Tax Credits, Recycled Bonds and Stimulus Funds

The Low-Income Housing Tax Credit (LIHTC) was a critical tool used during these years. Funding received through LIHTC is a critical component of HDC’s ability to build and rehabilitate affordable housing. Together, HDC’s LAMP program and HPD’s Mixed-Income Rental Program produced approximately 40,000 new and rebuilt units for low-income families in NYC since 2004.

In response to the housing and credit crisis, HDC took advantage of new and innovative financing tools, including the Tax Credit Assistance Program (TCAP), the New Issue Bond Program (NIBP) and the ability to issue Recycled Tax Exempt Bonds. “Part of what happened in the bond world after the financial crisis,” said Richard Froehlich, “was that bond rates, particularly for housing, were very high, and the Federal government’s borrowing costs were much lower. NIBP, which ran from 2009-2011, permitted HDC to issue bonds at rates closer to the government cost of funds. This allowed us to offer lower cost loans for housing projects.” By the end of the program, HDC had issued $500 million in low-interest bonds under NIBP to finance 7,548 units of affordable housing.

Froehlich added: “TCAP, which came out of the Stimulus Act, allowed HDC to gain additional funding that offset some of the loss in tax credit pricing post-crisis. Federal support for affordable housing assisted HDC through the roughest of times, enabling HDC to finance more affordable projects. The lion’s share of housing that went on in NYC in 2009 and 2010 was affordable because of programs like NIBP and TCAP. Without them, there would have been far fewer jobs in construction.”