This paper examines the effect of rental housing development subsidized by the government’s Low-Income Housing Tax Credit program on local crime. We take advantage of changes in the formula used to determine the eligibility of census tracts for Qualified Census Tract (QCT) status, which affects the size of the tax credits developers receive for building low-income housing. QCT status attracts real estate development from other parts of the county, differentially improving the housing stock in the poorest census tracts. Low-income housing development, and the associated revitalization of neighborhoods, bring with it significant reductions in violent crime that are measurable at the county level. There are no detectable effects on property crime, perhaps because of changes in reporting behavior among residents.

Both the efficiency and equity of place-based housing programs for low-income households are frequently called into question. To the extent that such housing programs promote development primarily in low-income neighborhoods, they may only serve to increase the concentration of poverty, which can have deleterious effects on communities, particularly in terms of limiting access to good jobs, schools, and other means to achieve upward economic and social mobility. However, when well-planned and targeted, subsidized housing programs may help to revitalize struggling communities and generate positive externalities that help to turn declining neighborhoods around. An important potential externality associated with affordable housing development involves its implications for neighborhood criminal activity. There are two primary ways in which low-income housing development could affect crime. First, new low-income housing may alter the composition of an area’s population by displacing current residents and attracting new ones. The extent to which immigrants or emigrants are prone to criminality could have immediate effects on the level and nature of crimes in an area. Second, housing construction or rehabilitation may lead the existing population to become less criminal. If new low-income housing development eliminates vacant lots that foster criminal behavior, attracts a greater police presence, motivates residents to be more vigilant, or more generally helps to rejuvenate a community, it could affect the extent of local criminal activity.