Google is bringing fresh capital to the industry at a time when many developers of low-income housing projects have been faced with significant financial gaps. Their commitment to affordable housing marks a continuing expansion of the affordable housing investor base beyond traditional investors such as banks and insurance companies.
To date, mostly banks and insurance companies have been investors in the Low-Income Housing Tax-Credits offered by the federal government. But in this rough economic times, many have been hesistant. The prices of tax credits have fallen far, from 94-95 cents on the dollar in 2006 to as low as 69 cents on the dollar at the end of 2009, if not lower. This means that when a developer sells the tax credits awarded, the developer will not receive as much cash as the company may have received in the past.
The lower cost of tax credits may have made it more attractive for non-traditional investors like Google. For more explanation of other benefits to Google, read this analysis.
A report has estimated the size of the tax credit market to be less than $4.5 billion in 2009, less than half of its peak of approximately $9 billion in 2007.
They're projecting 480 units nation-wide will be created as a result of the investment. Just a drop in the ocean on what is needed, but a welcome addition. Reading this article on Multifamilybiz.com makes me think that those seven communities were selected mostly because of pre-existing relationships with developers who may already have projects in the pipeline.
Posts
No comments:
Post a Comment