Recent New York City-based research demonstrates residents of tax credit-financed apartments pay $500 less than monthly market rents, more than doubling the discretionary income available to each household for other necessities. The June 2010 report shows these income savings boost local purchasing power, "contributing to retail vitality of the neighborhood."
The study, "Affordable Housing for Families and Neighborhoods: The Value of Low-Income Housing Tax Credits in New York City," was conducted by researchers from New York University's Furman Center for Real Estate and Urban Policy, the Local Initiatives Support Corporation (LISC) and Enterprise Community Partners.
Neighborhoods surrounding apartments financed with Low-Income Housing Tax Credits (LIHTC) also benefited through improved property values. In New York City, sites selected for tax credit development have tended to be blighted neighborhoods where property values were nearly 15 percent lower than surrounding areas.
Among all tax credit projects completed in New York City between 1987 and 2003, this gap fell by 6 percentage points almost immediately after completion of the projects. Within five years, "the development projects appear to have unleashed a chain reaction of improvement ... the price gap had closed by nearly 10 percentage points, closing two-thirds of the gap between the property prices before development and the surrounding neighborhood."
The study also looked to see if neighborhood impacts of newly-constructed tax credit-financed apartments differed from rehabilitation projects. The report explains "with average-sized projects, developers achieve the same neighborhood effect whether they renovate buildings or construct new ones. But as development projects get larger, the benefits from rehabilitating already-existing buildings outpace those of constructing new ones, most likely because renovations replace large and blighted properties, whereas new buildings are usually placed on previously vacant lots."