Who Is LIHTC Built for? The Distribution of Affordable Housing Units by Rents, Tenant Incomes, and Project Features in California

The Low-Income Housing Tax Credit (LIHTC) program relies on housing developers to build affordable housing units. Developers consider financial feasibility and programmatic regulations when planning projects, and one central project feature is the affordability of units. Decisions around unit affordability directly shape housing supply and, in turn, affect where low-income tenants live. In this article, I analyze LIHTC projects in California and show that, among projects funded from 2011 to 2023, only a small share (15%) of units was affordable to extremely low-income (ELI) households. In contrast, ELI households comprised the majority of LIHTC tenants. The share of units affordable to ELI households increased over time due in part to program regulations, financial feasibility, and state priorities around housing formerly homeless individuals, though there was still a substantial mismatch between units’ affordability and tenants’ incomes during this period. Units affordable to ELI households are slightly less likely to be in the highest socioeconomic status (SES) communities, though mismatch between affordability and tenant income is similar across neighborhood types. Developer decision-making around income targeting, tenant type, and project location shapes affordable housing supply, and I conclude by noting the importance of assessing the intersections of these factors for future policymaking.