The National Housing Preservation database estimates that in the next five years, affordability restrictions will expire on about 14,000 rental homes in Ohio that were built with low-income housing tax credits.
The federal Low-Income Housing Tax Credit, or LIHTC, program started in 1986. It gave states the equivalent of around $10 billion a year to issue tax credits for the rehab or construction of affordable rental housing.
That led to the creation of more than three and a half million affordability-restricted rentals between 1987 and 2022 across the United States.
"Bipartisan support has been in existence and [it] has become the main way that affordable housing is created in our country,” said Leah Evans, president and CEO of Homeport, a nearly 40-year-old Columbus nonprofit that develops affordable housing.
Homeport has 50 properties, and many of them were built using LIHTC credits. Evans said the properties look like any other apartments. But their rents are capped, and the buildings sometimes have special designations for who can live there, restricted to families, or to seniors, for instance.
The catch: the rentals don’t stay affordable forever. In Ohio, restrictions expire after 30 years – which means rents could soon skyrocket at a slew of apartments built in the mid-90s.
As those federal restrictions expire, some property owners are glad for the opportunity to make more money. But Evans said others wish they could keep properties affordable but struggle as market forces drive up the costs of operation.
“Interest rates going up, mortgages are going up, insurance, property maintenance, getting property managers, getting maintenance tax, all those costs are coming to bear on this project,” Evans said. “Now you're 30 years hence and as an owner, you're going to look at what's the right structure for me to go forward with this?”
Evans said mission-driven organizations sometimes find ways to keep properties affordable. Others sell buildings for a profit or raise rents to market rates.
Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio, said the resulting abrupt rise in rent is bad for tenants.
“The very logical outcome is that if somebody loses an apartment that is affordable [through] no fault of their own – they have been paying the rent, hey have been doing their end of the bargain – there is very good likelihood that their next apartment is going to be significantly more expensive,” Boos said. “And that's when you're into those toxic trade-offs: ‘All right, I got to pay more for rent. That means I got to get rid of [fill in the] blank.’ It's very personal. It's very damaging.”
LIHTC housing costs renters no more than a third of their income. Typically anyone making up to 60% of the area median income can apply. In central Ohio, that includes folks earning around $45,000 with two children, Boos said.
Boos said , a person has to make close to $23 an hour to afford the average, modest apartment in central Ohio right now.
"What we have historically considered to be our working class, our middle class families, they're not hitting that benchmark anymore,” she said.
The Ohio Housing Finance Agency oversees the LIHTC program. This year, around two dozen projects were awarded the federal credit, according to OHFA spokeswoman Penny Martin. Ten are in central Ohio and three in Cleveland. Others are scattered around the state in Dayton, Ashland, Athens, Akron, Findlay, and Cincinnati.
“Our goal as we administer this funding is to ensure that we try and reach as many parts of the state as possible,” Martin said.
After affordability restrictions expire, property owners can re-apply for more low-income housing tax credits to update their buildings, locking in affordability for another three decades.
And Ohio also started a state LIHTC program last year. It offers a 4% tax credit that pairs with the 9% federal LIHTC. Martin said it’s been popular.
“And so, we're continuing to work to bring more units online because we also know that housing in general is a challenge that the state's facing,” she said.
Which is all to say that while the Ohio Housing Finance Agency confirms that some 14,000 affordable units will go offline in the next five years, more should be on the way.