Affordable Housing Conference in Boston Tackles the New and the Difficult

5 min read

There is nothing stale or shy about a National Housing & Rehabilitation Association conference.

At this October’s Fall Developers Forum, the 21st event held each autumn in Boston, the auditorium of the Bank of America Center bristled with energetic discussion of the methods to help your investor out of an LIHTC deal after 15 years, the confusing interplay between federal and state tax credits in light of the lack of consistency among the state programs, and the 25-year successful struggle to recapitalize Massachusetts SHARP Program debt following the 1990 market crash that stagnated rents and negated projections.

More than 200 affordable housing professionals attended, largely from the tight Boston community but also from as far away as San Francisco and Seattle. Attendees included developers, syndicators, bankers, investors, attorneys, property managers, government staffs, representatives of the for-profit and non-profit and the public and private sectors. The provocative two days of sessions were nicely mixed with presentation ceremonies for both the 2014 Timmy Awards and Vision Awards for Career Achievement.

While NH&RA organizes about a dozen gatherings and presentations annually that float among various locations, the annual return to Boston acknowledges the size, scope and sophistication of this market’s affordable housing community.

The Keynote Speaker was Aaron Gornstein, currently Undersecretary for Housing and Community Develop-ment in the Massachusetts Executive Office of the Governor that administers nearly $1 billion in state and federal funds for housing related programs, and a longtime local housing advocate. He reported that under Governor Deval Patrick, the goal has been to create 10,000 affordable housing units per year to retain a vital local workforce for the future, utilizing new zoning initiatives and supplementing housing funds with transportation and infrastructure grants.

Revisiting the Old Deals

On members’ minds at this juncture – as an industry first conceived with the creation of federal tax credits to encourage housing for the needy in 1987 matures and confronts the end life of many early deals – is what Mark Einstein of CohnReznick characterized as dealing with both the “old rules and the new rules.” “Remember,” he said, “the person you first made the deal with 15 years ago most likely doesn’t work at that company any more. You are going to have new people now dealing with your original documents.”

Other participants on a panel entitled “Year 15 Exit Negotiations: Navigating Capital Accounts,” stressed the need to have the foresight to make sure the deal you agree to today is the one you are going to want in 15 years, as well as the necessity of beginning to think about your Year 15 exit in Year 10, and have that deal in place by Year 13.

A panel that focused on “Navigating State Tax Credit Structures” reported that there is “tension in the market place” resulting from two factors: a lack of an overall theory of state tax credits (Some states allocate according to the same percentage of investment as federal credits. Others do not.); and a confusion about tax consequences in the wake of the Historic Virginia case that ruled certain investors were not considered partners. Utilizing state credits with federal requires input from policy experts.

Peter Munkenbeck of Munkenbeck Consulting and Tim Sullivan of MassHousing, both of whom have long-term, hands-on experience helping to rescue Mass Housing from the consequences of a 1990 rent crash that put it on the verge of bankruptcy, described how state agencies, developers and renters collaborated for two years to return stability to an important state rent support program.

In another cleverly conceived and entertaining session, the “Tax Credit Equity Roundtable” demonstrated the bidding process at work. Bev Bates of Boston’s The Community Builders, presented two mock new construction projects to which five representatives of investment companies and banks responded with their questions and per tax credit bids.

On the policy advocacy front, members who participate on the Affordable Housing Tax Credit Coalition Board reported to the Developers Roundtable that they are looking for an Extenders bill when Congress returns post-election, to extend the minimum 9% housing credit rate and, hopefully, establish a minimum 4% credit rate for tax-exempt bond-financed acquisition costs. Though permanent extension of the minimum 9% rate is the goal, a two-year extension is likely the best that will happen. While the LIHTC and bond programs do not seem vulnerable, there is more concern around the future of the historic preservation credit, which was proposed for repeal in a tax reform discussion draft unveiled in February by retiring Congressman and House Ways and Means Committee chair Dave Camp (R-Mich.). Advocates also hope the Extenders bill will reauthorize the New Markets Tax Credit, which lapsed at year-end 2013 and was not mentioned in the Camp proposal.

NH&RA’s Next Conference

NH&RA will next convene its membership for another deep dive into transactional experience and regulatory developments at its Annual Meeting at the Ocean Reef Club in Key Largo, Fla. on February 18-21, 2015. Information about this event, upcoming Preservation Through Energy Efficiency seminars and other future plans can be found at the handsomely remodeled website,