Affordability After Expiration: Evidence from Washington State

Abstract

As the Low-Income Housing Tax Credit (LIHTC) program enters its fifth decade, a waveof early properties is reaching the end of the 30-year affordability period, after which owners face no federal obligation to maintain restricted rents. Little empirical evidence exists on what deregulation at Year 30 actually produces. This study examines Washington State's first cohort of expired LIHTC properties (50 properties and 99 bedroom-type observations whose regulatory agreements ended between 2019 and 2024) converting post-expiration asking rents to AMI-equivalent percentages, to see what AMI level those units would be affordable for. The central finding is that the cohort on average remained close to its original average set aside commitmentof 56.9 percent AMI, with a subtle increase to 60.7, with a large variance among individual observations. This is partly due to the phenomenon that that is in line with federal trends: about a third of the cohort had a surviving subsidy that extended beyond its LIHTC regulatory agreement, which could be seen in the difference between post-30 year data for those dually subsidized properties versus properties with no remaining federal affordability restrictions. However, among the fully deregulated properties, outcomes were highly dispersed; rents averaged near a 60 percent AMI ceiling, but ranged from 34.6 to 101 percent, including some that repositioned beyond local Fair Market Rents, and therefore above the practical reach of voucher holders. Together, these exploratory findings affirm the preexisting literature on properties that have exited from the LIHTC program: expiration alone does not uniformly affect affordability; property level factors must be considered in order to properly assess affordability loss risk.