Every Win Counts

By Jessica Hoefer
February 1, 2023 3 min read

I spent the end of 2022 and the beginning of 2023 watching College Football Bowl Games (Go Tigers! Clemson not LSU) and getting daily news updates on the recovery of Buffalo Bills player Damar Hamlin after his collapse on the field from cardiac arrest. Understandably, football has been front of mind between the recent news cycle and anticipation of Super Bowl LVII.

Then I read this month’s Breaking Ground in which John Rucker, managing director at Stifel, refers to bond underwriters as the quarterbacks who come in to sell the bonds and close the transactions. And it hit me, affordable housing is like a perpetual game of football. The outcome is never a certainty and the game’s volatility is like the volatility we often see in the affordable housing industry, as we try to anticipate each team’s strategy and determine what plays to run.

This issue of Tax Credit Advisor looks at tax-exempt bond trends, how they work, who gets them and how best to utilize them.

According to The Guru Is In, in today’s market, a dollar of the coveted tax-exempt volume cap is more than ten times more valuable than if it funds any other property type. Don’t believe him? Check his arithmetic. This student is more than happy to show his work.

In Legally Speaking, we learn that once the allocation of a volume cap occurs the play clock starts ticking and the project must reach bond closing within a set number of days. If that clock runs out a “penalty” ensues, and the volume cap reverts to the bond issuer.

Both The Rundown on Tax-Exempt Bonds and Bond Bailout articles feature experts in the bond field as they help readers better understand how states estimate demand and issue tax-exempt bonds. Also, we learn what types of tax-exempt bonds are available, their qualifying criteria and restrictions.

Over the years, there has been a reliance on multiple sources of financing to help close funding gaps in affordable and multifamily housing projects. And with demand for tax-exempt bonds steadily rising, more and more states are reaching their bond cap limit. While this creates some issues, a few strategic plays, outlined in Industry Insights—and maybe a Hail Mary Pass—offer a silver lining.

And straight from the affordable housing playbook, Case Study: Paxton Apartments in Washington, DC offers an example of a bond deal where four percent Low Income Housing Tax Credits go hand-in-hand with tax-exempt bonds. The current interest rate environment has led to some creative opportunities for pairing financing elements.

It all comes back to those strategic plays. Not every play results in a touchdown, or even a field goal. But football is a game of incremental gains…just like affordable housing. So, whether a touchdown or a field goal, every point makes a difference and every win counts.

Regards,
Jessica Hoefer
Editor-in-Chief

Industry Insights

The Hope of Spring

Kaitlyn Snyder • April 1, 2024 5 min read

Recent good news has me feeling like the affordable housing industry is awakening from a bleak winter into a springtime blossoming with federal action that will make it easier to build and preserve affordable housing.

The Guru Is In

Algorithmic Morality

David A. Smith • April 1, 2024 5 min read

Those who say you can’t put a price on virtue have never worked in the capital markets. Although people say they value many things, what they actually pay for is what they truly value. Increasingly, that is virtue, or the appearance of virtue, now manifesting itself in the availability, terms, security and risk-adjusted yield of debt or equity instruments.

Legally Speaking

Federal Tax Credit Legislation Recognizes Housing Crisis and Provides Platform for Additional Reform

Ken Lore, Charlie Metzger & Glenn S. Miller • April 1, 2024 6 min read

Against a backdrop of rising rents nationwide and a lack of housing supply in major cities, suburbs, and rural areas, leaders in Washington, DC are devoting significant time and attention to addressing the affordable housing crisis. President Biden, in his March 7th State of the Union address, called for Congress to enact his plan to “build and renovate two million affordable homes and bring…rents down.”