03/03/2026 AFFORDABLE HOUSING Minutes (2)

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00 ""W"a w, IMP. IMBO w Afforda6Ce Housing Committee 16 Great Neck RoadJVorth Mashyee, M-A 0264.9 On Cape, you see a lot of people come together and foster a relatively streamlined permitting process. A graph was projected overhead showing the growing prominence of LIHTC. It has become the largest rental assistance program, really the bread and butter of affordable development. It has expanded throughout the last few years with the funding bill. Public housing and Section 8 are closed systems with scarce resources. Public housing used to be a large part of the affordable sector, now they are generally not being built, some programs never converted or were preserved, so buildings are in disrepair. Project based Section 8 is a battle to ensure funding levels are maintained. Low Income Housing Tax Credit This is a federal program that gives dollar per dollar tax incentives to private developers for what is hopefully a good cause. These tend to be large banks and insurance companies that have taxable income to offset, and they will invest directly, through funds, or more commonly syndicators. Syndicators assemble funds utilizing investor money. They go to different banks, assemble funds, and interface with developers to have projects, then marry them. Two Types of LIHTC: 4% and 9% - 4%: As of Right, non competitive, each state has credits proportionate to population. Typically for acquisitions and rehabilitation of existing buildings or projects financed with tax exempt bonds. - 9%: Scarcer and more competition, primarily for new construction, one offered a year. The state housing finance agencies have a qualified application plan with criteria that lay points and varies from state to state. There are certain core thresholds for design and affordability, like 60%AMI. Exceptions for income averaging can go up to 80%AMI, as long as the overall average is maintained, which would mean some units would be very low-income. Generally, 60%AMI is the magic financing threshold. Developers will apply for these tax credits and generate equity through what investors pay in. There is almost always never enough funds, resulting in a gap that needs filling through state and local grants. They are typically deferred loans, or structured as loans with no repayment expected during the lift of the project. In some cases, tax abatements fill the gaps or the use of town land that is donated, leased, or sold to the developer at below market rate. Real Estate development tends to be easier to finance when there is more scale. With that, comes push or pull about density that can lead to tensions with local government, abutters, and residents. In looking at these projects, they identify ways to have more units and still fit within the site. They identify ways to draw in sources or reduce long term operating costs through tax abatement. It reduces the annual tax bill and provides predictability that enables 5