Summary: Pursuant to a congressional request, GAO reviewed the Low-Income Housing Tax Credit Program, focusing on: (1) the estimated cost to the Treasury of low income housing tax credits awarded from 1987 through 1989; (2) whether the awarded tax credits resulted in reduced rents in credit-assisted units; (3) whether tenants were selected from waiting lists maintained by public housing authorities; (4) the adequacy of existing compliance monitoring requirements; (5) the adequacy of current statutory provisions designed to prevent noncompliance; and (6) alternative tax credit allocation formulas.
GAO found that: (1) the total projected tax credit granted from 1987 through 1989 was about $5.7 billion, and was expected to be used between 1987 and 2000; (2) investors had not been using tax credits to reduce total unit rents, but frequently supplemented subsidies with the amounts they collected from tenants; (3) there was no legal requirement requiring investors to select tenants for credit-assisted housing from waiting lists that public housing agencies maintained, except under one program; (4) state credit agencies were required to give evaluation preference to project proposals planning to use waiting lists as a source of tenant referrals; (5) monitoring requirements were not adequate to ensure compliance; (6) Treasury dispensed billions of dollars in federal subsidies almost solely on the basis of recipient taxpayers' self-certification; (7) statutory program provisions did not effectively discourage noncompliance with program requirements; and (8) there were numerous options potentially available to allocate states' respective shares of credit.
