Mark Shelburne counts 26 affordable housing developments lined up to trade in the low-income housing tax credits (LIHTCs) they won in 2008 for cash. That's more than half of the 43 projects that received tax credit reservations in North Carolina last year.

“Having the exchange program fund some 2007 and 2008 projects means they can get started now,” says Shelburne, counsel and policy coordinator for the North Carolina Housing Finance Agency. “And more equity will be available for 2009 awards.”

The agency has already announced its 2009 tax credit winners. Across the Southeast, housing fi- nance agencies like North Carolina's are trying to move on from the credit crisis.

They are clearing out stalled affordable housing projects by helping developers cash in their unsold LIHTCs through the tax credit exchange program created by the federal stimulus package in February. At the same time, even in the places most ravaged by the housing crisis, officials are announcing new LIHTC reservations for 2009.

For example, in Florida, whose real estate markets were mangled in the crash, 11 projects won reservations of 9 percent LIHTCs through a request for proposals that closed May 29. Florida developers turned in another 27 applications for LIHTCs in August, which should easily use up Florida Housing's available tax credits for that round.

All of Florida's winners have begun discussions with interested potential investors, though tax credit prices in Florida have dropped from more than $1 for a dollar's worth of tax credits a little more than a year ago, plus related tax benefits, all the way down to $0.60 to $0.70.

“It's been quite a culture shock,” says Stephen Auger, executive director for Florida Housing.

Florida Housing is reserving new tax credits despite a huge backlog of unsold tax credits from prior years. None of the 28 projects that won 9 percent LIHTCs in 2008 in Florida have closed on the sale of their tax credits, though three are expected to close by the end of September. Another eight projects out of the 17 that received reservations of 9 percent LIHTCs in 2007 have not yet found tax credit investors.

Florida Housing is taking its unsold tax credits off the market with the exchange program. In August, the agency received 31 applications from developers to exchange tax credits.

Officials in Virginia have also focused on reserving tax credits for new affordable housing projects.

Despite the market difficulties, demand for tax credits was more than three times the supply. Officials received 93 applications totaling $50 million for their $18 million in LIHTCs.

The Virginia Housing Development Authority (VHDA) reserved 9 percent LIHTCs for 34 planned affordable housing projects.

The developers of these properties have already been in touch with potential investors and expect to sell their tax credits in the upper-$0.70 range in the northern part of the state, close to Washington, D.C. Rural projects are more likely to sell in the $0.60 range, according to officials.

Many out-of-state affordable housing developers traveled a long way to participate in Virginia's tax credit competition, according to local officials.

That's because investors remain interested in Virginia—particularly in the relatively strong housing markets around Washington, D.C.

Only five out of 35 Virginia projects that won LIHTCs in 2008 have had to apply to exchange their tax credits for cash. The other 30 projects have found investors and closed their financing.

Investors are even interested in Virginia's tax-exempt bond projects.

Six projects received reservations of tax-exempt bonds and 4 percent LIHTCs.

“Three have strong investor interest for the 4 percent credits,” says Jim Chandler, director of VHDA's tax credit program. He refuses to boast, even though tax-exempt bond projects have become impossible to finance in many parts of the country.

“It remains to be seen if all six will find investors,” he says.

Southeast Update

Volunteers of America applied for financing for Silver Lakes Village, a 104-unit project for low-income seniors in Orlando, Fla., under the Department of Housing and Urban Development's Green Retrofit Program on June 15. VOA would have used a mix of loans and low-income housing tax credits to finance the substantial rehab, but the difficulty of finding tax credit investors has led them to seek other sources of financing, says Patrick Sheridan, senior vice president for housing development.

In April, Carlisle Development Group started work on 56 new apartments for low-income families in Marathon, Fla., in the Florida Keys. Wells Fargo bought the low-income housing tax credits for the Sea Grape Apartments in two phases in November and December 2008. The bank paid $18 million, or $0.85 on the dollar, for the tax credits. The project had already suffered through years of delays when the credit crisis hit, and Wachovia, the Sea Grape's original investor, was purchased by Wells Fargo.

The developers of Labre Place in Miami applied in August to exchange their 9 percent low-income housing tax credits for cash. Biscayne Housing Group and Carlisle Development Group plan to start construction on the nine-story, 90-unit supportivehousing project by December. The exchange will raise $18 million, or $0.85 on the dollar, for the credits. On the brighter side, Labre's projected cost of construction has fallen $2 million to $20 million this summer.

In August, 24 planned affordable housing projects won reservations of federal low-income housing tax credits from the North Carolina Housing Finance Agency (NCHFA)—that's half as many projects that won tax credits in 2008. The 2009 projects used more tax credits per unit and were also larger, according to Mark Shelburne, NCHFA's counsel and policy coordinator. They also all have commitments from tax credit investors. “We feel pretty good about their prospects,” he says. (Photo courtesy of GRCVB/

In August 2008, Enterprise Community Investment, Inc., closed on the purchase of low-income housing tax credits for the 209-unit Welcome House in Atlanta. Enterprise says it is one of a few deals that closed last year in the Southeast. Enterprise paid $7 million, or $0.90 per dollar of tax credit. The $10.7 million renovation of the community, originally built in 1993, is expected to be finished this month.

Quaker Hill is one of just five affordable housing projects in Virginia whose developers are likely to exchange tax credits won in 2008 for cash through the tax credit exchange program. The 60 rental apartments at Quaker Hill are scattered throughout a larger condominium development in Alexandria, which left potential investors worried about rising fees from the condo owners association.