A Capital Idea
Ask a hundred economists and, probably, they'll give you a hundred different answers. Some will say the economy's down, some up and some that it's somewhere in the middle of a muddle. But we all know our economy's not firing on all sixes, the way it did just a few short years but what seems like a very long time ago.
Much of the confusion is the result of a lack of capital, particularly private capital. Visit, for example, Ketchum, Idaho. For a number of years a development company out of Salt Lake has wanted to build 32 units of affordable housing. The kind of housing, it told the Idaho Journal of Business, that "will provide for the first time a place for local workers to live close to their jobs in Ketchum in safe, decent affordable housing."
They'd planned to finance the deal using Federal Low Income Housing Tax Credits. Tax credits are a pretty simple idea. They're sold to private investors looking to reduce their tax liabilities. But when the market went south last summer and fall, investors no longer needed tax credits to reduce tax liability. They had losses - and plenty of them - to do that.
So, like so many other financial markets, the markets for tax credits dried up faster than a sno-cone dropped on a sizzling summer sidewalk. The developers from Salt Lake could no longer sell their tax credits and, thus, lacked the capital to break ground on their projects. For that matter, developers of some 1,000 housing complexes with an estimated 150,000 scheduled affordable housing units - across the country - could not either.
Thanks to the Recovery Act passed by the Congress and signed by President Obama earlier this year, families have a second chance to find affordable housing in the Ketchum area. Developers of Northwood Place have been given the capital resources to "jump start" projects stalled by the downturn.
That's because two important elements of the Act – the Tax Credit Assistance Program administered by HUD and the Tax Credit Exchange Program administered by the Treasury Department. Those are providing developers with financing to fill the gap created by the inability to sell tax credits to investors in the current market.
Just last month, in fact, the Idaho Housing and Finance Authority allocated almost $5.3 million in TCAP and $25.4 million in TCEP funds to 13 projects. Those will provide 476 units affordable housing in St. Maries, Boise, Post Falls, Buhl, Montpelier, Caldwell, Idaho Falls, McCall, Payette, Marsing, Chubbuck, Grandview and, of course, Ketchum.
The funds, said HUD Secretary Shaun Donovan, are "an important step in achieving the goal of putting the American people back to work while providing quality, affordable housing options for low and moderate income families at a time when those options are needed more than ever." As the work on these projects start or re-start, you can be pretty sure in Idaho today, there are 476 families who’d say, "Ditto!"
|Content Archived: August 15, 2011|