Freddie Mac Releases Three More White Papers in Duty-to-Serve Series

Freddie Mac has published three additional white pages in its "Duty-to-Serve" series, designed to examine efforts to encourage housing affordability and increase rental and homeownership opportunities in underserved markets. Last week, Freddie Mac released the first two papers, focusing on the Low Income Housing Tax Credit (Housing Credit) program in rural Appalachia and Indian Areas. These latest papers address Housing Credit incentives, affordable housing in high-opportunity areas, and mixed-income housing in areas of concentrated poverty.

"Opportunity Incentives in LIHTC Qualified Allocation Plans", the third paper in the series, explores how state Housing Finance Agencies (HFAs) promote affordable housing in high-opportunity areas through their Qualified Action Plans (QAP). Freddie Mac partnered with the National Housing Trust to review the QAPs of all 50 states and the District of Columbia to establish how states define high-opportunity areas and incentivize affordable housing in those areas. Their analysis found states use five common indicators in their QAPs to identify areas of opportunity: access to education, health care, and transportation; economic growth; and income levels.

The fourth paper, "Affordable Housing in High Opportunity Areas," analyzes the availability of affordable housing in high-opportunity areas and the demographics and housing characteristics within those areas. Freddie Mac found more than 56 million people live in high-opportunity areas, where there is a shortage of affordable housing. While 18 percent of the U.S. population lives in these areas, only 7 percent of subsidized affordable multifamily housing is located there, leaving an estimated shortage of 77,508 affordable units in high-opportunity areas. Development and preservation of affordable housing in these areas are met by zoning issues, local resistance, high land and construction costs, lack of buildable land, and limited housing subsidy.

"Mixed-Income Housing in Areas of Concentrated Poverty" examines an effort to bring economic opportunity to areas of concentrated poverty (ACPs) using mixed-income housing. Roughly 19 percent of the U.S. population lives within an ACP, which is defined by consistently high poverty levels, low economic opportunity, and high housing costs in relation to income. This paper, which is the first of three planned to cover ACPs over a three-year period, suggests economic integration can impact local school systems, create jobs, and improve economic opportunity. However, with economic integration can come the risk of residential displacement. The paper proposes increasing mixed-income housing as an approach to cultivating residential economic diversity in ACPs while protecting and preserving affordability for existing residents. The next two papers will offer case studies examining the opportunities and challenges mixed-income housing can bring to ACPs.

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