Division of Housing and Community Renewal

Administration of the Low Income Housing Tax Credit Program

The federal government operates the Low Income Housing Tax Credit program, in which ten-year federal tax credits are awarded for private investment in low income housing. In New York, this program is administered by the Division of Housing and Community Renewal. In 1994, a total of $445 million in tax credits was awarded nationwide, of which $39 million was awarded by the Division.

We examined the procedures used by the Division to award the credits and found that an excessive amountof credits was sometimes awarded. For example, the amount of tax credits awarded to a project is based to some extent on the cost of the project. However, the Division does not evaluate the costliness of projects receiving tax credits. We analyzed the cost of several projects receiving credits and determined that, if the cost guidelines used by the Division in evaluating other types of projects had been applied to these projects, the cost of the projects would have been decreased by an amount that would have reduced the accompanying tax credits by about $105 million over their ten-year life. We also identified many other specific instances in which either excessive amounts of tax credits were awarded or the requirements governing award amounts were disregarded by the Division. We further note that questionable practices were used by the Division in awarding a $5.5 million contract for services relating to the administration of the program. As a result of these practices, it appeared that the contract was steered to the contractor. We made a number of recommendations for improving the Division's administration of the program.

For a complete copy of 95-S-70 click here.
For a copy of the associated follow-up report click here.
For a copy of the 90-day response click here.