Preserving Low-Income Housing in Detroit

January 13, 2017

Detroit neighborhood

The project: The Low-Income Housing Tax Credit (LIHTC) program is the nation’s largest source of financing for building or rehabilitating affordable housing. The sale of the credits provides equity to help finance the production of decent affordable housing for low-income renters who are in or near poverty, many of whom are elderly or disabled or have experienced chronic homelessness. But once projects reach 15 years of operation, investors can sell their ownership, often leaving affordable housing projects in need of new sources of capital to provide much needed maintenance. In Detroit, more than 7,700 units have reached or will reach 15 years of operation between 2016 and 2022, so finding solutions to restructuring financing and management is an urgent need. 

For more than three years, U-M researchers have teamed with a Detroit LIHTC task force to analyze the financing and ownership to preserve decent affordable housing after this critical time frame. Through this partnership, researchers determined strategies to help address the looming crisis.

The process: Researchers reviewed as many projects’ financial information as possible using 2015 audits, identified outcomes for projects that already have passed year 15, studied the financial and physical conditions of the projects that will reach year 15 between 2016 and 2022, and identified promising practices that other weak-market cities have used to preserve affordable housing after year 15.

Results:  The study included 155 properties placed in service since 1990 that have passed year 15, and researchers found the majority of those properties are continuing as affordable housing without recapitalization. Most cannot support additional debt and will face challenges making substantial repairs when needed. 

Of the 105 properties reaching year 15 between 2016 and 2022, researchers received 2015 financial audits for 63 of them. The financial analysis showed projects are more financially stressed in Detroit than in the nation as a whole.

The research resulted in a report identifying promising practices weak-market cities have used to preserve affordable housing after year 15 of LIHTC, and Detroit’s Department of Housing and Revitalization built on the task force’s work in its strategic plan to preserve affordable housing. 

Margaret Dewar, U-M Taubman College of Architecture and Urban Planning
Lan Deng, U-M Taubman College of Architecture and Urban Planning
Sarida Scott, Community Development Advocates of Detroit
Ruth Johnson, Community Development Advocates of Detroit
Julie Schneider, Detroit Department of Housing and Revitalization
Rebecca Labov, Detroit Department of Housing and Revitalization
Tahirih Ziegler, Detroit Local Initiatives Support Corporation
Victor Alba, Detroit Local Initiatives Support Corporation
Tim Thorland, Southwest Housing Solutions
Kirby Burkholder, IFF
Yulonda Byrd, Cinnaire