The
current economic and financial crises present significant challenges
for the construction industry, particularly residential construction.
One of the by-products of this crisis has been the freezing of
investments in the low income housing tax credit (LIHTC) market. The
tax credits create an incentive for investors to provide capital to
developers to build multi-family rental housing for moderate- and
low-income families across the nation. Since the contraction of the
credit market, and as traditional investors remain on the sidelines,
the value of tax credits has plummeted. Consequently, as many as 1,000
projects (containing nearly 150,000 units of housing) are on hold
across the country.
In
response, the Recovery Act provides $2.25 billion for TCAP, a grant
program to provide capital investments in these stalled LIHTC
developments. HUD is awarding these TCAP grants by formula to 52 state
housing credit agencies (all 50 states plus the District of Columbia
and the Commonwealth of Puerto Rico) to complete construction of
qualified housing projects that will ultimately provide affordable
housing to an estimated 35,000 households nationwide. Since a major
purpose of this program is job creation, the Recovery Act establishes
ambitious deadlines for expenditure of grant funds and requires state
housing credit agencies to give priority to projects that can begin
immediately and be completed by February 16, 2012.