As multifamily rents continue to climb, so too does demand for low-income housing. But the longtime shortage of tax credits has been compounded by an inflationary economy and rising construction costs, making it harder for deals to pencil out and thus reducing incentive to meet the need.
Quite the Catch-22. But recent actions suggest some progress to come, whether or not Congress advances legislation to increase the supply of tax credits.
Most prominent among those actions was the Biden Administration’s Housing Supply Action Plan, released in late May. While some aspects of the plan require congressional funding approval, it offers a number of solutions that can progress regardless. Among those, notes the National Association of Hispanic Real Estate Professionals, it creates a point system that rewards improvements to zoning and land-use policies, creates new pathways to government-sponsored enterprise financing, seeks to improvement other federal financing, and outlines plans to align with the private sector to improve cost and supply of construction materials.
The National Apartment Association and National Multifamily Housing Council likewise lauded the plan’s combination of rewards, financial revisions and cooperation with the private sector. Cindy Chetti, senior vice president of government affairs for NMHC, termed it a “comprehensive approach to trying to move the needle on addressing housing affordability” in a conversation with our reporter Gail Kalinoski.
Meanwhile, collaboration is resulting in some interesting success stories. This week, the city of Detroit and its development partners announced they had won $12.1 million in additional low-income housing tax credits from the state of Michigan that will allow them to move forward with six big housing developments that had been threatened by rising construction costs. Other municipalities are partnering with non-profit organizations as well as developers to great success, as Denile Doyle outlines in a series of case studies featured in our July issue.
Such efforts not only create more housing units for lower-income residents, the increased funding and collaborative thinking are producing more livable communities. Nevins Street Apartments in Brooklyn, N.Y., for instance, was designed to ensure healthy airflow and maximize daylight. Solar panels reduce energy costs. Amenities include a gym, a community room, a full kitchen for hosting cooking events and a bike room.
How else can collaboration mutually benefit developers, low-income residents and municipalities? Email me at Suzann.Silverman@cpe-mhn.com and let me know what you’re trying!
Gillian Executive Search is a leader in Affordable Housing Development, Financing, Design and Construction recruiting. www.gessearch.com