In a new paper commissioned by the Massachusetts Housing Partnership (MHP,, based on a survey of stakeholders in Massachusetts and other states, the firm Recap Advisors recommends 10 strategic steps that state housing credit agencies should take to most effectively allocate their 2009 low-income housing tax credits in the current troubled LIHTC equity environment. These recommendations include:

  1. Participate with stakeholders in a collective response to the crisis. Shared interests should trump parochial or competitive interests.

  2. Allow strong, equity-backed applicants to apply and win. Viability is key, as is reliable execution.

  3. Make non-critical transaction features optional, for points. Thresholds can be counterproductive when demand is less than supply.

  4. Keep the competitive process. It harnesses market forces, even in weaker markets.

  5. Collect and disseminate reliable data on LIHTC markets: allocations, awards, pricing.

  6. Break the equity bottleneck using QAP criteria. Give substantial extra points for reliable and ready equity.

  7. Provide an underwriting cushion to handle equity price drops. Stress-test applications with lower-than-expected equity prices.

  8. Have resources available to assist pipeline properties to close. They represent a sunk cost (by somebody) and an affordability opportunity.

  9. Avoid incentives that align against equity markets. Rather than lose credits to a national pool, spend your resource in your state.

  10. Maximize flexibility with gap-filler resources. Plus-up any other LIHTC compatible resources available to you.