Faltering LIHTC market underscores importance of quality management.(INDUSTRY NEWS & NOTES)

According to an article in the November 12 issue of The New York Times, Fannie Mae Freddie Mac, and Citigroup have stopped buying Low Income Housing Tax Credits (LIHTC), one of the primary tools for meeting a growing need for affordable housing. Prior to this year, Fannie Mae and Freddie Mac alone bought about 35 percent of housing credits. As demand for credits has slipped, prices have fallen from around 90 cents on the dollar to less than 80 cents. Falling prices mean developers have less equity for affordable housing developments, resulting in fewer developments. Existing developments, however, still need quality real estate management.

Improper tenant income certification, neglected maintenance, and other poor management practices may cause the IRS to recapture housing credits. The demand for quality real estate management of affordable housing properties financed with LIHTCs may grow as developers, syndicators, and investors seek to shore up existing financial arrangements.

"LIHTC development may be slowing, but experienced managers of LIHTC properties need to understand and market the value they provide to existing properties. They also need to realize that they hold the competitive edge in landing the accounts for the developments that do get built," said Cindy Clare, CPM[R], president of KETTLER Management, a firm with LIHTC properties in its portfolio based in McLean, Va.

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