LIHTC’s Role in Rural ‘Persistent Poverty Counties’

Freddie Mac recently published a paper exploring the multifamily housing market in rural Persistent Poverty Counties with a special focus on the primary means by which the federal government supports the development of affordable housing nationwide -- the Low-Income Housing Tax Credit program.

Areas of poverty can be defined in many different ways. One measure that takes both severity and pervasiveness of poverty into account is the designation of a Persistent Poverty County (PPC), defined under federal law as a county that has had a poverty rate of at least 20 percent in each of the last three decennial censuses (1990 to 2010). According to Freddie Mac, 7.9 million people live in the rural parts of PPCs, which constitute 38.1 percent of the population of these counties. And since 2000, it has subsidized an average of 54 properties and 2,370 units in PPCs annually, according to the government sponsored enterprise’s report.

In total, of the 151,538 multifamily rental units in rural PPCs, 60,833 (40.1 percent) are currently supported by the LIHTC program. This is more than 50 percent higher than in all rural areas and more than three times higher than the national rate. “From this finding,” the Freddie Mac report says, “we can conclude that multifamily is far less common in rural PPCs, but that the multifamily housing that does exist is supported by LIHTC subsidies at a higher rate than elsewhere in the country.”

Poverty in these areas is much greater than in all rural areas or the country as a whole. “Fully 29 percent of census tracts in rural PPCs rank in the top 10 percent of all tracts nationwide in terms of highest poverty rate,” according to the report. Income is 43 percent lower than the national average and 28 percent lower than the rural average. Freddie Mac notes the lack of income means it is hard to support the kind of rent an unsubsidized development would have to show to be profitable.

The report can be found here.