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Rural Affordable Rental Housing : Quantifying Need, Reviewing Recent Federal Support, and Assessing the Use of Low Income Housing Tax Credits in Rural Areas

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  • Andrew M. Dumont

Abstract

Recently, there has been significant interest in the high levels of rental cost burden being experienced across the United States. Much of this scholarship has focused on rental cost burdens in larger urban areas, or at the national level, and has not explored differences in the prevalence of rental cost burden in urban versus rural communities. In this paper, I find that rental cost burdens are a challenge facing both urban and rural communities. However, despite the need for affordable rental housing in rural communities identified, I find the amount of resources made available by the federal government to address this challenge are at a low point relative to recent history. My analysis of federal resource availability also finds one program has been an important and resilient tool for the development and preservation of affordable housing in urban and rural communities: the Low Income Housing Tax Credit (LIHTC) program. Congress delegated much of the LIHTC program?s implementation to the states, whereby states choose many of the factors to prioritize when allocating LIHTCs to specific projects. Therefore, I explored each state?s qualified allocation plan to identify whether specific factors make it more or less likely rural areas will receive a ?fair share? of LIHTC allocations based on their need relative to non-rural areas. My analysis did not identify a specific factor or set of factors that systematically increased or decreased the likelihood of allocations being proportionate to the relative needs of a state?s rural communities. However, I did identify a number of factors that by their very design appeared to affect positively or negatively the likelihood that specific types of projects or project locations would receive allocations. Interviews with industry stakeholders confirmed that many of these factors are affecting developer decisions and may be unintentionally disadvantaging smaller, more remote rural projects.

Suggested Citation

  • Andrew M. Dumont, 2018. "Rural Affordable Rental Housing : Quantifying Need, Reviewing Recent Federal Support, and Assessing the Use of Low Income Housing Tax Credits in Rural Areas," Finance and Economics Discussion Series 2018-077, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2018-77
    DOI: 10.17016/FEDS.2018.077
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    More about this item

    Keywords

    Government expenditures (federal); Housing affordability; Housing supply; Rural; Tax credits;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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