Division of Housing and Community Renewal

Study on the Low Income Housing Tax Credit Program

The federal government operates the Low Income Housing Tax Credit program, in which federal income 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 reviewed the operation of the program in New York and found that the Division has made use of all the tax credits available to New York. However, we also identified certain inefficiencies in the nature of the program. For example, only about 50 cents of every dollar of tax credit goes toward actual housing costs; the remaining 50 cents is absorbed by transaction costs and investor profit. We also noted that housing projects funded by tax credits tend to cost more per housing unit than similar projects that are not funded by tax credits. We therefore question whether tax credits are the best way to fund low income housing. 95-D-29