In March I posted a chart that showed how severe a shift has occurred since 2005 in the funding sources for 9% tax credit developments. Tax credit equity has decreased by one-third and public agency soft loans have doubled as a share of total development costs (TDC). CTCAC released its 2011 Annual Report last month, and the trend has continued. While the average TDC for the 121 awarded projects fell by 4.2% from 2010 to 2011, tax credit equity and public agency soft loans both declined less than 1% – the major decline was in commercial loans, and there was some new funding from “Tranche B” loans, backed by Section 8 rental subsidies.

% TDC           2005      2006      2007      2008      2009      2010      2011
Soft Loans    17.8%     14.7%     16.4%     21.2%     29.2%     39.8%     38.1%
TC Equity      67.5%     68.7%     64.2%     57.1%     50.5%     47.3%     46.7%

The chart above clearly shows the continuing trend, which will probably be evident through 2012 as well. The table above shows the percentage of TDC that soft loans and equity covered over the past seven years and how pronounced the trend toward public agency loans has been – more than doubling from 2007 to 2010! Continue reading →

When the Housing Bubble popped, and home sales and prices started dropping like a stone, Congress enacted the American Recovery and Reinvestment Act of 2009 (ARRA), a stimulus package to try to stem the growing recession.  A big part of ARRA was a first-time homebuyers tax credit.  This gave people buying their first home, or who had not been homeowners for three years, with a tax credit equal to 10 percent of the purchase price of the home, up to $8,000.  Because California’s home prices are so much higher than those in other regions, the $8,000 cap was reached by almost all homebuyers here.

The tax credit was intended to spur home buying and stop the precipitous drop in home prices, which were plunging at almost 20 percent per year at the time.  According to a report by the Government Accountability Office (GAO), about 2.3 million taxpayers took advantage of the credit, which cost $16.2 billion in direct tax expenditures.

So, what was the real effect? Did the credit do what Congress intended?  And who really benefitted from that $16.2 billion? Continue reading →