Outside Publication

Changing the Face of Urban America: Assessing the Low-Income Housing Tax Credit, Virginia Law Review Vol. 102

June 11, 2016

On June 25, 2015, the US Supreme Court held that Low-Income Housing Tax Credit (“LIHTC”) allocations could violate the Fair Housing Act (“FHA”) if used to perpetuate racially concentrated poverty. On the heels of this decision, on July 8, 2015, the US Department of Housing and Urban Development (“HUD”) issued its final rule on the FHA’s Affirmatively Furthering Fair Housing (“AFFH”) provisions, mandating that state and local governments use federal housing money to mitigate racial segregation or face sanctions.

This Essay reconciles incongruous concerns that the LIHTC is “creaming the crop” of subsidized tenants (that is to say, serving the working poor as opposed to the poorest), thereby displacing the most marginalized households from central cities, with the recent barrage of accusations that the “poverty housing industry” is only further relegating the poorest to slum, blight, and distress. Celebrating the LIHTC as a successful public-private partnership, this Essay suggests that the LIHTC is changing the face of urban America by investing in both high- and low-poverty neighborhoods, bringing higher-income households into the lowest-income urban tracts and very low-income households into the suburbs. Countering criticisms of the LIHTC as redundant because of demand-side subsidies, this Essay concludes that the LIHTC is fostering a more regional distribution of affordable housing, an outcome unattainable by voucher provision alone.

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