Another LIHTC Letdown
A few months ago, I foolishly expressed optimism that Missouri’s low-income housing tax credit (LIHTC) program would perform better for state taxpayers in 2021. (You can read more about how LIHTC works here.) Unfortunately, new data from the Missouri Housing Development Commission (MHDC) confirm yet another year of utter disappointment.
In late December, the MHDC met to dole out the state’s LIHTCs for 2021, and there was reason to believe some measurable improvements were on the way. As I’ve written multiple times, when Missouri’s program returned from its brief hiatus in 2020, we were told this time it’d be different. The tax credit with a history of dismal performance was receiving reforms that would add accountability and allow each state tax dollar spent to go a little further. A pilot program that increases payout rates was being expanded because of its apparent popularity and supposed success.
Recently, Missouri State Treasurer Scott Fitzpatrick released a statement showing that the average sale price for state LIHTCs increased by nearly $0.10 in 2021. But this increase did not translate to more affordable housing being built. According to the MHDC’s newest project approval data, the number of projects and the number of units in projects approved for LIHTCs in 2021 decreased compared to 2020.
In fact, even the number of applications for LIHTCs declined in 2021. This means that while the recipients of these credits received more money than ever, those gains failed to translate into any improvement for state taxpayers. This new year of data also serves as a cruel reminder of the lessons Missouri should have learned during the program’s recent suspension. For two consecutive years, Missouri saved millions by forgoing the state’s investment in the LIHTC program. The federal program continued in its absence, and the same amount of affordable housing was built each year, but at a lower cost. Now the program’s back and we’re told that the way to improve it is to make it more lucrative for developers. In return, the amount of new housing being built remains the same.
Year after year, Missouri is reminded why the LIHTC program is such a bad deal for state taxpayers. How much more money must be lost before our elected officials start seeing the program for what it is and end it for good?