Withering Tax Credits Put Crimp on Housing

Boston Globe (06/18/08); Appelbaum, Binyamin
Affordable housing projects in Boston and other areas are suffering due to a decline in the value of tax-forgiveness credits sold by developers to fund development, as Fannie Mae, Freddie Mac and other financial institutions have scaled back purchases amid rising losses. Developers are finding it difficult to sell these credits for more than 90 cents on the dollar, and Jon Rudzinski of Boston-based Winn Development estimates that a 10-percent reduction in tax credit prices will spark a like drop in affordable housing construction. Trinity Financial, for instance, was forced to sell $49.15 million in tax credits for just $45 million, making it impossible to proceed with the second phase of its redevelopment of the Franklin Hill housing project in Dorchester, Mass., without $6.5 million in funding from the city and the state. However, observers believe lower prices for these tax credits will help bring investors back into the market.