Mississippi Low-Income Housing Tax Credit (LIHTC) Program

Lack of affordable housing has always been a growing concern throughout the U.S., and Mississippi is no exception. Increasing rent and a wage plateau cause considerable stress on many Mississippi families facing near-critical housing problems.  

The Low-Income Housing Tax Credit (LIHTC) program, both nationally and at the state level, has emerged as a key solution to these housing deficits by fostering private investment in affordable rental housing. This program plays a vital role in Mississippi in enabling low-income families, especially those in more underserved communities, to obtain safe, decent, and affordable homes. 

The LIHTC Program in Mississippi 

This is the LIHTC Program, a federal program enacted into law in 1986 to support developing and preserving affordable rental housing for very low-income, low-income, and moderate-income households. Its state-level administrator is Mississippi Home Corporation. The program grants tax incentives to private developers or investors to construct or rehabilitate affordable rental housing for families at or below 60% of the Area Median Income (AMI). 

Since its inception, the LIHTC program has effectively resulted in developing and preserving more than 3.7 million affordable housing units across the country. That is 56,205 in Mississippi alone. It bridges the gap created by a wide range between putting up housing with high costs and income from affordable rent, otherwise making such developments impracticable without public support. 

Mississippi Affordable Housing Requirements 

Affordable housing in Mississippi has a huge deficit need, as over 90,000 renter households spend more than half their income on rent. Most of these households stay in areas with economic hardships, lower incomes, and significant population decline that accelerated the housing crisis in places like the rural Lower Mississippi Delta. Underserved is the Lower Mississippi Delta, one of the poorest areas in this country regarding affordable rental housing. Just 14.2% of Mississippi renters live in multifamily buildings versus the national 42.9% average . 

On a minimum wage salary, a worker would have to work 72 hours a week to earn enough money to afford a one-bedroom apartment in Mississippi, underlining the need for more affordable housing now . 

How Does LIHTC Work in Mississippi? 

In Mississippi, the Mississippi Home Corporation (MHC) exercises control over the allocation of tax credits to developers. The tax credits help bridge the funding gap resulting from the development or rehabilitation of rental housing to provide affordable rentals. The tax credits can be utilized by the developer or sold to investors to raise capital for funding the housing development. Once the project enjoys tax credits, there is a mandate upon the owner to maintain the affordability of units for at least 30 years to ensure long-term benefits for low-income residents.    

Generally, the credits are awarded through a competitive application. Through LIHTC funding, the developers apply for funds annually with their project plans and budgets and compliance regarding the affordability requirements the program will provide. The MHC assesses these applications on factors such as the geographic location, level of affordability, and whether it will serve critical needs like homelessness or special-needs population housing.   

The LIHTC program in Mississippi is being used with other federal and state programs, including the National Housing Trust Fund (HTF), which further supports developments aimed at Extremely Low-Income (ELI) households. 

LIHTC in the Lower Mississippi Delta  

The Lower Mississippi Delta represents one of the most challenging markets for affordable housing development. This region cuts across parts of Mississippi and surrounding states. It has a lower population density than other areas, with about 37% less income compared to the national average . This region has a disproportionate share of the impoverished populace, especially its African American population, where 37.4% of its black population lives below the poverty line. These economic conditions make it hard for developers to raise their rental income to sustain housing without significant subsidies. 

Despite its challenges, LIHTC plays an integral role in the region. In fact, it accounts for nearly 39.2% of the multifamily rental housing market in the Delta, with a ratio much higher than the national average. Despite LIHTC supporting many multifamily units, the region still needs to enhance its overall affordable housing capacity, primarily due to economic and structural barriers.   

Impact of LIHTC in Mississippi 

Of course, the Mississippi LIHTC program has greatly influenced housing development at the state level, with homelessness and housing support mainly targeting at-risk individuals. For instance, a large proportion of those units in developments receiving LIHTC funds are allocated for homeless persons or people with disabilities, which connect them with services and support that address specific needs. 

LIHTC projects also promote economic development through jobs created during construction and increased earnings for local businesses. Since LIHTC began in Mississippi, the program has helped support over 75,214 jobs and has generated $8.427 billion in wages and business income. 

Challenges Faced by LIHTC in Mississippi 

Despite its success overall, the LIHTC program faces many challenges in most areas, especially the underserved. Regions in the Lower Mississippi Delta region are often plagued by persistent features such as low income and outmigration. In contrast, infrastructure in the area often needs to be developed to support the scale of development seen in cities and suburbs.  

LIHTC projects here must be well designed to achieve sustainable results over the long term, although frequently, additional subsidies or creative financing are required to make the program work. 

Boasters are also pushing for an expansion of the LIHTC program and its improvements ditching and overcoming the LIHTC challenges. For instance, the Affordable Housing Credit Improvement Act will expand housing credit to create up to 7,120 more affordable homes in Mississippi . 

Conclusion  

LIHTC is an anchor for Mississippi’s plans to solve the state’s affordable housing crisis. This involves increasing private investment, aligning those investments with federal, state, and local resources, and making inroads on safe, affordable housing deliveries to thousands of families statewide. More sustained effort and innovation are needed to close the remaining gaps, especially in the rural and underserved parts of the state, like the Lower Mississippi Delta.

Mississippi will continue to use its LIHTC program as an even more inclusive tool to help build a fair and stable future for its residents when they need housing.