University of Michigan Gateway Ford School

Has Competition Led to Healthier Neighborhood Effects? A Study of Low-Income Housing Tax Credit Projects Built by Three Sectors

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October 2009

Lan Deng

Abstract

Using a difference-in-difference hedonic regression approach, this study examines the external neighborhood effects of Low-Income Housing Tax Credit Projects built in Santa Clara County from 1987 to 2000. It finds that a majority of the LIHTC projects examined have generated significantly positive impacts on nearby property value. The impacts also vary by project size, neighborhood context, and type of developer. Low-income neighborhoods, for example, have benefited more from LIHTC developments than other types of neighborhoods. This study also finds that for-profit projects have delivered benefits similar to those of nonprofit projects, a result of both government incentives and market competition. Yet projects built by some of the largest nonprofits and the county housing authority have generated the greatest neighborhood impacts.

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Keywords: Housing, Public Finance & Taxation

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