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“Don’t Neglect the Southwest Side: Investigating the Low-Income Housing Tax Credit Allocation Disparity in a Latinx-Dominant Region of Chicago”

Author: Alexis Mata

Department: UIC Institute for Policy & Civic Engagement

Advisor: Dr. Joseph K. Hoereth, IPCE

Abstract: In the face of the housing affordability crisis inflamed by market-led speculation, the Low-Income Housing Tax Credit (LIHTC) program entails the federal government issuing budget authority to state agencies. These housing finance agencies head the allocation of the program via a scoring matrix and policy objectives stated in each respective state's Qualified Allocation Plan (QAP). This aids in developer’s acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants to address their rent-burden. The Illinois Housing Development Authority (IDHA), which distributes the credits as an LIHTC-allocating agency, has formally stated that the program “accounts for the majority (approximately 90%) of all affordable rental housing created in the United States today, and is the most successful affordable housing tool in Illinois.” It is in that vein, that the LIHTC-allocating Chicago Department of Housing (DOH) espoused in their 2021 Racial Equity Impact Assessment (REIA) that the program is under-represented in “majority Latinx neighborhoods.” This study finds the underrepresentation derives from the disparity of credit allocation throughout the city's Southwest side, which many Latinx residents occupy. The results informed by a literature review and data analysis of governmental agencies are significant because despite the Southwest having a nominal stock of naturally occurring affordable housing (NOAH), this does not equitably serve Latinx folks. This study recommends the Chicago Housing Authority direct building housing as a major priority in the Southwest. Additionally, Congress should allow the direct pay of LIHTC funds to the agency with community input to build affordable rental housing.

Keywords: Low-income housing tax credits, Latinx, rental housing, affordability, disparity