Inside a LIHTC Investment with Ben Stevens - S2E5

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About this Episode – Inside a LIHTC Investment with Ben Stevens

Welcome to the A.CRE Audio Series! On this episode, I am here once again with the creators of the Adventures in CRE website, Spencer Burton and Michael Belasco. Today we are joined by Ben Stevens to talk about the birth of a LIHTC building.

Ben Stevens is a project manager for a real estate development firm in Chicago. He holds an MBA in Real Estate and Urban Land Economics from the University of Wisconsin at Madison. On the side, he hosts The Skyline Forum. He is also the author of the new book, The Birth of a Building. Ben lives in Chicago with his wife and two children.

Today we are starting a two-part episode with Ben. We are specifically talk about LIHTC-supported investments. We also jump into a variety of other topics based on Ben’s knowledge, including lessons he has learned and how allocation is set up.

Show Notes – S2E5: Inside a LIHTC Investment with Ben Stevens

Affordable housing [3:48]
- In the plain sense, they may mean do you pay a certain percentage of your income to live where you live.
- There’s an economic question and is there enough housing that is affordable.
- The affordable housing debate is what people are typically referring to.
- If there isn’t enough affordable housing, should the government get involved?
- If the government gets involved in some financial way to solve the problem, how should they do that?
Solving the affordable housing problem [4:32]
- Learning from the past and what went wrong is why we have the tools that we have.
- Affordable vs dangerous housing.
- Decisions made to cut costs.
- When affordable housing first started, people paid their rent with their incomes. It had a lower middle-class feel.
- The government then made affordable housing based on income. It became the best deal for people who don’t have any income.
The different sides [11:11]
- Understanding the different benefits.
What is LIHTC? [12:21]
- LIHTC is the low-income housing tax credit.
- Setting a rent floor.
- Financing with what amounts to free money.
How allocation is set up [18:27]
What stage are credits being bought? [20:41]

Resources from this Episode

Adventures in CRE: https://www.adventuresincre.com/
A.CRE Accelerator: https://www.adventuresincre.com/accelerator
How to Calculate LIHTC Credits: https://www.adventuresincre.com/lihtc/

Frequently Asked Questions about Inside a LIHTC Investment with Ben Stevens (A.CRE Audio Series S2E5)

What is LIHTC?

LIHTC stands for Low-Income Housing Tax Credit. It is a program designed to incentivize the development of affordable housing by offering tax credits to developers. As stated in the episode, it allows for “financing with what amounts to free money.”

How is rent determined in a LIHTC-supported property?

A rent floor is typically set to ensure affordability while allowing some stability for the investor and operator. The rent is usually based on a percentage of the area median income (AMI), ensuring it remains affordable to qualifying tenants.

How does the allocation of LIHTC credits work?

Allocation is set up at the state level, often with competitive applications. Each state has a limited number of credits it can allocate, and developers must apply through a process that considers project type, location, and need. Details on exact mechanics are discussed around [18:27] in the episode.

At what stage are LIHTC credits typically bought?

Credits are usually purchased after allocation has been secured and during the financing stage of development. This happens once the developer can demonstrate a viable project with committed financing and approvals in place ([20:41]).

What are the economic questions surrounding affordable housing?

The episode explains that affordability raises questions such as: “Is there enough housing that is affordable?” and “Should the government get involved in solving the shortage?” It also explores how affordability is defined differently across economic groups ([3:48]).

How has affordable housing evolved over time?

Initially, affordable housing resembled lower middle-class housing where rent was paid with earned income. Over time, it shifted to being income-based, creating challenges and making it “the best deal for people who don’t have any income” ([4:32]).

What challenges were addressed in early affordable housing efforts?

The episode discusses how early efforts led to issues such as “dangerous housing” and the consequences of cost-cutting decisions. These failures informed modern tools like LIHTC as more structured and financially sound alternatives ([4:32]).

What additional resources are available for learning about LIHTC?

Listeners can access an in-depth tutorial on how to calculate LIHTC credits at Adventures in CRE’s LIHTC page, as referenced in the episode’s resources.