2010 was a world away from the year before. Affordable housing production got back on track after being derailed by the recession. AFFORDABLE HOUSING FINANCE's Top 50 developers started 24,528 new units in 285 projects last year. That's a big 95 percent increase from the 146 projects the developers started in 2009.

While the list accounts for only a portion of all affordable units being built, it still provides a vivid snapshot of the health and mood of the industry.

The latest image to emerge is one of developers putting more shovels in the ground. A backlog of projects broke free and moved forward in 2010 with the help of federal stimulus programs that jumpstarted stalled low-income housing tax credit (LIHTC) projects and more private investor capital flowing into the market.

The average number of units started by the Top 50 developers was 481 units. That's up from the 250-unit average they started in 2009.

The latest list features 51 companies because there was a tie at the No. 46 spot, with PIRHL, LLC, of Warrensville Heights, Ohio, and Realtex Development Corp. of Austin, Texas, each starting construction on 168 units last year.

The only list of its kind, the AHF 50 reveals how many units are under development by the leading national and regional developers. The ranking is based on the number of new units started in 2010. Separate lists reveal the Top 50 owners and the Top 10 firms completing acquisitions.

The Top 50 owners hold more than a half million units.

The results are compiled from a voluntary survey. This year, 105 firms participated. All developers and owners with general partner interests are encouraged to take part in next year's survey.

Who's on top

The top firms continued to show their strength in 2010, with The Michaels Organization in Marlton, N.J., and The NRP Group in Cleveland holding on to the top two spots as they did last year.

Miami-based Carlisle Development Group was the third most active developer in 2010, moving up 16 spots.

Pinnacle Housing Group in Miami was the biggest mover on the list, advancing to the No. 7 spot from No. 45 last year.

“We moved a lot of the deals out of the pipeline and into the ground,” says David O. Deutch, a partner at Pinnacle, which started construction on seven projects with nearly 700 units.

He attributes the increased activity to the American Recovery and Reinvestment Act of 2009 (ARRA), which created the Tax Credit Assistance Program and the Tax Credit Exchange Program. They provided billions of dollars and new financing tools to rescue stalled LIHTC projects.

Pinnacle received ARRA awards for six projects.

The stimulus programs were huge for developers last year. The Top 50 developers reported receiving ARRA awards for 166 developments.

Developers also had to be creative in structuring their deals and refocusing their firms during the last few years.

“What these times call for is a lot of creativity and nimbleness in how you structure the financing,” says Matt Franklin, president of MidPen Housing Corp. in Foster City, Calif.

For many developers, that has included looking at new ways to leverage the local investment in projects and using different subsidy sources for the first time.

The Pacific Cos. started construction on 14 projects last year, more than the Idaho-based company is used to.

Company leaders anticipated the increase in activity and hired key construction site superintendents to help. “We also worked with our lenders, investors, and government partners to stagger the closings throughout the course of the year," says Caleb Roope, president and CEO.

A number of firms reported expanding into new markets. The Michaels Organization, Carlisle Development Group, Pinnacle Housing Group, and others have entered or are exploring the possibility of moving into new states.

Even though many firms were able to begin clearing their backlog in 2010, the Top 50 group expects to start roughly the same number of projects and units this year. The numbers are just slightly down as they project starting construction on 271 projects with 23,502 units.

In another show of their strength, 36 of the 51 firms reported hiring additional staff in 2010. The Top 50 developers employ about 16,000 people. One firm downsized slightly while the remaining companies maintained the same level or did not report a change.

When looking at all the companies that responded to the survey, 55 hired additional staff in 2010 while 10 reported downsizing.

The outlook

Despite the recent improvements in the LIHTC market, developers remain mixed on the outlook for this year. Fiftyone percent of all respondents expect affordable housing finance conditions to be better a year from now while 27 percent believe conditions will worsen. The rest say it will remain the same.

Asked to name their top concern in 2011, developers overwhelmingly fear the loss of state and local resources. Forty-five percent of the respondents picked diminishing local resources as their biggest worry from a list of nine choices.

These developers were located around the country, including many in California, where hundreds of city and county redevelopment agencies face possible elimination under Gov. Jerry Brown's budget proposal.

The next biggest worry, cited by 21 percent of the respondents, is the possible elimination or changes to the LIHTC program by Congress. That was followed by the availability and cost of debt financing, 11 percent.

However, developers are feeling better about LIHTC prices. The survey finds that the average price per dollar of credit in 2010 was about $0.77. The average price for the same type of deals in mid-2011 is estimated to be $0.84.