Tax Credit Advisor Article Archives

New money from pension funds, life insurance companies and commercial banks is flowing into apartments with affordable rents. These private equity investments in affordable housing are just a trickle so far – but they may soon become a flood.

Life was good, or it should have been, for Gerry General, the general partner of a partnership that owned Good Life Lofts, a 150 unit low-income housing tax credit (LIHTC) property, located in Rising Rents, USA. But Gerry was a “glass half-empty” guy. As he tried to relax aboard his 34 foot Tartan sailboat, becalmed on the waters of Lake Erie, the future of Good Life Lofts weighed on his mind.

For many low-income seniors, access to quality, affordable in-home care is a pipe dream. If a tenant qualifies for services under Medicaid it normally means a trip to the nursing home, which nobody wants. In progressive Minnesota, where thinking outside of the box is a way of life, developer Tom Schuett has developed a business model that allows him to provide round-the-clock home healthcare to his tenants while getting reimbursed by the state.

“The best way to change the world,” iconic folksinger and social activist Pete Seeger once said, “is to find a positive story and tell it.”

On his first day as Principal Deputy Assistant Secretary for Housing, Edward Golding was asked by the Office of Public Affairs to sit for his official photograph – instead, as a playful joke, he considered sending over a photo of Albert Einstein.
Five weeks later, when I shook Golding’s hand prior to sitting for this interview, I noticed the resemblance right away. And while he may not be a world-famous physicist, Golding is a gifted economist, who has spent the past quarter century working in the mortgage finance industry and advocating for policies that strengthen access to affordable housing.

Acertain $10-billion-a-year industry faces systemic catastrophic risk, for which we are entirely uninsured.
Today’s tax credit properties would not exist without insurance. Today, a LIHTC property without insurance is unfinanceable and un-ownable. It must have title insurance, fire insurance, casualty and personal injury insurance, and flood insurance if relevant. Many properties expect the tenants to buy renter’s insurance, many loans have mortgage insurance.

Operating an affordable housing company is an intricate endeavor. Project development and finance tends to get most of the attention, but operations and maintenance, human resources and asset management are equally important disciplines, particularly as companies mature. As a means of helping educate our members and help build capacity across our industry, NH&RA has been exploring a diverse array of approaches, models and best practices aimed at increasing portfolio value, reducing operating expenses and mitigating company risk. One result of this effort is the Preservation Through Energy Efficiency Road Show, which has visited six cities thus far and was featured prominently in a recent Tax Credit Advisor article. This month I’d like to share some additional ideas and initiatives we have learned about.

“New Markets Tax Credits are coming of age,” says one experienced dealmaker. “Or, maybe it’s more accurate to say people are growing more sophisticated in their use of NMTCs.”

National Church Residences (NCR) is earning a half-million dollars a year in extra rental income, simply because the nonprofit changed the way it calculates the utility allowances at 25 affordable housing properties.

“I’ve been in the affordable housing business for more than 30 years and always thought this was a close-knit community, but what happened in less than 24 hours was amazing,” says David Cooper, of the WODA Group, a nationally recognized company that specializes in affordable housing and has offices in five states.
Cooper, a principal of the company who shares day-to-day operating responsibility with Jeffrey Woda, was wrong. It took only
a few hours.

Every building tells a story. Every brick laid and iron fixture cast tells a tale of prosperity and growth. Every crumbling wall and cracked window speaks of a shift that shaped us. These properties are living testaments to our successes and challenges as communities.

Decades ago, when many sought to destroy these buildings in a quest to build something new, Tim Anderson saw something more than dilapidation and decay. He saw a chance to preserve our history, and carry it with us into the future. He saw buildings that not only had the chance to be beautiful again, but could serve the new and evolving needs of our communities.

Visionary filmmaker George Lucas has rocketed back from his self-created galaxy of long ago and far away to contribute to the dimension of affordable housing right here on earth: specifically, on his expansive property in Marin County, California, north of San Francisco.