Public organizations as principals in an era of new governance
Williamson, Anne Lockwood
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This dissertation provides an empirical analysis of the federal Low Income Housing tax Credit program. This program was created as part of the Reagan‐era Tax Reform Act of 1986, and implementation is devolved upon the states. It provides a financial incentive through the federal tax code for private‐sector developers to construct or substantially rehabilitate rental housing for low‐income households. Developers may use the tax credit to offset their tax liabilities or alternatively, and most commonly, the credit may be sold to generate funds to finance construction. Private‐sector developers have substantial authority and discretion in the design of rental housing developed with program funds, as well as in the selection of geographic areas and tenants who will be served. Further, private‐sector developers who receive federal housing tax credit funding retain ownership of the low‐income rental properties resulting from the program. As a feature of tax policy, the program is largely invisible to the public. In a departure from earlier federal housing programs, there is no requirement that detailed information be collected on tenant characteristics or outcomes. In addition, no information on developer profits arising from program participation is collected. Therefore, meaningful evaluation has proved elusive over the program’s more than 20 years of history. One of the most severe criticisms of this policy is that developers who participate in it earn excessive profits (Olsen, 2000). Drawing on Olsen (2000), I assume that well‐managed state programs will suppress the availability of excess profits. My research seeks to explain variations among the states and in a preliminary way make an assessment of the extent to which management of this program in each state has an impact. Overall, results indicate that the degree of political hierarchy exercised over the public organizations responsible for managing implementation activities is very important. In addition, the professional orientation of governing board members was critical. Those states performing better had boards with stronger representation by those whose primary professional activities involve serving low‐income households, and were not dominated by members of the real estate industry.