The global financial crisis has created some unexpected collateral damage for affordable multifamily housing owners. With the collapse of the low-income housing tax credit and housing bonds markets, the state housing finance agencies found themselves suddenly sitting around twiddling their thumbs. These agencies have two basic functions…first to generate funds for affordable housing, and secondly to monitor the properties funded. The current state of the financial markets has essentially eliminated the financing function.
So what is a fully staffed bureaucracy to do? The choice lies between laying off employees or reassigning them to oversight activities. The latter is a great solution for agency staff, but with horrendous impact upon the multifamily properties they serve.
In an attempt to fill up the work week, these new compliance police are ferreting out the most obscure regulations and loan agreement terms and pouncing upon their clients with extraordinary requests for documents, updated financial information and new studies and reports. Granted, these demands may be perfectly legitimate under the relevant funding agreements; however, their timing and ferocity are out of sync with the day-to-day responsibilities and budgets of the affordable communities involved.
These are hard times for all affordable housing and especially for multifamily properties. Local taxing authorities are using every possible trick to deny tax abatements and exemptions, lenders and bondholders are nervously requiring better performance in a down market, and now come the state agencies with time consuming and budget-breaking requirements that are ill-timed and unnecessary.
What has your state housing finance agency done for you lately?