The Impact of LIHTC Program on Local Schools The Impact of LIHTC Program on Local Schools

Abstract The low-income housing tax credit (LIHTC) program has developed over two million rental homes for low-income households since 1986. The perception of deterioration in school quality has been a main reason for community opposition to LIHTC projects in middle-and upper-income areas. In this paper, we examine the impact of LIHTC projects on the nearby school performance. The LIHTC projects tend to have positive and statistically significant impacts on school performance the year they are placed in service and this finding is robust to various specifications. Offsetting these, the one year lag effects are negative and of similar or smaller magnitude. Disclaimer The views expressed in the paper are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Dallas or the Federal Reserve System. 1 The Impact of LIHTC Program on Local Schools Abstract The low-income housing tax credit (LIHTC) program has developed over two million rental homes for low-income households since 1986. The perception of deterioration in school quality has been a main reason for community opposition to LIHTC projects in middle-and upper-income areas. In this paper, we examine the impact of LIHTC projects on the nearby school performance. The LIHTC projects tend to have positive and statistically significant impacts on school performance the year they are placed in service and this finding is robust to various specifications. Offsetting these, the one year lag effects are negative and of similar or smaller magnitude.