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4 J. Land & Dev. 39 (2014-2015)
Thank You Sir, May I Have Another: The Issue of the Unsustainability of Low Income Housing Tax Credits and Proposed Solutions

handle is hein.journals/jlandpmen4 and id is 45 raw text is: THANK YOU SIR, MAY I HAVE ANOTHER: THE ISSUE OF THE UNSUSTAINABLITY OF LOW INCOME HOUSING TAX CREDITS AND PROPOSED SOLUTIONS John Baber* I. Introduction The Federal Low-Income Housing Tax Credit (LIHTC) program is currently the nation's largest federal subsidy for the development and rehabilitation of affordable housing, having created or preserved over 2.5 million housing units and distributed over $7.5 billion in fed- eral tax credits to developers of and investors in affordable housing from the program's inception in 1986 through 2007.2 However, de- spite its monumental size and impact, the program has some poten- tially fatal flaws that threaten the long-term financial and physical viability of the very affordable housing that it creates, and threatens the health of the neighborhoods that it is created in.' Affordable housing projects built today are routinely constructed in communities that are already geographically segregated, overburdened with debt due to unnecessarily high up-front development fees and other debts, and simultaneously limited in the amount of rental income they can generate.4 In many ways, these building practices do not benefit the communi- ties they are built in, and can lead to an unsustainable economic situa- tion where the project's ability to fund its ongoing maintenance and capital improvements (new roofs, systems, etc.) are put in serious jeopardy because most of its revenue goes towards paying its operating * J.D.,magna rum laude, University of Baltimore School of Law; M.Ed., cum laude, University of Virginia; B.A., George Mason University. The author thanks Professor Audrey McFarlane for her support and inspiration; the author also thanks his father, Brant Baber, for showing him the way and then walking along side him. . Megan Ballard, Profiting from Poverty: The Competition Between For-Profit and Nonprofit Developers fur Low Income Housing Tax Credits, 55 HASTINGs L.J. 211, 212 (2003). 2. NAT'1 COUNCIL OF STATE HOUSING AGENCIES, STATE HFA FAcTBOOK: 2010 NCSHA ANNUAL SURVEY RESULTs 92, 100 (2012). 3. See infra Part IV. 4. See Barry Zigas, Learning from the Low Income Housing Tax Credit: Building a New Social Investment ModeA 9 CMTy. DEV. INv. Rkv. 47, 54 (2013). Zigas states that there is considerable value leakage caused by layers of spon- sors, syndicators, lawyers, accountants, and others needed to create, track, and document the credit. Id. 39

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