Affordable Rental Housing Development in the For-Profit Sector: A Review of the Literature

Rachel G. Bratt
Irene Lew
Joint Center for Housing Studies of Harvard University

Starting with below-market interest rate loan programs in the 1960s and culminating with the creation of the Low-Income Housing Tax Credit (LIHTC) Program through the Tax Reform Act of 1986, the federal government has provided various incentives to encourage for-profit developers to build rental housing that is affordable to low- and moderate-income households. Although for-profit firms have been involved to a far greater extent than nonprofit housing organizations in the LIHTC and other affordable housing production programs at the federal, state, and local levels, these firms have garnered relatively little attention from the academic and policy communities. This article addresses part of that gap by presenting a review of the literature1 pertaining to the affordable housing production record of private, for-profit developers and, where possible, comparing it with the records of nonprofit housing organizations. The article also explores what is known about the extent to which for-profit firms are meeting the “quadruple bottom line.” The quadruple bottom line encompasses the following four components: an affordable housing development must (1) have the financial backing necessary to preserve the development’s long-term affordability, (2) address the social and economic needs of the residents, (3) contribute positively to the neighborhood, and (4) be environmentally sustainable (Bratt, 2012, 2008a). Although the evidence is limited and some findings are contradictory, several differences emerge from this review. The article also offers suggestions for further research.