The Wall Street Journal published an article on how the credit crunch is impacting on an affordable housing projects funded by low income housing tax credits on March 12, 2008. The article entitled “Losses Stall Affordable-Housing Projects” detailed a situation that is also beginning to impact projects in New Jersey. It is a reminder of how an economic downturn can have an impact on those least able to adjust.
The following is opening paragraphs of the article. To read the full article click here.
Affordable housing is the latest victim of the credit crunch that is reverberating through financial markets.
Projects are being canceled because some of the nation’s largest financial companies, including Fannie Mae, Freddie Mac and Bank of America, have scaled back their participation in the federal government’s largest and most prolific affordable housing tax-credit program, designed to boost construction of below-market-rent apartments.
Carlisle Development Group, a developer that manages 6,000 government-subsidized units in Florida, recently shelved the first phase of a $100 million project it was planning in Miami with the local YMCA. It would have provided 355 affordable housing units. The housing authority in Pueblo, Colo., delayed a 25-unit project for senior citizens this week. Developers report similar tales around the country.
Reeling from losses in the housing and credit markets, U.S. financial giants are without profits that need shielding from taxes and therefore don’t need tax credits. With few buyers, the value of tax credits has declined sharply, leaving a funding gap for developers.