Despite a shortfall in critical financing, supportive-housing proposals can compete with other deals, said executives at the “Serving Special-Needs Populations and Underwriting Tenant Services” panel at AHF Live.

  Debbie Burkart, vice president of specialized projects at the National Equity Fund, Inc., said she has several supportive-housing deals that are about to close. These deals have survived for several reasons, she said, including having little hard debt, large reserves, and rental subsidies.

She estimated that the low-income housing tax credit industry will have a shortfall of about $3.7 million in capital this year, leading to one of the industry’s toughest years.

On the positive side, the recent Housing and Economic Recovery Act make several positive changes for deals, including supportive-housing projects. For example, project-based vouchers should be easier to use, and Shelter Plus Care grants will also be more flexible.

Jim Logue, chief operating officer for the Great Lakes Capital Fund, said tax credit investors will have many “vanilla” projects to choose from. Although supportive-housing projects are often more complicated than straightforward affordable housing deals, they have several attractive elements, including little or no hard debt, he said.

He noted that underwriting is critical and that deals should have a minimum debt-service coverage ratio of 1.15x. If it is any lower, developers should go back to the drawing board.

Logue also suggested that developers write a marketing plan that describes why the project is a good investment. “Think about all the ‘what if’ questions,” he said.

Michelle Hoereth, associate director of the Corporation for Supportive Housing, also noted that every state has some sort of incentive for the creation of supportive housing as part of the tax credit program.