OKLAHOMA CITY — Oklahoma could lose up to 1,500 existing affordable housing units in coming years as regulatory periods expire. This comes as the housing market is already struggling to meet demand and remains largely inaccessible to impoverished and low-income renters.
With a vast number of affordable housing units built (at least in part) utilizing the Low-Income Housing Tax Credit, or LIHTC, affordable housing developers and operators are required by law to maintain affordability in those units for a period of 15 to 30 years.
But with that 30-year regulatory period soon set to expire for the first major wave of LIHTC units built in the 90s, does that mean that the state’s (and the nation’s) already overburdened and inadequate affordable housing supply is about to dwindle even further?
The answer might be even more complicated than you think.
30-year regulations
The LIHTC program provides approved, qualified affordable housing developers with substantial subsidies to produce housing that meets affordability needs for low-income renters.
Most affordable housing developers couldn’t do their jobs without the LIHTC, and an entire affordable housing industry has established itself around it.
When first passed federally in 1986, the LIHTC called for 15 years of annual affordability inspections and approvals to ensure that the units built with tax credit subsidies remained affordable on the market throughout those 15 years.
In 1990, those regulations were updated to include a subsequent 15-year “Extended Compliance Period,” meaning that when those first 15 years are up, a property owner can’t just immediately raise rents to market value. Instead, they can choose to either maintain its affordability for another 15 years or sell to a new owner who will.
That effectively guaranteed affordable, LIHTC-regulated housing units would remain affordable on the market for 30 years.
But after those 30 years, all legal affordability requirements finally vanish and an owner can sell, rebuild, restructure, or raise their rates up to market value however they’d like.
With the first LIHTC units built in the late 80s, followed by a national wave of LIHTC units built through the 90s, we’re now reaching the end of that 30-year period for homes all across the country.
Oklahoma and the LIHTC
Free Press reached out directly to the Oklahoma Housing Finance Agency (OHFA) to determine just how many LIHTC units are operating in the state and how many the market stands to lose as their regulatory periods expire in coming years.
Holley Mangham, Communications Manager for the OHFA, responded in an email with numbers compiled by the agency.
“We show that there are 40,009 LIHTC units [in Oklahoma],” she said, “of which, 5,483 are in the OKC Metro and 5,321 in Tulsa.”
They also broke down the numbers of LIHTC units set to expire between 2024 and 2030:
- 2024: 237
- 2025: 454
- 2026: 194
- 2027: 384
- 2028: 220
- 2029: 42
- 2030: 30
All told, that’s 1,561 affordable housing units aging out of their required affordability period in just a 7 year span.
Added to that, Oklahoma’s affordable housing market was already more than 77,000 units short as of 2022, according to the National Low-Income Housing Coalition.
What then?
Not all of those units are guaranteed to leave the affordable range of the market, as Mangham made clear to Free Press.
“Re-syndication of additional tax credits is an option to remain affordable,” she said, meaning that the owners of those units could reapply for LIHTC funding, thereby reverting the affordability period back to the beginning.
But that’s only if the owners choose to do so, and only if there’s enough LIHTC funding available to update and renovate the properties for approval once again.
An LIHTC explainer was published online by the US Department of Housing and Urban Development to examine options for properties at the ends of their 15-year and 30-year regulatory periods.
At the time of the report, none of the properties studied had reached the end of the 30-year period, but researchers concluded it was unlikely that a majority of them would remain in the affordable realm of the housing market beyond that period.
Potential for a legislative solution
As other states have proven, there are legislative solutions to stop the housing hemorrhaging.
California, for example, has already passed and enacted legislation to significantly increase the Extended Compliance Period for their LIHTC homes from 15 years to a full 55 years.
A similar change in regulation for Oklahoma would require state-level legislation to change how HUD funds and tax credits are allocated, but even some of the state’s most housing-minded legislators have seemed to be at a loss on this element of the issue.
Free Press reached out to State Senator Julia Kirt (D-Oklahoma City) who this month co-sponsored a new study of possible state-level solutions to the affordable housing shortage.
Kirt expressed concern over the impending expirations, but could currently only direct us back to the Housing Finance Agency to discuss the extent of the potential housing loss.
Even if new legislation was passed to lengthen the regulatory period on LIHTC properties similarly to California, it would likely not affect those 1,561 properties facing imminent expiration.
It’s unlikely that city-level legislation could do anything to halt or lengthen those expirations either, leading some city leaders to put greater pressure on city funding plans and greater hopes for an increase in federal funds as those plans roll out.
“Our housing need in Oklahoma City is $1.2 billion on its own,” Ward 2 City Councilman James Cooper told Free Press. “That tells me that if we’re looking at about a $75 million housing component in our bond next September, then the state and the feds are going to have to join us here.”
Cooper’s hope is that by using MAPS and General Obligation Bond funding to provide things like down payment assistance and housing vouchers, HUD could begin allocating greater LIHTC subsidies to local developers to produce more units as a stop-gap to the properties expiring in coming years.
As he put it simply: “We just can’t do this on our own.”
Brett Fieldcamp has been covering arts, entertainment, news, housing, and culture in Oklahoma for nearly 15 years, writing for several local and state publications. He’s also a musician and songwriter and holds a certification as Specialist of Spirits from The Society of Wine Educators.
