For those of us in the affordable housing industry, particularly those of us who are familiar with the affordable housing tax credit program, we know the state of the industry.  Not good. 

Over the past several months, we have seen the turmoil in the financial system essentially destroy, or make unrecognizable, Fannie Mae and Freddie Mac, and cause great havoc among many public and private financial institutions.  We can not overstate the impact the economy has had on affordable housing and its related industries. 

With tax credit prices down substantially, if they can be sold at all, the affordable housing industry is in a state of uncertainty.  In steps our new President and congress.  To whom much is given, much is expected.  Unfortunately, as of this writing the affordable housing industry is being given the cold shoulder.  The industry had high hopes of the new administration and congress with respect to the American Recovery and Reinvestment Tax Act of 2009 (the economic recovery/stimulus bill).  However, the initial draft of the Bill released by the House contains little or no provisions to assist the affordable housing industry.  Industry leaders such as the Affordable Housing Tax Credit Coalition and various other non-profit and for-profit groups, are aggressively lobbying to obtain better language in the Senate version which should come out this week.  Recommendations by people within the affordable housing industry include:

• Gap Financing ($5 Billion) should be provided to the States to assist with 2007-2009 LIHTC projects in the pipeline that are unable to place their tax credits with investors.
• Acceleration of the 10-year credit period to a 5-year credit period to increase yields and make the credit more attractive to investors.
• Allow the affordable housing tax credit to offset Alternative Minimum Tax Liability to attract more investors.
• Allow a carry back of affordable housing tax credits to prevent flooding the market with credits an investor cannot use.
• Increase the 70% present value tax credit rate from a fixed 9% to a fixed 10-12%.
• Set the 30% present value tax credit rate from a variable rate to a fixed rate of 4% or increase it to a fixed rate of 6-7%.
• Make the affordable housing credit a refundable credit.

All of these recommendations would help the affordable housing industry in one way or another.  Other mechanisms not heretofor considered should also be on the table.   Let's hope that the affordable housing industry is not left behind in the midst of everything else happening in our economy.