The high cost of developing affordable housing is one of the biggest threats facing the industry, according to speakers on the Hall of Fame Power Panel at AHF Live: The Affordable Housing Developers' Summit, in Chicago.

“The industry has got to get together and do something about the cost issue,” said Amy Anthony, president and CEO of affordable development company Preservation of Affordable Housing. “It could ripple across the country in ways that will be very bad for us.” She recommends changing some of the incentives that drive costs higher, including advantages given to developments that use more expensive construction techniques.

This year at AHF Live, four giants of the industry who have been honored in the Affordable Housing Finance Hall of Fame joined together for a discussion of the state of the affordable housing industry. Their discussion included the high cost of development, the danger of tax reform, and opportunities for growth and development.

As the cost to develop affordable housing blows past $300,000 per unit at many developments, the business becomes vulnerable to attack. “If the Washington Post wants to tear us apart like they did the HOME program, those facts are already out there,” said Robert Rosen, principal for Washington Council Ernst & Young.

Such an attack would be particularly risky as Congress continues to consider a comprehensive reform of the U.S. tax code. Some conservatives are committed to lowering the top corporate tax rate to 25 percent. “The only way to do that is to get rid of things like the tax credit program,” said Bob Greer, former president of Michaels Development Corp.

The Hall of Famers agreed that tax reform is unlikely before the 2014 election. “I don’t if you’re aware of this, but Congress is totally dysfunctional,” Rosen deadpanned. He encouraged attendees to keep working to educate their Congressional representatives and inviting them to visit properties.

Development costs are rising in part because the competition includes a seemingly endless list of requirements and incentives for developers to use more expensive building techniques. “Applications used to be no more than four pages,” remembered Jeanne Peterson, director for CohnReznick.

Affordable housing must now serve many purposes beyond simply providing housing at a cost low-income residents can afford.  “The qualified allocation plans are requiring us to do more and more. Now we have to be all things to all people… social programs… health care,” said Greer.

The growing role of affordable housing also provides an opportunity, as developers find ways to tap unusual funding sources from Medicaid waivers to disaster recovery money. New programs like Choice Neighborhoods and the Rental Assistance Demonstration program may also expand to help developers.

The panel even found some reason to hope a new leader at the Federal Housing Finance Agency (FHFA) may soon fund the National Housing Trust Fund, created early in the financial crisis with a dedicated stream of income from Fannie Mae and Freddie Mac, which failed soon afterward. Now that Fannie and Freddie are once again turning a profit, and a new leader, Mel Watt, could soon take the reins at FHFA, it's possible that the trust fund may finally be funded.