Missed AHPAA-tunities: No 2025 housing tax credits in Illinois’ least affordable communities

by Martin Cozzola, Staff Counsel, and Suni Kartha, Staff Counsel

On June 24, 2025, the Illinois Housing Department Authority (IHDA) released a list of projects receiving 2025 Low-Income Housing Tax Credit (LIHTC) awards. Notably absent from the list of communities receiving awards this year—and nearly entirely absent even from the list of developments requesting funds—were any projects in our state's least affordable communities. 

While nearly every community in Illinois needs more affordable housing, Impact for Equity has long advocated for new affordable housing in communities where housing costs are the highest. These communities' lack of access to housing creates barriers to jobs, education, and other resources for low- and moderate-income Illinoisans. 

What's more, state law recognizes this imperative as well. The Affordable Housing Planning and Appeals Act (AHPAA), passed in 2003, requires every municipality whose housing stock is less than 10% affordable (called non-exempt local governments, or NELGs) to submit an affordable housing plan to IHDA. Because IHDA administers both the state's LIHTC program and AHPAA, the agency is uniquely positioned to accomplish the goals of both policies at the same time by directing critical LIHTC funding to municipalities subject to AHPAA. 

These awards are critical because LIHTC is the primary tool for building affordable rental housing both in Illinois and nationally, subsidizing nearly 90% of available units in the country. In Illinois, LIHTC awards have helped create more than 100,000 units of low-income housing affordable units since the inception of the credit in 1986. In 2025, LIHTC investments are expected to add an additional 850 affordable homes. However, there are far fewer resources available than are needed to meet the state's affordable housing gap, and typically most proposals cannot be funded. 

Unfortunately, only one affordable development was proposed in an NELG this year, and it did not receive an award. This dismal result is not an anomaly—a February 2025 report by Impact for Equity showed that despite nearly two decades of modest incentives for LIHTC proposals in NELGs, the state is averaging just one LIHTC award to an NELG per year.  

In future funding rounds, IHDA can and should encourage more proposals in NELGs to serve the state's least-affordable communities by amending its Qualified Allocation Plan (QAP), which IHDA uses to evaluate applications and is updated annually. While IHDA's recent QAPs have given a slight scoring preference to proposals in NELGs, those incentives have not been sufficient to induce developers to make proposals in the face of other challenges, including the cost of land and potential "not in my backyard" opposition from residents of affluent communities. 

In addition, state legislators must take action to pave the way for more affordable and moderate-cost housing proposals and developments in high-cost communities using tools beyond LIHTC, as the need for affordable housing far exceeds the ability of that program to produce it. A recent joint study from the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois Urbana-Champaign posits that Illinois must build 227,000 affordable homes in the next five years to keep pace with demand, while this funding round, as noted above, is anticipated to create just 850 affordable homes. 

Opportunities to move this work forward were plentiful in the this year's Spring legislative session, where bills were filed that would have created a state match for LIHTC, eliminated local parking minimums, legalized accessory dwelling units statewide, or reduced the prevalence of single-family zoning statewide. Any one of these policy changes would have primed the pump for affordable development in NELGs, as well as other communities across the state. While none of these efforts resulted in new law, legislators may have another chance to get these bills over the finish line during veto session this Fall. Impact for Equity urges the General Assembly to take up and pass these measures and IHDA to update future QAPs to give a more significant preference to NELGs. Collectively, these policy changes will help our state realize the vision of AHPAA and of an affordable Illinois.