A recent report conducted by Rapoza Associates entitled “The Low-Income Housing Tax Credit: Overcoming Barriers to Affordable Housing in Rural America” examines the importance of the Low-Income Housing Tax Credit (LIHTC) in the developing and preserving affordable housing in rural communities.  According to the report, LIHTC has been used to fund more than 7,600 affordable rental housing developments or more than 270,000 rental units in rural communities since the program’s inception in 1986.

The report notes that rural communities face significant barriers to clean, decent, and affordable rental housing. Due to lower incomes and higher poverty rates, far too many rural families live in rental housing that is either too expensive or in substandard condition. In fact, nearly 30 percent of all rural households—or more than 7.3 million families—live in housing with at least one major affordability, quality, or crowding issue.

LIHTC is the most successful tool used by rural communities to overcome barriers to clean, decent, and affordable rental housing. According to a recent survey of 111 rural housing organizations, conducted by the National Rural Housing Coalition (NRHC), in 2012 alone, rural housing organizations helped assemble $524 million in financing to develop 3,092 units of affordable rental housing. At more than $250 million, LIHTC investments comprised nearly half (48 percent) of all available financing for the development of rural rental housing. In fact, twenty (20) state housing finance agencies (HFAs) specifically target rural housing needs in LIHTC Qualified Allocation Plans (QAPs), including California, Georgia, Idaho, Iowa, Kentucky, Louisiana, Maine, Michigan, Minnesota, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah, Washington, West Virginia, Wisconsin, and Wyoming.  On average, these states required that about 16.5 percent of their total allocation directly benefit rural communities. Several other states set aside a portion of their allocations for housing preservation, supportive housing, senior housing, and other types of housing that may also benefit rural communities.

The report concludes that while LIHTC has played a significant role in improving and shaping rural housing opportunities, other programs and resources should not be forgotten.  The report authors call on Congress to also invest in other federal resources—like the U.S. Department of Agriculture (USDA) Section 515 Rural Rental Housing Loan program (Section 515) and the Department of Housing and Urban Development (HUD) HOME Investment Partnerships program (HOME)—that play a critical role in helping rural communities provide affordable rental housing.

Click here to read the report.