Tax Credit Pricing, Budgets Erode Affordable Housing Finance

Last week the Senate Banking, Housing and Urban Affairs Committee created a permanent affordable housing fund that, when fully capitalized, will be used to build 1.5 million affordable homes during the next 10 years. Affordable housing advocates were jubilant about the bill, which along with the House version, has been steadily inching to the president’s desk. Unfortunately, capital for the fund will be delayed for at least two years as the expected sources – Fannie Mae and Freddie Mac – will be tapped to finance a homeowners’ bailout fund.

The bill’s successful passage to the Senate floor, not to mention the delays in funding it, also serves to highlight larger difficulties in finding financing for affordable housing – a state of affairs that has been building for the last year or so. For instance, the funding delay is a story that is being replayed in state and local legislatures throughout the country as the economy slows, according to George T. Faris, an attorney with Lamm Rubenstone. “Whenever there is a general tightening of budgets, one of the first programs hit is affordable housing,” he tells GlobeSt.com.

At the same time, developers are grappling with a steady erosion in tax credit prices. “Tax credit prices have gone down by 15% over the last year or so,” Bernard Carr, executive director with the New York State Association for Affordable Housing, tells GlobeSt.com.