Taking a Holistic View of Housing Policy

Abstract

Schwartz and Dawkins have both raised questions about the focus of our earlier article, suggesting that it emphasizes particular housing programs too much, or too little. In his response, Schwartz admits that whereas federal policy has contributed significantly to racial discrimination and segregation, the Low-Income Housing Tax Credit (LIHTC) “is not a significant part of this story” (Schwartz, in this issue). He argues that LIHTC units are less concentrated in high-minority tracts than other types of subsidized units are, and that LIHTC operates at too small a scale to have a significant effect on regional segregation. Dawkins also raises this point. At the outset, we point out that our analysis, arguments, and policy recommendations were by no means focused solely on LIHTC. Most of the regional data summarized in Orfield et al., (2015, Tables 2–3) (Table 1). Include separate breakouts for all place-based subsidized units and LIHTC units. LIHTC units represent only about a fourth of the units included in these data.1 The cost analysis (reported in Orfield et al., 2015, Table 4) also included all units funded between 1999 and 2013 for which the Minnesota Housing Finance Agency (MHFA) was able to provide financial data—not just LIHTC units, or even just units receiving federal funding. LIHTC units alone represent 5%–6% of the total rental market in the Twin Cities, and subsidized units in the aggregate represent 5% of the entire housing market—19% of the rental market at a minimum. These shares are clearly large enough to warrant the attention of policymakers, and are even greater if Housing Choice Vouchers are included. But even if analysis is limited to LIHTC units alone, Schwartz is wrong to declare that their impact on segregation is insignificant. Although tax credits are distributed slightly less segregatively than other subsidies are, our data show very clearly that LIHTC units are dramatically overrepresented in high-minority tracts and school attendance areas. Fifty-two percent of LIHTC units allocated by MHFA between 2005 and 2011 were in census tracts with minority shares greater than 30%, compared with just 23% of all housing units and 40% of all rental units. Similarly, 83% of LIHTC units were in school attendance areas with minority shares greater than 30%, compared with just 46% of the student population in the Twin Cities. As discussed in our original article, in the process of maintaining this segregative pattern, state housing authorities have turned down a substantial number of LIHTC funding proposals from more-affluent suburban areas. This represents a set of selection priorities and systems, laid out in the state’s Qualified Allocation Plan, that favor segregative development. Schwartz also claims we overemphasize the importance of the link between LIHTC and education policy. For instance, Schwartz argues that “most households . . . do not have school-age children,” pointing out that only 29% of all Twin Cities households include children under 18 (Schwartz, in this issue).