Building Affordable Housing in Cities after Abandonment: The Case of Low-Income Housing Tax Credit Developments in Detroit

June 2011
Lan Deng, University of Michigan

This paper examines affordable housing developments supported by the Low Income Housing Tax Credit (LIHTC) program and how they have contributed to neighborhood redevelopment in the city of Detroit. For cities like Detroit that have long suffered from disinvestment and abandonment, building subsidized affordable housing offers one of few opportunities to channel resources into neighborhoods. In Detroit, the LIHTC funding supported the rehabilitation of over 6,000 housing units and produced over 5,000 new housing units from 1990 to 2007, about half of the new housing stock the city added. In examining the possible neighborhood impacts generated by the LIHTC projects, the study finds that half of the LIHTC neighborhoods experienced more improvement in their socioeconomic status than their comparison groups, while the other half lagged behind. An examination of the spatial distribution of these neighborhoods reveals a strong relationship between the concentration of the LIHTC investment and the types of changes experienced by their neighborhoods.