Concerned about the shrinking pool of money for new projects, Enterprise and dozens of others have been lobbying Congress to make tax-rule changes that could broaden the appeal of the Low Income Housing Tax Credit to more investors. Fannie Mae and Freddie Mac were the big buyers, but they haven't needed tax credits since mounting losses landed them in government conservatorship. And uncertainty about future profits has reduced other big financial institutions' appetite for the credit, which is taken annually for 10 years.
That has cut the investor base from $9 billion annually to about $4 billion, leaving many developers with credits they can't sell, said Doug Able, senior vice president in capital markets with Enterprise's Community Investment arm. The rest are selling for less - around 70 cents on the dollar in Maryland, down from the usual 90 cents.
"That has had a dramatic impact," said Jeff Hettleman, executive vice president of the Shelter Group. "Many projects can't get going. ... Right now, we're working on half of what we were doing before."
On the homeownership side, the Brooklyn and Curtis Bay Coalition has seen a seismic shift, too. It quickly found buyers for 10 rehabbed properties unrelated to the green townhouse project - sometimes before work finished - between 2002 and 2006. Now it's hoping the stars will align so it can go to closing on five of its new homes in October, 10 months after construction ended. It's still seeking buyers for the other three.
The group needs people who meet its income restrictions and can also qualify for a mortgage. Many interested would-be buyers meet one requirement but not both, said Eshelman, head of the nonprofit community development corporation.
The coalition pieced together financing and subsidies so it could sell the three-bedroom homes, on sixth Street in Brooklyn, for $152,000 even though each cost nearly $250,000 to build. Everything is energy-efficient to make them affordable to maintain, from the appliances to the lighting to the solar panel on each roof that heats the water. Sandy Marenberg, a real estate broker handling sales for the Brooklyn Green Townhomes, said buyers should end up with less than half the heating and cooling costs of a regular new home.
If they can get a mortgage.
"Loan underwriting standards keep getting tougher," said Marenberg, with MEI Real Estate. "The pendulum's gone from giving loans to everybody, whether they deserve it or not, to only giving loans to the overqualified. The folks in between are getting turned down, and many of them would be fine homeowners."
