LOW-INCOME HOUSING TAX CREDIT SHOWCASE

Low-Income Housing Tax Credit Showcase
Investors, Syndicators
Hail Value of LIHTC
T“It is the quintessential
Those who put their money into low-income housing tax
credit (LIHTC) properties are bullish on the tax credit.
public-private partnership,” said
Tom Dixon, vice president of
acquisitions at Boston Capital. “It’s
administered through the state
housing agencies, but it requires
private financing. It’s a great mix
between the two–it has proven to
be the best way to build affordable
housing.”
Dixon has plenty of company
in holding that view among
those who syndicate and invest
in the tax credit properties. “It’s
extremely important. It’s probably
the most successful housing
program ever enacted in our
country, as evidenced by the past
30 years or so,” said Raoul Moore,
the senior vice president of tax
credit syndication for nonprofit
Enterprise Community Partners.
“It’s the only housing program that
provides affordable housing on any
real scale.”
Dixon marvels at the long-term
effectiveness of the LIHTC, which is
in its fourth decade. “The longevity
of the program has been pretty
remarkable,” Dixon said. “In so many
programs, five years is an eternity.
This has been here since 1986.”
For every dollar the government
gives, it gets $3 back, when
you consider all the sources …
that’s a pretty robust return for a
government marketplace.
As Dixon points out, the LIHTC
has continued through multiple
recessions in the United States. “The
production aspect of the LIHTC
has been phenomenal,” Dixon said.
“In times of downturns, the LIHTC
still puts out and produces quality
and affordable units throughout the
states. That’s the best attribute of it–
in good times and bad, it produces
multifamily housing at a good clip.”
Investors, who recognize the
steep price to develop many of the
properties that use LIHTCs, say the
tax credit is irreplaceable. Philip
Melton, executive vice president
at Bellwether Enterprises, said the
need for the LIHTC has grown as
the cost of living climbed in urban
areas. “There’s just no way to build
these projects without some sort of
subsidy,” Melton said.
Melton pointed out that
the “investors” aren’t limited to
financial institutions. In many
developments, local agencies
contribute fee waivers or other
funding. “They have as high an
investment in the program as
anyone,” he said. He also said that
the flexibility of the tax credit,
which requires states to come up
with specific plans that fit them,
makes the investment attractive.
And Melton pointed out
another obvious winner in the
“investment” area of the LIHTC:
the federal government. “It’s been
critical in the past and continues
to be,” Melton said. “For every
dollar the government gives, it
gets $3 back, when you consider
all the sources … that’s a pretty
robust return for a government
marketplace.”
12 Novogradac & Company LLP