Comments on: Re-engineering the LIHTC value chain: Part 1, it’s broken http://affordablehousinginstitute.org/blogs/us/2009/06/re-engineering-the-lihtc-value-chain-part-1-its-broken.html Affordable Housing Institue Mon, 22 Feb 2010 01:10:03 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Mark Shelburne http://affordablehousinginstitute.org/blogs/us/2009/06/re-engineering-the-lihtc-value-chain-part-1-its-broken.html/comment-page-1#comment-34174 Mark Shelburne Tue, 02 Jun 2009 17:39:48 +0000 http://affordablehousinginstitute.org/blogs/us/2009/06/re-engineering-the-lihtc-value-chain-part-1-its-broken.html#comment-34174 Your observation regarding agencies having been in the cat bird seat has merit. However there’s also the matter of IRS Code Section 42(m): (2) Credit allocated to building not to exceed amount necessary to assure project feasibility. (A) In general. The housing credit dollar amount allocated to a project shall not exceed the amount the housing credit agency determines is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period. (B) Agency evaluation. In making the determination under subparagraph (A), the housing credit agency shall consider— (i) the sources and uses of funds and the total financing planned for the project, (C) Determination made-when credit amount applied for and when building placed in service. (i) In general. A determination under subparagraph (A) shall be made as of each of the following times: (I) The application for the housing credit dollar amount. In other words agencies don’t have much choice. Unfortunately you are also correct that having equity come in last means an unknown hole to fill, which is not likely to improve any time soon. Your observation regarding agencies having been in the cat bird seat has merit. However there’s also the matter of IRS Code Section 42(m):

(2) Credit allocated to building not to exceed amount necessary to assure project feasibility.

(A) In general. The housing credit dollar amount allocated to a project shall not exceed the amount the housing credit agency determines is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period.

(B) Agency evaluation. In making the determination under subparagraph (A), the housing credit agency shall consider—
(i) the sources and uses of funds and the total financing planned for the project,

(C) Determination made-when credit amount applied for and when building placed in service.
(i) In general. A determination under subparagraph (A) shall be made as of each of the following times:
(I) The application for the housing credit dollar amount.

In other words agencies don’t have much choice. Unfortunately you are also correct that having equity come in last means an unknown hole to fill, which is not likely to improve any time soon.

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