The Road Ahead Exactly how many affordable units are at risk is uncertain. The most pessimistic estimates suggest it may reach as high as 20 percent of the total. Most observers, however, expect that fewer than 15 percent of units created under the program will cease to be affordable after the 15-year expiration date.
Still others believe it could be as low as 5 percent to 10 percent. “I don’t believe it’s actually that big an issue,” says Howard Menell, a tax advisor for the National Multi Housing Council in Washington, D.C. “There are additional restrictions on a lot of these properties, which is going to prevent their being taken out of the affordable housing inventory.”
Jenny Netzer, executive vice president of MMA Financial LLC in Boston, concurs with Menell’s assessment. MMA is the principal operating subsidy of MuniMae, a financial services company specializing in tax exempt investment. “In the vast majority of cases, the properties are staying as affordable,” she asserts. “That’s what they are best suited and positioned for.”
Netzer adds that because many project sponsors have an affordable-housing mission, they will do whatever they can to ensure properties remain affordable. In addition, she says, the individual housing finance agencies that run the program at the state level, as well as the communities in which the projects are located, will fight to prevent the loss of affordable housing.
The projects most at risk of converting to market rates are those approved from 1987 to 1989, when the program mandated only 15 years of affordability. Beginning in 1990, the compliance period for projects built with tax credits was extended to 30 years–but the period of tax credit is still 15 years.