood in the US , and that these units are more likely to be located in central 13 Ellen, O’Regan, and Voicu examine the census tracts where cities than suburban communities . C units were sited between 1980 and the early 2000s, finding that LIHTC units were three LIHT times more likely than all housing units to be located in tracts with poverty rates that were 40 3

6 14 However, when compared against other forms of subs idized housing (such as percent or higher. -income public housing or housing choice vouchers) or the neighborhoods in which the average low renter lives, LIHTC properties tend to be located either in similar or slightly lower poverty/lower 15 minority neighborhoods . Horn and Re gan, for instance, find that LIHTC units appear to have distributions across neighborhoods that are fairly similar to those of the poor or near poor renters in 16 the same Metropolitan Statistical Area (MSA), at least in terms of minority concentration. e is Ther also evidence that while the majority of LIHTC units are in higher -poverty neighborhoods, a 17 significant share has been built in lower poverty, suburban neighborhoods . While most studies have focused on LIHTC siting as it relates to neighborhood racial composition and poverty level, a few studies have looked at other dimensions of neighborhood quality. One area of focus has been transit and employment accessibility, with the goal of assessing whether LIHTC developments can help to remove the ‘spatial m -income households and ismatch’ between low employment opportunities. Adkins et al. found that LIHTC units tend to be more concentrated in neighborhoods with higher degrees of transit and job access than other housing, but that only a third 18 of LIHTC units b uilt between 2007 and 2011 meet three or more out of seven “access” measures. Welch found that LIHTC properties in Baltimore had less transit access than would be expected from 19 The record is also mixed in terms of educational access. In a a random distribution of housing. eiffer examined the educational opportunities available to LIHTC study focused on California, Pf residents and found that most LIHTC units are located in neighborhoods that feed into low - 20 performing school districts. At the national lev el, Ellen and Horn found that while LIHTC families tend to live in neighborhoods with lower -performing schools than other renters, a larger shar e have -quality schools compared to other families receiving other forms of housing assistance access to high 21 (e. a voucher or public housing). g., While the record of LIHTC suggests that more could be done to improve siting in “higher opportunity” neighborhoods, others have argued that LIHTC is a powerful community development tool. -quality affordable housing in lower -income tracts can stimulate community Building high 22 investments, leading to improved property values or neighborhood conditions. Indeed, many developers of LIHTC properties have a community development mission, and see LIHTC as an important tool for pl ace -based reinvestment and revitalization as well as for preventing displacement 23 in neighborhoods that are gentrifyi ng. Researchers who have studied the neighborhood spillover effects of LIHTC developments have found some evidence for positive spillover e ffects, although the 24 finds that majority black Deng direction and magnitude of the effect vary by neighborhood context . high -poverty neighborhoods receiving the LIHTC investment experienced the most positive changes, 25 including decreased minority concentra tion and poverty rates . Mos t recently, Diamond and McQuade examine the impacts of LIHTC developments on property values in 129 counties across 15 26 In the lowest income states, covering approximately 20 percent of all LIHTC developments. quartile tracts, they find significant increases in property values: housing values within 0.1 miles of a tax credit development increase by 6.5 percent after the development is placed in service. Yet the impact in higher -income tracts is negative or insignificant. Horn and O’ Regan also find that the development of LIHTC units in a tract is associated with neighborhood changes that may contribute 27 But studies in other locales have found small to lower levels of segregation at the MSA level. 4

7 28 . For example, Freedman and McGavock take advantage of local caps on negative spillover effects QCT eligibility, which allow them to compare similar neighborhoods in different metropolitan areas, and they find evidence that new tax credit developments increase the poverty rates in the 29 nei ghborhoods where they are built, but that these effects are small. What is striking within the existing body of literature on LIHTC is the limited focus on residents and their experiences with affordability, neighborhood conditions or challenges in accessing transit and employment opportunities. In part this has to do with data constraints: states were not required to - submit data on LITHC tenants until 2010. In 2013, O’Regan and Horn conducted the first large 31 30 scale multistate examination of LIHTC tenants. They found that LIHTC properties serve a mix of resident incomes, though on average LIHTC residents have higher incomes than do the recipients of vouchers or those living in public housing. However, because LIHTC rents are set at the unit level rather th an as a proportion of resident income, they also found that LIHTC residents tend to have higher rent burdens —approximately 57 percent of residents paid more than 30 percent of their income on rent. However, the O’Regan and Horn study did not consider resid ent’s experiences or perspectives. To date, the literature on LIHTC and resident outcomes is remarkably absent. Methods Our goal with this study was to begin to fill this gap. While we believe there is a need for experimental longitudinal research on outc omes for LIHTC tenants nationally, we decided to begin with a point- in-time survey of LIHTC residents in California. To conduct this research, we partnered with California Community Reinvestment Corporation (CCRC), a multifamily affordable housing lender f ounded in 1989. CCRC pools bank funding (largely motivated by the Community Reinvestment Act) and directs those funds in the form of loan programs for the acquisition and rehabilitation of affordable housing, as well as forward commitment programs for new construction and permanent financing. Since its inception, CCRC has made over $1.5 billion in loans, financing more than 42,000 LIHTC units across the state. To identify the properties for the study, we analyzed CCRC’s portfolio of funded projects, and identified six developers and 18 properties that met criteria for inclusion. Because we were particularly interested in understanding the role of affordable housing on economic mobility, we limited our sample properties to family buildings (rather than, for example, senior housing), which tend to serve a larger share of households with children. We also selected buildings that had been occupied for at least five years. We intentionally sampled properties located in both lower and higher poverty neighborhood s (Figure 1) . Six properties were located in neighborhoods with poverty rates of less than 20 percent —this is generally assumed to be a threshold below which a neighborhood doesn’t experience the negative effects of concentrated poverty. Six properties wer e located in neighborhoods with poverty rates of between 21 -30 percent, and six properties were located in neighborhoods with poverty rates over 30 percent. Overall, the sample was skewed towards neighborhoods with higher poverty rates, consistent with the overall general siting of LIHTC alifornia, but also nationwide. properties not only in C 5

8 Figure 1: Neighborhood Poverty Rates around Surveyed LIHTC Properties 7 6 5 4 3 2 Number of Properties 1 0 Less than 10 11-20 percent 21-30 percent 31-40 percent More than 40 percent percent Neighborhood Poverty Rate Source: 2015 American Community Survey, 5 year estimates t each of these 18 Working closely with each of the developers, we then surveyed residents a We employed an intercept survey and interview methodology. A team of researchers properties. -site at each of the properties, and would intercept residents as they -eight hours on would spend six or out of the building, asking them if they would be willing to participate in a survey. Survey came in days tended to be scheduled for the weekends or in the evenings, or were aligned with a community ld be reached. Surveys were esidents who cou meeting or event, to maximize the number of r conducted on a computer or tablet, with the researcher talking the resident through each of the Surveys were available in English and in Spanish, and at and recording their responses. questions In some of the sites, residents assisted in further translating the survey into Arabic and Farsi. addition, as they were taking the survey, residents were asked whether they would be willing to 32 provide more context for their answers by responding to structured interview questions. In total, we collected 251 surveys and received 180 detailed interview responses from residents across the sites. 6

9 Table 1: LIHTC Resident Sample Descriptive Characteristics Percent Percent Age of Household Size of Sample Sample 24 15.3 18 Single 6.5 - - 25 17.3 Small Family (2 - 4) 66.8 34 35 54 51.6 - - 8) 26.8 Large Family (5 55+ 15.7 Gender Other Forms of Assistance 8.3 Temporary Assistance for Needy Families (TANF) Female 78.5 Male 21.5 County Adult Assistance Programs (CAAP) 2.0 Supplemental Nutrition Assistance Program (SNAP) 30.7 Race/Ethnicity Medi - Cal 65.0 White 11.7 Supplemental Security Income (SSI) 18.9 Asian 9.7 Housing Choice Voucher 11.0 Black 12.9 Latino Length of Time in LIHTC 54.0 4.0 Less than 1 year Arab/Middle Eastern 6.1 - 1 American Indian 3 years 19.3 0.8 Other 4.8 4 - 6 years 27.7 7 - 8 years 12.9 9+ years 36.1 Educational Attainment Less than High School 25.8 High School/GED 23.8 Some College or 21.5 Associate's Degree Bachelor's Degree or 15.3 Higher Other 3.6 Percent English 35.7 Speaking Table 1 provides basic demographics and characte The majority of ristics of survey respondents. respondents were female (78.5 percent) and between the age s of 25 and 54 (68.9 percent). Because we surveyed family properties, the majority of respondents were living with either small (66.8 percent) or large (26.8 percent) families. We found significant racial and ethnic diversity across the sample, with Hispan ic/Latino residents making up the majority of LI HTC residents (54 percent). heir racial/ethnic composition —residents often learned about the Interestingly, properties varied in t 7

10 property from friends or family members, and so some buildings tended to house a significant share share of of residents from the same racial or ethnic origin (such as one building that had a large Only 35.7 percent of residents across all the properties spoke English as t heir Iranian immigrants). While 25. 8 percent of residents did not have a high school diploma, 15.3 primary language at home. d at least a bachelor’s degree. Residents also benefited from other percent of residents had earne forms of public assistance, with Medi -Cal playing an important role in providing health insura nce and SNAP being the most prominent form of assistance. Only 11 percent of our respondents reported having a housing choice voucher, significantly lower than national statistics would suggest. In the next section, we present the findings from these sur veys and interviews, which we believe provide important insights into the experiences of resid ents living in LIHTC building. However, it is worth noting that while we attempted to reach a random sample of residents through our intercept methodology, there is a potential for bias in who chose to respond to the survey and to our interview requests (for example, with residents who associate most strongly with the benefits of living in affordable housing th e most likely to participate). This makes it difficult to generalize the findings in our survey to the entir e population of LIHTC renters. However, the results presented here point to important dimensions that have been under -explored in research focused on LIHTC, and lay the groundwork for future research on how LIHTC impacts residents’ economic opportunities. Findings LIHTC Improves Housing Affordability, Stability and Quality In California, the housing crisis has reached new heights, with more than half of renters paying more rcent of their income in rent. Conditions are even more acute for lower than 30 pe -income households, where fully 80 percen t of renters are cost burdened. It is not surprising, therefore, that the vast majority of respondents to our survey indicated that “affordabili ty” was the major benefit of living in a LIHTC property, and that they valued affordability more than other features associated with living in subsidized housing, such as location and accessibility to transit o r other neighborhood amenities. ent of survey respondents reported that their housing had improved afte r Nearly 90 perc moving into a LIHTC property. Strikingly, one in five respondents said that they had experienced homelessness before moving into their current unit, and another 20 percent reported th at they had been forced to move involuntarily, either as the result of eviction or an unsustainable rent increase (Figure 2). Fifty percent reported that they consistently worried about paying for rent prior to moving into their LIHTC unit, and 40 percent said that they had either worried about paying for food or skipped meals as a result of their high housing cost burdens. 8

11 Figure 2: Housing and Financial Situation Prior to Moving into LIHTC Unit 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Percent of Survey Respondents Worried about Ability Moved Involuntarily Worried about Paying Homelessness to Make Rent for Food Payments O’Regan and Research has highlighted concerns that LIHTC tenants may still be cost burdened. Horn found that approximately 41 percent of LIHTC residents payed more than 30 percent of their 33 Especially among tenants with very nt paying more than 50 percent. income on rent, with 16 perce enefits from low incomes, these r ent burdens are generally offset by the fact that the household also b a housing voucher. We found that on average, LIHTC residents were paying $1,055 in rent, and that approximately 40 percent were devoting more than 30 percent of their income on rent (consi stent with the national data). For residents with a voucher, monthly rents were significantly lower at $644. felt that their rent was —even those experiencing cost burdens— However, overall residents .4 percent reported that they thought their current rent Among survey respondents, 85 “affordable.” was affordable, with only 6.9 percent reporting that they felt their rent was too high (7.7 percent provided a neutral answer). cent) experienced a rent Surprisingly, we found that a significant share of households (35 per —meaning that they were paying more for the increase when they moved into their LIHTC unit First, housing in the private market. The interviews revealed why. subsidized unit than they had for rious conditions prior to moving into LIHTC, paying little many households lived in intensely preca rent as they moved from one relative’s couch to another’s in search of somewhere to stay, or putting up with deplorable housing situations. One resident, a construction worker with three kids, ribed his previous housing situation as follows: “Before moving here, my family desc and I were living ust in a garage. The garage was spl it into 6 units with curtains. This is not some fancy house, it’s j your normal two- car garage. We were living in that little space, with no running water, other people k. just on the other side of the curtain. We had no place to cook. The kids had no place to do homewor e, but we didn’t have a There was no heat, no air. My kids showered at school. This is not a healthy lif choice. Now, we pay more, but we have a safe place to live.” 9

12 This story was not an anomaly —we consistently heard that private market rents have so outstripped t alone stable and safe incomes that families are increasingly struggling to find any kind of shelter, le Common challenges in addition to monthly rental costs included overcrowding, slum units. rds and low -quality units (“We had to move because landlo previous apartment had a wall the collapse due to leak in between apartments ”), sudden and abrupt rent increases, the inability to come up with the deposit and/or first and last month’s rent (requiring the household to live in lower cost and quality unit than they could afford based on the monthly payments), and family tensions resulting from li ving with friends or relatives. For residents with a housing choice voucher, moving into LIHTC was not specifically associated with affordability (since their rents are pegged to their st always related to the higher quality of the building compared to what incomes), but rather almo was available to a voucher holder on the private market. We also found that many tenants chose to move into the LIHTC building with an eye toward longer ter m stability and affordability. Residents noted that they m ight be paying more than 30 percent of their income in rent, but they are protected from unpredictable rent increases. Finally, many residents discussed the benefits of living in a building with mo re mission -oriented proach to property scribed the difference in the ap For example, one resident de landlords. management: ents. Bef ore, I would have “I lost my job last year, and I couldn’t make my rent paym had to move. Here, I went and talked to the resident manager, and we came up with a reduced payment plan so I could get back on my feet. They want you to succeed, so they help you when you need it.” Residents also pointed to the benefits of living in a building where efforts were being made to build community. Approximately half (54.8 percent) of residents repor ted that they socialized with other residents in the building on a daily or weekly basis, with 15.2 percent saying that they quently or at special events. Overall, 65 percent of respondents answered “yes” when interacted infre asked if residents from differ talk to and help one another. However, property ent backgrounds management seemed to make a significant difference in residents’ experiences, and not all of the sites were equal in terms of residents’ percepti ons of their property managers. At a couple of buildings, residents shared that recent changes in the property manager had contributed to increased tensions between different racial and ethnic groups within the development. For example, at one site, residents felt that the property manager was biased a gainst non -English speaking households, failing to provide them with the information they needed to understand management decisions. 10

13 In Their Own Words: Benefits of Living in a LIHTC Building Proud to show people where I live. Amazing that houses like this exist. It's so crucial to have families in this type of places, as comfortable and secure as my house is. I don't know how far in life I would have gotten. -bedroom apartment now. My old place had a lot of problem s. There were I have a two cockroaches. The old neighborhood had a lot of smoking. This is cleaner. My financials have improved since it is slight cheaper, which allows me to save. Affordable housing is very good. Where we lived before we only had 1 room. Here everyone has their own room. I have a daughter with a disability and it was hard to get her inside my previous place. Here it was easier. Everything is closer here and I have access to public transportation. I did feel like my financial situation got better when w e moved here. -$1400 in rent. It was really expensive, really old and Where I lived before I was paying $1350 I had rats and roaches. They were super strict for an old and small space. There I had 2 bedrooms. I had to rent out one of the rooms to a couple t o make rent and that was complicated. They didn't help around the house or cleaned. I was also paying for a babysitter for my 2 youngest daughter. I could barely buy food. Someone told me about this place and I applied and got right in. I was so happy! Now my rent is $890 and I have 3 rooms. I like that my children are surrounded by other cultures and are exposed to different people. I feel like they learn from them. These are spaces where people can learn to coexist and adapt to other ways of living and learn from each other. It can have a financial benefit for everyone. People that you don’t even know, you get to meet. You learn a new way of life and you give some of yours. It makes you tolerant. It’s wonderful I think. LIHTC Promotes Economic Mobili ty, but Residents Are Constrained by -Wage Labor Market Low nomic One of the key policy concerns related to subsidized affordable housing is that it limits eco First, because mobility or opportunity. The mechanisms for this ar e attributed to three factors. subsidies are means- tested, an increase in income can disqualify a household from affordable by reducing work effort. housing, there In other words, the rental subsidy may provide a disincentive to work, particularly in HUD -subsidized housing where rents Second, rease in line with income. inc residents living in affordable housing projects may not have a “culture” of work, particularly if a significant share of their neighbors are unemployed or disconnected from the labor force. Third, because subsidized units tend to be located in lower -income neighborhoods, residents of these properties may have less access to job opportunities, either because jobs are located elsewhere, or because they lack the social capital or networks to learn about job openings. 11

14 very little support for any of these theories among residen ts living in LIHTC properties. We found The majority (58 percent) of working -age LIHTC reside nts we surveyed were employed. Approximately half were employed full time, with just over 40 percent worki ng one or more part - time jobs (Figure 3) . In addition, for those who were unemployed, only 17 percent were looking for wor k but unable to find something. The majority of those who were unemployed were either in tired/disabled. school, choosing to be a stay at hom e parent, or re In addition, geographic access to Ninety percent of residents said rity of residents. employment centers was not a concern for the majo that they could easily access public transportation (only 6 percent disagreed), and 80 percent noted that they either live close to work or moving into a LIHTC building has not changed their commute. jobs. As one resident shared: Interviews similar pointed to improved transit access and proximity to “Living here is super central to other cities and job oppor tunities. It's close to shopping centers and fast food joints for jobs.” Figure 3: Employment Cha racteristics of LIHTC Residents Stay at Home Parent Unemployed: 42.2% Retired/Disabled Student Looking for a Job Employed: 57.8% Self-Employed Part Time Full Time 50 60 0 40 30 20 10 adults to pursue We also found evidence that living in a LIHTC property opened up opportunities for ild their professional skills. One of the clear benefits of living in a educational opportunities and bu nt for hile rents rise slightly over time to accou LIHTC unit is tha t the rent is relatively stable. W -subsidize d units, they are not pegged t o changes in household income. inflation, unlike in HUD As noted above, while this can lead to greater cost burdens for LIHTC residents, it also means that there is no penalty for earning more, and residents reported that the stability of rent payments allowed them to develop intentional strategies f or employment and advancement. One resident explained -off profess that she and her husband were taking advantage of the rent structure to trade ional development opportunities: working and since there are no rising “Right now only my husband is costs of rent, I was able to quit my job and concentrate i n my studies. There is no worrying about being able to pay for rent. We can make it with his income and I can finish school. When I am done 12

15 I will be able to contribute a lot more. Then he can go to school. [I]f I were living with nursing school, elsewhere I wouldn't be able to do this.” We found that over a third of respondents articulated some form of economic mobility strategy for themselves —from learning Engl ish to going back to school — and that they linked this strategy directly to the benefit of living in affordable housing. Residents also articulated a relationship between housing quality and more intangible feelings aro und the motivation to succeed. One re sident said: “I feel more excited about life. This place is like an incentive to push forward. My financial situation has gotten better, because when you see something so nice, you just want to go forward not backwards.” However, the surveys and interview bs in lower -skilled s also revealed the precarious nature of jo industries. The challenge for these households i sn’t necessarily finding work —it’s finding work that pays a living wage and that pr ovides stability and benefits. Among employed LIHTC residents, jobs tended to be in lower skilled and lower paid industries. Common occupations included service work (restaurants, retail, hotels), domestic work (cleaning and caretaking), manufacturing (assembly and warehousing), education (teacher’s aides and presch ool teachers) and construction. Approximately half of working residents earned less than $35,000 a year, with 20 percent earning between $35,000 In other words, families were earning well and $50,000, and 10 per cent earning more than $50,000. onal poverty rate, yet in California’s high cost markets, these incomes were insufficient above the nati to effectively afford housing in the private market. Figure 4: The Job Characteristics of LIHTC Residents 60.0 50.0 40.0 30.0 20.0 10.0 0.0 No Regular No Paid Sick Does Not Pay No Health No Overtime No No Paid Working Hours Days Minimum Vacation Opportunities Insurance Wage for Advancement s or opportunities to get In addition to low wages, residents noted that many jobs lacked key benefit . More than half of employed residents did not have health insurance, and more (Figure 4) ahead than a third of jobs did not include paid vacation, overtime, or opportunities for advancement. -five percent o Twenty f residents reported that their jobs did not provide regular working hours, and that their income fluctuated based on how many hours they were al located each week. Interviews also revealed signifi cant instability in their jobs. As one resident explained, “ Maybe the first phrase I 13

16 learned in English is “you’ve been let go.” My friends and I, we’re often In Their Own Words: after six months looking for work Housing and Economic Mobility because a job has ended and you have If you don't have basic needs covered, you can't move up to find a new one.” Respondents also to the top of the pyramid. This property provided that connected this income instability with for me and my children. I was able to get my GED, AA, BA and work due to this stability. I am currently trying housing instability. One resident said to get into a master's program as well. to moving in to a LIHTC that prior “You building, her life was a series of: I wish everyone would have an opportunity to get an Each ob, you have to move. lose your j apartment in affordable housing. With my experience, immigrants are working to pay for rent and they cannot ord less. And the kids time you can aff concentrate in their kid's studies, learning the language suffer.” In addition, residents who or working towards becoming permanent residents. reported being unemployed but Being able to live in this type of housing allows them to “looking” tended to have significant be able to do all of this. barriers to work, including childcare as Has been a nice foundation, has given us security, can well as educational and language pay for gas and pay rent, and can pay for credit cards. se barriers and the barriers. The Makes a big difference to have a stable house, when not -wage and precarious nature of lower worrying about making rent, can work on other lower -skilled jobs suggest that projects. Can learn new skills, was able to work on supporting residents’ educational and English and then was able to get a better job, grateful professional development and for opport unity, the quality of life has improved for the whole family. providing wraparound services to help stabilize employment would in turn There are very few job options for someone like me, with ility. promote greater housing stab little experience. If you have been out of the market, it's hard, unless you know someone. I would say the real A Significant Share of LIHTC benefit has been being ab le to stay at home and care for my kids. Youth Are Headed to College, I feel safer here. Knowing that my kids are safe and but Challenges in the there is no violence around makes it easier for me to Educational System Remain leave for work. In addition to exploring the links between LIHTC and economic mobility for adults, we were also interested in understanding the links between a ffordable housing and ch ildren’s educational outcomes. Housing segregation and school segregation are deeply intertwined, and there is a strong gregation and school correlation between levels of neighborhood poverty and racial and ethnic se quality. As a re sult, if LIHTC properties are located in higher poverty neighborhoods, then children may not be accessing the best schools. Moreover, affordable housing developers are increasingly recognizing that investments in buildings need to be coupled with investments in human capital, and CCRC as well as many developers offer scholarship programs for youth living in their buildings. One of the goals of this study was thus to understand how LIHTC residents perceive the educational well as to empirically measure the quality of schoo opportunities for their children, as ls that LIHTC 14

17 residents attend. The studies that have focused on LIHTC and educational access have tended to look well as charter at the characteristics of neighborhood schools, but the rise of school choice policies as To better assess educational schools means that not all students attend their neighborhood school. opportunities, we asked each interview respondent to provide the ages and schools atten ded for each of their children. We then matched these data with data from the California Department of ation on school level outcomes. Educ -depth interview questions also prompted residents Our more in to provide more det ail on their perceptions of their children’s education and their ac ademic trajectories. Seventy -eight percent of our sample had children, with the vast majority (95 percent) with school or college -aged children living with them at th e property. Overall, the surveys and interviews painted a positive pictu opportunity. Seventy -five percent of respondents reported being re of educational happy with their children’s school. This was significantly higher than our initial expectations. We also found that overall, the schools that LIHTC residents in our sample attend are comparabl e to the California average (Figure 5) . Metrics that were lower for the schools that LIHTC youth attended included English proficiency, high school graduation rat e, and teacher experience. But the schools that LIHTC youth attended were less likely to expel or suspend students, and they also had a slightly tate and e them eligible for California S higher rate of students taking coursework that would mak We did not find a correlation between neighborhood poverty rates California schools. University of and eithe r the parents’ perceptions of their children’s school or the empirical measures of the schools the children attended, although there was one high school in a high poverty neighborhood that stood out as having both significantly lower outcomes and parental concerns than the other schools. Figure 5: Characteristics of LIHTC Resident Schools Compared to California Average 90.0 80.0 70.0 60.0 50.0 40.0 Percent 30.0 20.0 10.0 0.0 UC/CSU Teacher English Math HS Elementary High School Eligibility Proficiency Experience Proficiency Graduation Discipline Truancy Rate Rate California Average LIHTC Residents One reason for this disconnect between empirical measures of “neighborhood schools” and the is that parents demonstrated a lot of agency and quality of the schools LIHTC students attended Nearly a third of the children in our sample problem solving as it related to their children’s school. attended a school other than the public school in their neighborhood, with 20 percent attending a 15

18 publi c charter school, 5 percent attending a magnet public school, and another 5 percent attending a hurch). private school (in general, one associated with the Catholic c At one of the properties, residents engaged in a lively discussion about how they share in formation about the “good” and “bad” schools within the Long Beach Unified School district, and that they help fellow residents navigate the school district bureaucracy so that the children can get into the best school, while others shared that they had be nefited from the lottery or school assignment system that allowed their ools outside the neighborhood. children to attend better sch Yet this school choice also can put a burden on the childre n, who have to commute further. For example, one resident said th at her son attended school in another part of Los Angeles, but that “he had to be bused far away. I had to worry about him. I had to pay for public transportation. There was no school bus for him. It was a big hazard. Both of my kids had to go to schools f ar away.” Several interviews revealed that parents wished that the neighborhood school was better, even if they were currently happy with their child’s education. One of the more positive educational findings from o ur study was that among college -aged chil dren, nearly 60 percent were currently enrolled in college, and more than half were enrolled in a four -year college (as opposed to a technical school or community college). Interviews revealed the important role of secure housing and resident services in c reating an environment where college was not only attainable but expected. Across the 180 interview responses, the most common theme that emerged was that housing stability was the most important factor that parents attributed to their children’s success. “We have had housing stability and haven't had to jump around like we One resident said: were before. Kids are ab Although not all the properties we surveyed le to remain in same schools.” provide extensive residents services, 45 percent of residents at pro perties with a resident services program on -site said that their children had attended programs, including ch ildcare, tutoring, college prep or summer camp activities. Overall, parents attributed resident services with improvements in their child’s perform ance at school (66 percent), with teaching their children an orientati on towards college (72 percent) and in improving behavior (93 percent) and self -confidence (64 percent). However, not all the responses related to educational opportunities were positive . There was a significant share of responses (23 percent) that highlighted parental concerns about neighborhood schools and particularly about the peer influences related to drugs , gangs and premarital sex. This was particularly true for parents -school aged children. There was also a pervasive concern of high about school district policies, with parents expressing frustration at the lack of investment that was going into neighborhood schools, as well as policies that seemed arbitrary and that had a nega tive impact on LIHTC families. At one of the properties, the district had changed the school assignment policy, and many of the families were upset because it meant that their younger children were no longer eligible for the magnet school that the ir older children had attended. One resident said: “It’s really bad. Now I have to take my kids to two different places, and you can see that the older one is getting much better schooling.” Others noted the difficulties of navigating school bureaucracies, a nd nting under -resourced schools. the systemic challenges confro 16

19 In Their Own Words: LIHTC and Educational Opportunity Her access to college has improved. It's given her a more positive attitude. ool. Children participate in property Really positive because no gangs or violence. Close to sch programs when they are provided. If I stayed in Richmond it would have been tough keeping him away from the wrong crowd. He has a 4.0. I tell him that we need scholarships for college so to keep up the grades. He is a really good kid. Environment made a difference. It's been a positive experience for my kids. My daughter has a 4.4. She is in an engineering academy and wants to apply to Stanford. My son is in a Spanish immersion school and I really like it. It was a lot tery school and he has stayed there since before we moved here. What I like about the schools are the different variety of resources they provide. It's very cultural (the district itself). They emphasize culture, community and advancement. ys little things, but it has been mostly positive. They have had good education in There are alwa general. We are pushing for better programs. My daughter is receiving a scholarship. They all es. I am have good grades. I think me being around has helped for them to have good grad always motivating them and letting them know they can do it. My husband and I decided to make a sacrifice. I don't work and thus I cannot make money, but I stay at home and I have time to take care of my children and that has paid off. on the child It depends —in a rougher neighborhood, it depends who you hang around with. So one son ran into some people and maybe had a bad experience, but then my daughter used a lot of the services here and activities. Since we moved here, I started seeing college as an opportunity for my son. I hadn't thought of it before. I didn't think something better was possible. Now, he goes to college. I also feel like this environment makes them safe. Here they have their own space. This gives them privacy and more space to play. I feel like they have a chance to have a better life. To have more aspirations. Most Residents Like Their Neighborhood, but Residents Have a More Nuanced View of Neighborhood Opportunity Than Data Can Capture study is that residents often learn about the opportunity to One of the insights to come out of this move into a LIHTC building because they knew somebody living there or because they already l ived in the same neighborhood. About a third of residents surveyed had a friend or family member livin g in the property or in another property run by the same developer, while another 28 percent learned . We thus found that d by it” as it was being built (Figure 6) about the building because they “walke 17

20 moving into LIHTC did not change neighborhood quality for most residents: almost half of survey respondents had been living in the exact same neighborhood before moving into their LIHTC unit, and 70 percent were living in a neighborhood with the same pover ty rate as they had before moving into LIHTC. Neighborhood characteristics overall were less important than other factors in choosing to live in LIHTC: only 10 percent said that the neighborhood was the most important factor in their decision (80 percent said the most important factors were affordability and unit size), but approximately half said that neighborhood quality was important to them in where they lived. Figure 6: How Residents Learned About the LIHTC Property 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Percent of Respondents We found that most residents had strong ties to the neighborhood, and judged their neighborhood positively. Figure 7 summarizes the responses to questions re lated to neighborhood quality. Overall, ity to residents rated their neighborhood positively across multiple dimensions, including proxim and access to fresh fruits and vegetables. amenities such as trans portation, parks and open space “Close to work” ranked lowest, but in part that was due to a high proportion of responses selecting that they didn’t have either a positive or negativ e assessment of their proximity to their jobs. 18

21 Figure 7: Respondent Perceptions of Neighborhood Characteristics 100 90 80 70 60 50 40 30 20 10 0 Close to Work Feel Safe in the Fresh Fruits and Transportation Parks and Open Close to Friends and Relatives Neighborhood Vegetables Space Agree Neutral Disagree We also found no significant statistical association between measurable neighborhood conditions es captured in survey, shedding light on the challenges of (e.g., poverty rate) and the experienc ay that matters for residents. measuring neighborhood conditions in a w In other words, along all six dimensions of neighborhood quality, there was no statistical correlation between those who rated their neighborhood positively and the neighborhood poverty rate. For example, residents who “disagreed” with feeling safe in the neighborhood, or “disagreed” with the statement that there were parks and open spaces nearby, were no more likely to live in a neighborhood with a higher poverty rate or fewer parks than those who said they “agreed” that they felt safe or did have access. Rather, it appeared that some residents were generally more positive about the neighborhood, with others feeling less positiv e. Interviews revealed some clues as to why there was such a strong disconnect between the survey answers and empirical measures of neighborhood quality. First, interviews revealed a very strong were living in, and an aversion to place attachment among residents to the neighborhoods they moving “away” despite recognizing the shortcomings of where they lived. Interview responses tended to provide a balance of “I love it here but it is very polluted,” or “I wish we could do something about the gangs but I am very happy with my community.” They were also more likely to attribute the neighborhood problems to structural factors related to other systems than they were to the poverty rate of residents. Residents consistently asked us why the government wasn’t do ing more p the air quality or to build more affordable housing in the neighborhood, fix the school, clean u Several also pointed to the community development value of the property, noting improve the parks. neighborhood, and that the associated that the building was the “nicest housing” in the improvements, including landscaping and play spaces, were helping to “improve the community.” Second, this place attachment was particularly strong for immigrant respondents, who felt like the neighborhoods provided st Indeed, some of the clearest rong ti es to their cultural heritage. 19

22 distinctions between the LIHTC neighborhoods we surveye on d and California neighborhoods “ 34 Table 2 compares the LIHTC average” is that neighborhoods have a large immigrant population. the properties we surveyed with the characteristics of the average California census tract, showing that these tracts tend to have a significantly lower percentage of citizens, English speakers, and levels of voter participation. As such, residents saw these neighborhoods as important “enclaves” of families like themselves, and noted the benefits of having easy access to service organizations, in stitutions with bilingual staff and a shared sense of values among residents in both t he property an d the surrounding neighborhood. Third, the interviews revealed that residents had a much more nuanced view of neighborhood ical data often let us capture. conditions than empir -income, and in particular being a Being low person of color, resul ned with researchers’ ts in risks and burdens in ways that aren’t always alig metrics. For example, residents at one property said their biggest neighborhood concern was that the local transit agency had moved the local bus stop, from a corner right outside the property management of fice to a corner a block away. One resident explained: “The new bus stop, i t’s in front of a crack house. So now we can’t l et our kids go to the bus stop. It’s not safe. Before, they could wait for the bus, and the prop erty manag er, kept an eye out. Now they make u s unsafe.” Indeed, routes to and perceptions about the extent to school or work, places they had to undertake every day activities, n overall which they were welcome in local public spaces were much more important to residents tha er opportunity” neighborhood conditions. These concerns were not alleviated in “high neighborhoods. As one resident , a Muslim woman living in one of the LIHTC properties located in a orhood, shared: -poverty neighb lking on the street or going to the “I feel very unsafe here, wa lower park.” Finally, the research pointed to the need to see neighborhoods as dynamic and multifaceted. While often in tracts with a higher poverty rate, the LIHTC properties we surveyed were located in neighborhoods with bet ter access to jobs, as well as proximity to prenatal care, health care the availabilit y, and access to supermarkets (Table 2) . The exception is bank access, though difference here is slight. ng needs. However, these neighborhoods also have sign ificantly higher housi As Table 2 shows, neighborhoods with LIHTC units have much higher rates of overcrowding, higher tween incomes and house prices. We also found that house prices — cost burdens, and a wider gap be and in particular rents —have been rising more rapidly in neighborhoods surrounding LIHTC properties, meaning that the existing units are preserving affordability in neighborhoo ds experiencing gentrification, which helps to protect lower -income residents from displacement as a result of neighborhood change. 20

23 Table 2: Neighborhood Characteristics for LIHTC Properties d to Other Tracts in California Compare California LIHTC Neighborhood Properties Characteristics Census Tracts Definition of Metric Access to Employment 57.9 59.7 Percentage of workers whose commute time is Commute Time less than 30 minutes. Employment Rate 89.2 89.4 Percentage of adults age 20 - 64 employed. 699 mile - 783 Number of jobs per 1,000 people, within a 5 Job Availability radius. 46.3 40.3 mile - paying jobs, within a 5 - Percentage of high Job Quality radius. Access to Amenities 83.9 83.2 Percentage of mothers who received prenatal Prenatal Care care in first trimester. Number of banks and credit unions per 1000 0.24 0.23 Bank Access people, within a 5 -mile radius. Percentage who live within 1/2 mile (urban) or 10 53.1 53.8 Supermarket Near miles (rural) of supermarket. 1.7 Number of locations providing basic medical 1.8 Health Care Avail. services per 1000 population within 5 mile radius. 86.4 85.1 Percentage of citizens, over age 1, who live in the Neigh. Stability same residence as the previous year. Citizenship 82.6 Percentage of adults who are U.S. citizens. US Citizens 69.4 who speak only 81.1 88.1 Percentage of citizens, age 18 - 64, English Speakers English or speak English "well" or "very well". Percentage of citizen, voting age population that 23.9 30.7 Voting Rates voted in 2010. Housing Percentage of households in which residents own 37.9 55.2 Homeownership their own home. 81.9 90.6 Percentage of households with no more than 1 Housing Adequacy occupant per room. Housing Ratio of median income of census tract to 0.14 0.19 Affordability median value of dwellings in census tract. Percentage of homeown 51.7 44.2 ers and renters for whom Housing Burden housing is less than 30% of household income. 21

24 In Their Own Words: LIHTC and Neighborhood Quality The neighborhood is changing. There are a lot of new families moving in, and rents are going up. I’m happy I know I can stay —this is where my friends are, where my kids go to school. We’ve lived in this neighborhood a long time. I’m scared for those who can’t stay. It's easier to get to my job and I have more time, so I could pick up my child. I am so close to my work and never late . I had this job before living here but also had the stress of the commute. So living here has alleviated the stress. Growing up we went to the community center up the street. The community center location was a big factor and huge reason for moving here. My parents like this area so they didn't want to move. My friend said this neighborhood isn't good but it is. I lived in this neighborhood before. I like that it is safe. The neighborhood itself has problems. There are drug dealers outside. But it’s conve nient to everything, and when you walk in the door, it’s like stepping into another world. I let my kids play in the inner courtyard, so they don’t need to be at the park. llution. The A few of my friends and I here are trying to get the city to pay attention to the po trucks and shipping make for very bad air quality. I’m interested in environmental justice. We should have better environmental quality. Policy Implications Overall, this research points to the fact that, i n many ways, LIHTC is working. We fo und that in California, LIHTC properties play an important role in stabilizing families in high -quality housing, allowing them to focus on education, employment, and other dimensions of economic mobility. he promise of stable, affordable rent ove Indeed, t r the long -term led many residents to invest in their professional development (e.g., by pursuing an advanced or technical degree or by learning English) and helped them to keep their jobs by reducing involuntary moves. Parents consistently reported outcomes for their children as well, and while there were concerns raised about the quality of better local schools, many parents had figured out how to best address their child’s educational needs, and significant share of children who were 75 percent were happy wi th their children’s education. The planning to (or attending) college was also a positive finding. In addition, e ven in neighborhoods with higher rates of poverty, LIHTC developments are providing vate than what is available in the pri better housing quality and stronger property management od prior to moving The majority of residents already lived in the same or similar neighborho market. icest building We repeatedly heard that the LIHTC property was a “safe haven,” the “n into LIHTC. for miles around Many respondents pointed to their d “you walk in the door and you ” an feel safe.” 22

25 LIHTC property as a stabilizing force not only for themselves and their families, bu t for the Residents themselves see the community development value of LIHTC, and neighborhood as well. they have a strong often expressed a desire to see more investment in neighborhoods to which attachment. Especially for immigrant respondents, LIHTC properties were located in neighbor hoods where they felt “at home,” often because of a significant presence of other immigrants and associated servi ces and cultural institutions. These findings do not undermine the recent decision to integrate fair housing into California’s QAP regulations —as Justice Kennedy recognized, we should be doing more to undo the legacy of residential segregation, and housing policy, including the siting of LIHTC buildings, has a role to play in that effort. Although the majority of residents had positive experience s (and had no desire to move elsewhere), other residents did share concerns about the neighborhood an d their children’s well- being. Providing low -income residents with more housing choices will allow them to make decisions that benefit their unique circumstances and needs. But, it’s important to acknowledge that simply focusing on where LIHTC buildings are located will not necessarily lead to better outcomes for residents. First, most residents find their units because they are already living in the same neighborhood —this means that if we hope that locating LIHTC properties in higher resourced places will help improve the choice set for low -income families, we need to be more intentional about marketing strategies and connecting residents in high poverty orhoods to those new buildings. In addition, if the state of California is really committed to neighb advancing fair housing goals, it should also continue to direct attention to the larger set of land use n where developers can find suitable sites and/or and housing policies at the city level that constrai obtain affordable housing entitlements. Without more proactive polices that ensure cities are adequately identifying and zoning land for multifamily housing, and without reforms to the ways in which more af fluent communities allow for housing overall, the revised QAP is unlikely to address the historical shortfall in LIHTC projects in prosperous areas on its own. Second, while some residents did have concerns related to neighborhood and schools, we did not find much evidence that it was neighborhood conditions or access to social networks and a culture of Theories that low -income households “work” that was limiting op portunity or economic mobility. e presence of middle -class ‘role models’ lack the social networks to connect them to jobs, and that th 35 will help to promote mainstrea m social norms and expectations were largely developed through ed public research on public housing residents, as well as on residents living in the most distress housing developments. In our research, we found that most LIHTC residents have strong social networks and do work: 60 percent of adult residents surveyed were employed, with only 7 percent unem ployed and unable to find work. In California at least, LIHTC residents represent a d iverse spectrum of working households, who appear to be more constrained by conditions in contemporary labor markets —including low wages, variable work hours and limited benefits —than by the lack of resourced” neighborhoods is insufficient to motivation or social networks. Siting housing in “highest address the structural inequalities in the labor market nor will it overcome continued cuts to education and/or the social safety net. 23

26 In addition, the finding that even with jobs, most residents still struggle with housing affordability -term trajectories of LIHTC residents as well as for has important implications for the long ousing markets more generally. The middle rungs of the housing ladder are missing. California’s h The gap between wages in the lower -skilled sectors of the labor market and housing costs means that ordable in the private market. As a result, more very few families are able to find housing that is aff than a third of respondents had lived in their LIHTC unit for more than 9 years, and just over half of respondents (54 percent) were the original residents of the building from when it opened its doors. LIHTC is thus providing deep and long -term subsidies to some households, but it is unlikely that these residents will ever have the si gnificant wage growth needed to move out and open up the u nit to someone new. Unless there is more attention to how to increase the supply of housing, as well as develop new financing mechanisms that can support the expansi on of housing for those at 80 -120 percent of AMI, it is unlikely that LIHTC units will serve as a platform for mobility into the unsubsidized housing market. Third, property management really matters to the resident experience, and we found that this could be u neven across the developments. In interviews, residents discussed challenges with high turnover among property manageme nt or resident services staff. At some developments, it was clear that residents were deeply appreciative and had strong connections to the property manager, but i n other cases, we also heard reports of property managers who held racist views of some residents and who didn’t communica te rules or rents effectively. For example, at one development we heard that the manager “ belittles many of the tenants, especially pe ople who don't have English as a first language. Because it's affordable housing, they think they can treat us however... I think a lot of residents are As LIHTC developments across afraid of speaking up because they're w orried they'll get kicked out.” the diversity of religious, racial and ethnic state increasingly serve residents coming from a backgrounds, it will be important to ensure that property managers have the skills and training to be aware of their own biases as well as to help them develop strategies for establishing shared 36 community norms. Finally, as housing is increasingly being seen as a critical platform for health and economic mobility, LIHTC is also increasingly being leaned on to accomplish a much wider range of policy goals tha n just a safe, affordable home. California’s QAP is indicative of this trend: in order to be competitive, projects need to expand access to “high opportunity” neighborhoods (including proximity to grocery stores and parks), to offer the highest quality residential services, to exemplify the high est standards 37 -oriented development of green building and to align with the principles of transit . These are all laudable goals, and represent the state’s commitment to the well -being of low -income families as well as to con cerns about climate change. But by continually layering these goals onto the construction of affordable housing, there is a risk that the levels of subsidy that will be needed to households at the build one unit will become unsustainable, or that we increasingly house a few expense of the many who need assistance. While ensuring that LIHTC continue s to deliver high - quality, well -managed and well- financed units is critical, the research here at least suggests that one portunity is a safe, affordable place to live. of the most important foundations for op 24

27 References 1 U.S. Department of Housing and Urban Development. ( ow -Income Housing Tax Credits.” Retrieve from: 2017 ). “L https://www.huduser.gov/portal/datasets/lihtc.html. 2 (2014 ). Housing Policy in the United States . 3 edition. New York: Routledge. F. Schwartz, A. 3 ). “The Effects of Exposure to Better Neighborhoods on Children: New Evidence & Katz , L . (2015 N., Chetty, R. , Hendren, from the Moving to Opportunity Experiment.” Working Paper 21156. National Bureau of Economic Research. . Retrieved from: http://www.nber.org/papers/w21156 . J., Levy , D. K., & Buron, L. (2009 ). “Has Hope VI Transformed Residents’ Lives? New Evidence From The Hope Popkin, S Housing Studies –502. Retrieved from: 24 (4): 477 VI Panel Study.” https://doi.org/10.1080/02673030902938371. 4 Note that HOPE VI and MTO were disproportionately targeted to “superblock” public housing projects in large cities that tended to be more significantly distressed and isolated than the majority of public housing developments. A large share of ousing stock in other cities is represented by smaller properties and effective, if underfunded, property the public h . operations and management 4 Goetz, E. G. (2011 ). “Where Have All the Towers Gone? The Dismantling of Public Housing in U.S. Cities.” Journal of –287. Affairs 33 (3): 267 Retrieved from: Urban https://doi.org/10.1111/j.1467 -9906.2011.00550.x. 5 Ellen, I. G., O’Regan, , I. (2009 ). “Siting, Spillovers, and Segregation: A Re- Examination of the Low -Income K. M., & Voicu Housing Housing Tax Credit Program.” In Markets and the Economy: Risk, Regulation, Policy; Essays in Honor , 233 –67. Cambridge, MA: Lincoln Institute of Land Policy. of Karl Case 6 The Secretary of HUD designates DDAs, which are areas with high construction, land and utility costs relative to area median gross income. Qualified Census Tracts are defined as those with at least 50% of households earning incomes less than 60% of the area median income or that have poverty rates of 25% or more. More information can b e found at: https://www.huduser.gov/portal/datasets/qct.html 7 Williamson, A. R., Smith, M. T., & Strambi- Kramer , M . (2009 ). “Housing Choice Vouchers, the Low -Income Housing Tax Credit, and the Federal Poverty Deconcentration Goal.” 45 (1): 119 –32. Urban Affairs Review 8 Tax Credit Allocation Committee. ( 2017 ). “California Tax Credit Allocation Committee Regulations Implementing the Federal and State Low -Income Housing Tax Credit Laws.” California Code of Regulations, Title 4, Division 17, Chapter 1. Sacram ento, CA: California Tax Credit Allocation Committee. http://www.treasurer.ca.gov/ctcac/programreg/2017/20171213/clean.pdf. 9 Chetty, R., Hendren, N., & Katz, L. (2015). “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment.” Working Paper 21156. National Bureau of Economic Research. . Retrieved from: http://www.nber.org/papers/w21156 ). “The Mechanisms of Neighborhood Effects: Theory, Evidence, and Policy Implications.” In Galster, G . C. (2012 , edited by Maarten van Ham, David Manley, Nick Bailey, Ludi Neighbourhood Effects Research: New Perspectives Simpson, and Duncan Maclennen, 23 –56. Dordrecht ; New York: Springer Science+Business Media B.V. Retrieved . http://dx.doi.org/10.1007/978- 007 -2309 -2 from: 94- I. G., & Turner Ellen, (1997 ). “Does Neighborhood Matter? Assessing Recent Evidence.” Housing Policy Debate 8 (4): , M.A. 833 –66. Retrieved from: https://doi.org/10.1080/10511482.1997.9521280. 10 Horn, K. M. & O’Regan , K. M . (2011) . “The Low -Income Housing Tax Credit and Racial Segregation.” Housing Policy Debate Retrieved from: https://doi.org/10.1080/10511482.2011.591536. –73. 21 (3): 443 11 . (2011) . “Low -Income Housing Tax Credit Developments and Neighborhood Change: A Case Study of M iami- Dade Deng, L . Housing Studies 26 (6): 867 –95. Retrieved from: https://doi.org/10.1080/02673037.2011.593130 County.” Dawkins, C . (2013 ). “The Spatial Pattern of Low -Income Housing Tax Credit Properti es: Implications for Fair Housing and –34. Poverty Deconcentration Policies.” Journal of the American Planning Association 79 (3): 222 Retrieved from: https://doi.org/10.1080/01944363.2014.895635. -Snow, N. & Marion . (2009 ). “The Effects o f Low -Incom e Housing Tax Credit Developments on Neighborhoods.” Baum , J 93 (5 –6): 654 –66. Retrieved from: Journal of Public Economics https://doi.org/10.1016/j.jpubeco.2009.01.001. Williamson, A. R., Smith, M. T., & Strambi -Kramer, M. (2009). “Housing Choice Vouchers, the Low -Income Housing Tax Credit, and the Federal Poverty Deconcentration Goal.” Urban Affairs Review 45 (1): 119 –32. 12 Baum -Snow, N. & Marion, J. (2009). “The Effects of Low -Income Housing Tax Credit Developments on Neighborhoods.” Journal of Public Economics 93 (5 –66. Retrieved from: https://doi.org/10.1016/j.jpubeco.2009.01.001 . –6): 654 L. (2004 Freeman, -Income Housing Tax Credit ). “Siting Affordable Housing: Location and Neighborhood Trends of Low Developments in the 1990s.” Washington D.C.: Brookings Insti tution. Retrieved from: https://www.brookings.edu/research/siting -affordable -housing -location -and -neighborhood -trends -of-low - income- housing -tax -credit -developments -in-the -1990s/. 25

28 2000 ). “Assessment of the Economic and Social Characteristic Abt Associates. ( s of LIHTC Residents and Neighborhoods: Final Report.” Washington D.C.: US Department of Housing and Urban Development, Office of Policy Development and Research. Retrieved from: https://www.huduser.gov/portal/publications/affhsg/lihtc.html. (2008 )a. “Deconcentrating Poverty With Housing Programs.” Journal of the American Planning Association 74 McClure, K. Retrieved from: https://doi.org/10.1080/01944360701730165. (1): 90 –99. 13 Freeman, L. ( 2004 ). “Siting Affordable Housing: Location and Neighborhood Trend s of Low -Income Housing Tax Credit Developments in the 1990s.” Washington D.C.: Brookings Institution. Retrieved from: -affordable -housing -location -and -neighborhood -trends -of-low - https://www.brookings.edu/research/siting housing income- -credit -developmen ts-in-the -1990s/. -tax 2013 -Income Housing Tax Credit Properties: Implications for Fair Housing and Dawkins, C. ( ). “The Spatial Pattern of Low Poverty Deconcentration Policies.” Journal of the American Planning Association 79 (3): 222 –34. Retrieved from: //doi.org/10.1080/01944363.2014.895635. https: ” , D ). “The Low ‐ Income Housing Tax Credit An Analysis of the First Ten Years. . (1999 Cummings, J. L. & DiPasquale Housing Policy Debate 10 (2): 251 –307. Retrieved from: https://doi.org/10.1080/10511482.1999.9521332. Oakley, D . (2008 ). “Locational Patterns of Low -Income Housing Tax Credit Developments.” Urban Affairs Review 43 (5): 599 –628. , S. & Mhatre . (2009 ). “Growing Pains: Perpetuating Inequality Through the Production of Low -Income Van Zandt , P.C allas/Fort Worth Metroplex.” 30 (5): 490 –513. Retrieved from: Housing in the D Urban Geography -3638.30.5.490. https://doi.org/10.2747/0272 14 Housing Policy Debate Ellen, I. G., & Turner, M.A. (1997). “Does Neighborhood Matter? Assessing Recent Evidence.” 8 –66. Ret rieved from: https://doi.org/10.1080/10511482.1997.9521280. (4): 833 15 Freeman, L. (2004). “Siting Affordable Housing: Location and Neighborhood Trends of Low -Income Housing Tax Credit Developments in the 1990s.” Washington D.C.: Brookings Institution. Retrieved fr om: https://www.brookings.edu/research/siting -affordable -housing -location -and -neighborhood -trends -of-low - income- housing -credit -developments -in-the -1990s/. -tax (2008 )a. “Deconcentrating Poverty With Housing Programs.” Journal of the American Pla nning Association 74 McClure, K. (1): 90 –99. Retrieved from: https://doi.org/10.1080/01944360701730165. 16 Horn, K. M. & O’Regan, K. M. (2011). “The Low -Income Housing Tax Credit and Racial Segregation.” Housing Policy Debate 21 (3): 443 –73. Retrieved from: https://doi.org/10.1080/10511482.2011.591536. 17 Deng, L. (2011). “Low -Income Housing Tax Credit Developments and Neighborhood Change: A Case Study of Miami -Dade . County.” –95. 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Retrieved from: https://civilrightsproject.ucla.edu/research/metro- and -regional- inequalities/housing/the- oppor tunity -illusion -subsidized -housing -and -failing -schools -in-california. 21 Ellen, I . G. & Horn , K. M . (2012 ). “Do Federally Assisted Households Have Access to High Performing Public Schools?” New York, NY: NYU Furman Center. 22 Nguyen, dable Housing Detrimentally Affect Property Values? A Review of the Literature.” ). “Does Affor M.T . (2005 20 (1): 15 Journal of Planning Literature Retrieved from: https://doi.org/10.1177/0885412205277069. –26. 23 Schwartz, A ). “The Low -Income Housing Tax Credit, Community Development, and Fair Housing: A Response to . (2016 Housing Policy Debate 26 (2): 276 –83. Retrieved from: Orfield et Al.” https://doi.org/10.1080/10511482.2016.1126469. 24 K-N. , Horn , K.M., Dillman, , A . (2017 ). “The What, Where, and When of Place- Based Housing Policy’s & Verrilli . 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29 Ellen, I. G., O’Regan, K. M., & Voicu, I. (2009). “Siting, Spillovers, and Segregation: A Re -Examination of the Low -Income Housing Tax Credit Program.” In Housing Markets and the Economy: Risk, Regulation, Poli cy; Essays in Honor of Karl Case , 233 –67. Cambridge, MA: Lincoln Institute of Land Policy. 25 Deng, L. (2011). “Low -Income Housing Tax Credit Developments and Neighborhood Change: A Case Study of Miami -Dade . County.” Housing Studies 26 (6): 867 –95. Retrieved from: https://doi.org/10.1080/02673037.2011.593130 26 Diamond, R. & McQuade, T. (2016). “Who Wants Affordable Housing in Their Backyard? An Equilibrium Analysis of Low Income Property Developmen t.” Working Paper 22204. National Bureau of Economic Research. Retrieved from: . https://doi.org/10.3386/w22204 27 -Income Housing Tax Credit and Racial Segregation.” Horn, K. M. & O’Regan, K. M. (2011). “The Low Housing Policy Debate 21 (3): 443 –73. Retrieved from: https://doi.org/10.1080/10511482.2011.591536. 28 -Income Housing Tax Credit Developments on Neighborhoods.” Baum -Snow, N. & Marion, J. (2009). “The Effects of Low . 4–66. Retrieved from: Journal of Public Economics 93 (5 –6): 65 https://doi.org/10.1016/j.jpubeco.2009.01.001 Freedman M. & McGavock T. ( ). “Low ‐ Income Housing Development, Poverty Concentration, and Neighborhood 2015 ” –34. 34 (4): 805 Inequality. Retrieved from: Journal of Policy Analysis and Management https://doi.org/10.1002/pam.21856. 29 Freedman M. & McGavock T. (2015). “Low ‐ Income Housing Development, Poverty Concentration, and Neighborhood Inequality. ” Journal of Policy Analysi s and Management 34 (4): 805 –34. Retrieved from: https://doi.org/10.1002/pam.21856. 30 O’Regan, K . M. & Horn , K.M . (2013 ). “What Can We Learn About the Low -Income Housing Tax Credit Program by Looking at the Tenants?” Housing Policy Debate 23 (3): 597– 613. Retrieved from: https://doi.org/10.1080/10511482.2013.772909. 31 A few earlier studies focused on tenants include a GAO study for a randomly selected 423 tax -credit projects placed in service between 1992 and 1994, an Abt Associates survey of 39 LIHTC properties placed in service between 1992 and 1994 in five metropolitan areas, and two studies on LIHTC residents in Florida, which includes 311 developments. 31 U.S. Government Accountability Office. ( 1997 e Low -Income ). “Tax Credits Opportunities to Improve Oversight of th Housing Program.” Washington D.C.: U.S. Government Accountability Office. Retrieved from: . https://www.gao.gov/products/GGD/RCED -97 -55 ). “Assessment of the Economic and Social Characteristics of LIHTC Residents and Neighborhoods: Abt Associates. ( 2000 Final Report.” Washington D.C.: US Department of Housing and Urban Development, Office of Policy . Development and Research. Retrieved from: https://www.huduser.gov/portal/publications/affhsg/lihtc.html Williamson, A. (2011 ). “Can They Afford the Rent? Resident Cost Burden in Low -Income Housing Tax Credit R. Urban Affairs R eview 47 (6): 775 –99. Developments.” Retrieved from: https://doi.org/10.1177/1078087411417078. Smith -Income Housing Tax & Strambi- Kramer , M . (2009 ). “Housing Choice Vouchers, the Low Williamson, A. R., , M.T., Urban A ffairs Review 45 (1): 119 –32. Credit, and the Federal Poverty Deconcentration Goal.” 32 At two of the sites we conducted focus groups with residents instead of interviews, and at two of the sites the survey was distributed to residents on paper. 33 O’Regan, K. M. & Horn, K.M. (2013). “What Can We Learn About the Low -Income Housing Tax Credit Program by Housing Policy Debate 613. Retrieved from: Looking at the Tenants?” 23 (3): 597– https://doi.org/10.1080/10511482.2013.772909. 34 al immigrants and refugees, not those who are undocumented. These data reflect leg 35 Joseph, M. L., Chaskin, R. J., & Webber , H.S . (2007 ). “The Theoretical Basis for Addressing Poverty Through Mixed - Income Development.” Urban Affairs Review 42 (3): 369 –409. Retrieved from: https ://doi.org/10.1177/1078087406294043. 36 Chaskin, R . J. & Joseph , M. L . (2015 ). Integrating the Inner City: The Promise and Perils of Mixed -Income Public Housing Transformation . University of Chicago Press. 37 Tax Credit Allocation Committee. ( 2017 ). “California Tax Credit Allocation Committee Regulations Implementing the Federal and State Low -Income Housing Tax Credit Laws.” California Code of Regulations, Title 4, Division 17, Chapter 1. Sacramento, CA: California Tax Credit Allocation Committee. Ret rieved from: http://www.treasurer.ca.gov/ctcac/programreg/2017/20171213/clean.pdf. 27

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