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The Tax Credit Turns 30

This anniversary report takes a look back at the first 30 years of operation of the Low Income Housing Tax Credit (Housing Credit) to find out what happened to the earliest generation of developments in California that received allocations of Housing Credits from 1987 to 1989. Some of these developments were lost to conversion to market rate after only 15 years, and many others of which are nearing the end of their 30-year affordability terms today. The risk of Housing Credit-financed developments converting to market rate at the end of their required rent affordability terms, also known as “rent restriction” terms, is very real in California’s supply-constricted housing markets—which include seven of the ten most expensive rental housing markets in the country.

Patterns in conversion to market rate among first-generation Housing Credit developments reveal lessons for how affordable housing stakeholders should assess risk in the existing stock moving forward—and what social and economic benefits may be at risk unless deliberate action is taken to preserve these developments as affordable housing.