Many residents of affordable rental housing nationwide continue to lack access to broadband in their homes, but effective use of a long-standing federal tax credit can help close the gap in those housing units not funded by the U.S. Department of Housing and Urban Development (HUD).
Recognizing the critical importance of high-speed internet access, a HUD rule effective since 2017 requires that broadband infrastructure be installed in new and rehabilitated federally assisted multifamily housing. This rule is an important step toward improving broadband access for households in affordable rental housing, but HUD-funded units represent only a fraction of new affordable housing.
The Low-Income Housing Tax Credit (LIHTC), launched in 1986, offers a path to help ensure access elsewhere. The tax credit is the primary source of affordable rental housing production in the United States today, however the total availability of competitive LIHTCs is limited; the IRS allocates them annually to states based on a formula and the level of congressional appropriations. State housing agencies then distribute the credits to eligible projects through a competitive process. Each state defines its priorities and scoring criteria through what is known as a qualified allocation plan (QAP).
States set threshold requirements for new developments, and then identify additional priorities through a scoring system in the states’ QAPs. For example, Massachusetts awards additional points for climate resilient design, while Delaware has incentives to include private outdoor space for each unit. The process for allocating these credits is highly competitive. Although the total points scale varies by state, developers have a strong incentive to score as many points as possible because of the number of projects seeking credits. Therefore, QAP requirements heavily influence what affordable rental housing gets built and that means this process presents an opportunity to address broadband needs.
Many states include broadband and digital literacy incentives in their QAPs, though the specifics vary. Among the approaches are incentives for in-unit wiring, provision of ongoing service, common area access (such as computer labs for residents), or digital skills trainings. These features can be requirements for new LIHTC developments or encouraged by providing additional points in the plan calculations.
Some states incentivize broadband access in community areas or dedicated computer labs for residents. For example, Georgia mandates that applicants provide free high-speed Wi-Fi internet access in the required community room or building, while New Hampshire encourages this feature by adding points for the inclusion of free password-protected Wi-Fi in community rooms. When it comes to incentives for computer labs, states have varying equipment requirements based on number of units. For example, Idaho offers points for providing a “computer/study room” with high-speed internet access with at least one computer per 15 units.
States take different approaches as well to in-unit broadband access. In recent years, many updated their QAPs to include points for building broadband infrastructure into all new construction, reflecting that broadband has become an essential service for homes.
Some go beyond the infrastructure to offer additional points for providing free service. For example, Indiana offers up to four points for providing internet access to residents: one for providing the needed infrastructure for high-speed internet service in each unit, two for applicants that commit to provide free service to each unit, or three for those that commit to provide free Wi-Fi service to each unit. Applicants can get an additional point if they commit to one of these options and provide free Wi-Fi in a common area.
California, meanwhile, offers points only for free service, stating that “High speed internet service, with a minimum average download speed of 25 megabits/second, must be made available to each Low-Income Unit for a minimum of 15 years, free of charge to the tenants, and available within 6 months of the project’s placed-in-service date.” Applicants can get an additional point in this section for rural projects.
Digital literacy training can also be incorporated into QAPs, and some states offer points specifically for computer classes. Indiana and New Mexico each provide incentives for projects offering computer training, while several other states include it on a list of potential classes that housing providers can offer for points.
Although many states have made broadband a higher priority or included it for the first time in recent QAPs, nearly half still have no provisions for in-unit access. States can provide incentives for different priorities in their point systems, but need to consider what goals they are trying to achieve when setting grant terms. Including broadband in QAPs—either as a requirement or incentivized through points—demonstrates an understanding of the importance of access to high-speed internet.
As more states recognize the need for residents of affordable rental housing to have access to broadband, it’s imperative to consider both access and adoption. Even as broadband infrastructure becomes standard in new housing development, many low-income residents may still be unable to afford the cost of service. Subsidies such as the Affordable Connectivity Program, a federal initiative that provides low-income households up to $30 per month subsidy for broadband service, can help with incorporating ongoing service costs into housing development.
Importantly, these QAP requirements apply only to new developments and substantial rehabilitations, leaving much of the existing affordable housing stock without these funding avenues. This is where the federal Infrastructure Investment and Jobs Act (IIJA) will be important. The Broadband Equity, Access, and Deployment and Digital Equity Act programs created through the IIJA include funding that can be used to connect existing federally assisted multifamily housing. While updating QAP requirements can ensure all new LIHTC properties have broadband access, the IIJA funds will be essential to connecting existing properties that are not connected or under-connected.
Anna Read is a senior officer and Kelly Wert is an associate with The Pew Charitable Trusts’ broadband access initiative.