Affordable Housing Deals Are Stalling: The Market for Tax Credits, a Catalyst for Construction, Is Drying Up

Many developers are finding it difficult or even impossible to put their deals together

By Curmudgeon

The New York Times today has a story on its economics pages that is not un-related to Ogden matters. The headline is "Affordable Housing Deals Are Stalling: The Market for Tax Credits, a Catalyst for Construction, Is Drying Up. "

Two points of interest in the story. First, federal tax credits [in this case for building affordable housing, mostly apartments] are now falling in value. The developer gets the credits and then sells them to raise money to build the project. Federal tax credits for affordable housing had been selling for 90 cents on the dollar. Now they're going for 78 cents on the dollar... if you can find a buyer. Fannie Mae, Freddie Mac and Citigroup... all major purchasers of tax credits in the past... have stopped dealing in them altogether, as have others. Funding tax-credit and tax-free bond financed projects has become, as a result, much more difficult.

Second point: the projects that are being funded... and some are... tend, according to the story, to be projects to build low and mid-income housing, not high end housing. From the story: "Affordable housing is said to do better than other real estate sectors in a bad economy because government subsidies are available, land and construction costs fall and demand for the apartments rises."

Wondering about the impact on Ogden, because the model for downtown regeneration Ogden currently has in place rests heavily on attracting relatively up-scale condo owners to the downtown area, exactly the kind of construction the Times article suggests is doing badly in current market conditions. [E.g. the Reid condo development, now on what is politely being called "hiatus" for at least two years, and maybe forever. The condo building just north of the Salomon Center has still not been completed, I think, well after its planned completion date. And have the new condos now completing to the east and south of the Salomon Center been leased or bought? I don't know. Just curious. ] I'm wondering what the Times story might mean for downtown Ogden going forward, if anything. How does the River Project development Mr. Leshem plans fit into all this? Would it be wise for the City... Mayors office and Council... to look again at the development model for downtown and to consider whether it needs to be changed in light of new circumstances? Worth chewing over, probably. Anyway, the Times article can be found here:

"Affordable Housing Deals Are Stalling: The Market for Tax Credits, a Catalyst for Construction, Is Drying Up. "

It's worth a read.