The current financial crisis offers some opportunities along with challenges, providing a unique set of circumstances that can change the affordable housing industry. Rahm Emanuel, a prominent Obama administration official, has publicly stated the crisis should not be “wasted.” Affordable housing policymakers should not ignore the unprecedented opportunity to improve and influence housing outcomes by:

  • Enhancing communications and developing new relationships;
  • Developing a better understanding of housing needs and goals;
  • Acquiring new skills (asset management);
  • Refining existing standards, e.g., underwriting; and
  • Rethinking current programs and exploring new options.

Partnerships and effective communication are imperative during this crisis to affect necessary change. Entities that may not have had a relationship before now have reason to work together to accomplish shared objectives. Developers or investors are responding to state housing agency requests for their expertise, working proactively to develop solutions to issues that arise. Unlikely pairings have resulted, as in the case of an Indiana-based syndicator with few Ohio projects who has become a key stakeholder in the Ohio Housing Finance Agency’s (OHFA) approach to the problems in the tax credit market.
During this crisis, housing organizations are examining the status of their programs, projects, and goals as never before, positioning them to take advantage of the housing market when it revives. At the same time, housing organizations are being challenged to learn new skills and programs. OHFA, for example, is working with contractors to administer the American Recovery and Reinvestment Act (ARRA) funding, gaining knowledge throughout the process. The asset management function required under the Tax Credit Assistance Program (TCAP) and tax credit exchange program will require state agencies to develop expertise in this area—even if they are contracting for asset management services.

In addition, given the fluid nature of projects, many organizations are just starting to exercise their dealmaking skills. While the TCAP and credit exchange are limited by statute, both will result in state agencies taking different approaches to financing projects. This will lead to new programs as agencies identify additional needs.  To get past the current crisis, some standards will have to be sharpened. For example, underwriting will likely be the focus of more attention. This focus has an upside in that it is building a database of information that can be used in future deals, ensuring that when the market returns, housing organizations will be much better positioned to structure projects.

While there are some upsides to the housing crisis, there are clearly some harsh realities. Many in the industry believe that things will go back to the way they were before the crisis, but it is evident that this is not the case.

While we can celebrate and take advantage of what we are learning from the current crisis, we must evaluate how we are solving housing problems and what we’ll do if the housing credit market recovery is slow or nonexistent. We have to move the conversation forward and begin talking about other means by which housing goals can be met, particularly if the market for tax credit investments does not rebound as rapidly as desired.

While all may agree the problem is the economy, not the program, we nonetheless must consider how the program is working.  It is possible it is not through the same tax credit program that has created many thousands of affordable units up until now. It could be through a new grant and loan program. Possibly more funds should be block-granted to the states so they can meet specific needs. Then again, possibly a few adjustments to the tax credit and other programs would be sufficient to ensure affordable housing goals are met. 

What does affordable housing need now? Now is the time for affordable housing to step back to identify what we are attempting to achieve. In essence, we need to adopt a “zero-based” approach. Instead of continuing to talk about additional funding or enhancements to existing programs, we need to challenge the orthodoxy. Are tax credits, Sec. 8, and other programs the only way to provide affordable housing, or are there other means?

As an industry, we should ask tough questions concerning the broad range of programs we administer. Changing circumstances require a new consideration of these issues, including:

  1. What is the role of the market and the private sector in solving housing problems?
  2. What role does government have in resolving market failures?
  3. Are the same programs effective in the same markets?
  4. How much housing assistance for low- to moderate-income households is reasonable?
  5. How do we balance investments in homeownership and rental housing?
  6. Which funding method is most financially and administratively effective—grants, loans, or equity?
  7. What is the role for the customer (i.e., the renter or home buyer)?
  8. Should flexibility be valued over stability and consistency?
  9. What has worked and not worked with current housing programs?
  10. Which level of government is best positioned to create and administer effective housing programs?
  11. Should housing programs only meet housing needs, or address broader needs such as neighborhood or community revitalization?

Our nation periodically restructures housing assistance programs in response to political shifts, economic fluctuations, and changing housing needs. It appears likely that we are about to enter another such period. As new policies emerge, we can have an impact if we choose to focus on outcomes, not programs. Let’s embrace the opportunity to build a better response to housing needs, rather than defending only our current programs. The households who benefit from housing programs do not care how quality affordable housing is delivered, just that it is available.
The views expressed in this article are those of the author and not necessarily those of the Ohio Housing Finance Agency.

Brian Carnahan is director of the Ohio Housing Finance Agency's Office of Program Compliance, where he manages the compliance monitoring of tax credit, HOME, and Sec. 8 communities. Carnahan can be reached at