The Real Deal New York

State budget provision to curb affordable housing investment, developers say

July 02, 2010 09:00AM

An effort to close the state budget gap by deferring low-income housing tax credits could curb private investment in affordable housing development, the Wall Street Journal reported. The state’s tax credit program allows affordable housing developers to sell tax credits to investors in order to raise cash for their projects. Investors can then claim the credits each year for 10 years. The proposed measure would defer the use of those credits that exceed $2 million for three years, which developers say will devalue them, discourage private-sector participation in affordable housing, and ultimately threaten the success of some projects — even those that are already underway. If passed along with the state budget, the deferrals would take effect for tax years beginning Jan. 1, 2010, and developers worry that they will be forced to repay investors who don’t get the tax credits they were promised. [WSJ]

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