Georgia Low-Income Housing Tax Credit (LIHTC) Program

In Georgia, affordable housing is still a hardship, especially for low-income families. To address this issue, the state developed an innovative scheme to promote affordable housing: the Georgia Low-Income Housing Tax Credit (LIHTC) program, which enables landlords to develop cheap rental properties. 

This article highlights the Georgia LIHTC program, its history, its economic impact, and its effectiveness in boosting the supply of low-income housing.

History of Georgia LIHTC Program   

The Georgia LIHTC program was enacted in 2000 and became effective for qualifying projects from January 1, 2001, onward. It is governed under OCGA § 48-7-29.6 regarding State Income Tax and OCGA § 33-1-18 regarding Insurance Premium Tax (IPT) liabilities, which offers considerable incentives to developers and investors. 

The last change to these codes was in 2003, which concerned only a technical correction to the IPT section. This state-level program corresponded with the federal LIHTC program to double the benefits for developers and further boost affordable housing development.

How Does the Georgia LIHTC Program Work? 

Georgia follows the model of awarding tax credits directly to developers under the Georgia LIHTC. The process involves applying through a competitive process administered by the Georgia Department of Community Affairs. 

A qualified developer can apply for these credits if they build or renovate houses for low-income people. If they receive these credits, they can be sold to investors and raise funds for the projects. 

Disbursement of these funds under this program is meant to finance either the construction or renovation of the project. 

But the developers are bound to keep affordable for the next 15 years in most cases even for 30 years.

Economic Impact of the Georgia LIHTC Program   

The Georgia LIHTC program has had a significant economic impact since its inception. An economic impact report prepared for the Georgia Affordable Housing Coalition in 2006 showed that the program significantly increased construction-based economic activity. 

An IMPLAN analysis of 15 projects in the report determined that the program generated nearly $3.4 billion in economic activity from 2001 to 2003 and supported almost 12,000 jobs. In addition, the operations of these developments over 20 years were estimated to contribute an additional $1.1 billion in economic impact.  

These numbers reflect the program’s effectiveness, both in terms of job creation and the promise of continual growth of the Georgia economy.

Impact on Low-Income Housing Supply in Georgia    

One big question concerning the Georgia LIHTC program is whether it is generally effective in increasing the supply of low-income housing in the state. The econometric analysis considered this issue, comparing Georgia’s low-income housing development with similar communities in states that do not implement a state-level LIHTC. 

The data was drawn using the Department of Housing and Urban Development (HUD) LIHTC database, which contained very detailed information regarding the number of low-income units placed in service across different census tracts. 

These findings showed that the Georgia LIHTC program positively affected the supply of low-income housing, mostly in the post-program implementation years. Georgia clearly saw an uptick in the number of low-income units from 2001 until 2007, above that of the control group of matched census tracts in Georgia.  

However, this effect was absent during the Great Recession, indicating that the impact is not maintained over economic downturns. The evidence in the study shows that the availability of low-income housing in Georgia has increased.

Recent Developments and Challenges   

Even though the Georgia LIHTC program is recording success in development, several challenging situations or issues will affect its efficiency and efficacy in the future.  

Some of the LIHTC challenges include growing construction costs, decreasing funding, and competitiveness.

  

Competition and Rising Costs of Building 

The increasing building cost has continued to rise, causing challenges to LIHTC projects, which always have very tight budgets. The increasing costs may make it difficult for developers to complete a project within the budgeted estimates, causing delays or cancellations.  

 

Scarcity of Funds and Competition  

The Georgia low-income housing program is among the most competitive, with several solicitations of applications in excess of the available tax credits. The funding in the program is only available in relatively small proportions, capped on a yearly basis; hence, only a few applications can be supported every year. Project developers go through a very complicated application procedure and compete against other proposals to get the required funding so as to carry out the project effectively. 

 

Compliance and Monitoring  

Another issue is how to ensure long-term compliance with the LIHTC requirements. After all, developers are expected to ensure that their units stay affordable for at least 15 years and that the DCA monitors and verifies LIHTC compliance. Non-compliance in this respect means possible recapture of credits, which could be very financially devastating for developers.

Conclusion 

The LIHTC program is vital as it provides an avenue for delivering affordable apartments in Georgia to low-income families.

The program has successfully created thousands of affordable housing units at low costs, leveraging private investment through tax incentives for revitalized communities and economic growth. 

Strong positive impacts on Georgia low-income housing, especially in the early years, led to the overall success of the program. The funds were distributed adequately despite challenges due to increasing construction costs and limited funding. 

Since Georgia keeps growing, the LIHTC system will continue to be essential in the state’s plan to ensure that all citizens live in safe and reasonably priced homes.