The same stock market crash that deflated retirement accounts and siphoned value out of real estate also walloped government-subsidized housing developments.
That market is coming back, in Massachusetts at least, and starting next year the state will double its funding for low-income housing, in the form of tax credits.
For the first time, the state's contribution of tax credits will exceed the amount of federal credits used within the state — at least by one metric.
"This will put people to work and provide housing," Rep. Kevin Honan, D-Brighton, said before the increase was passed by the state Legislature in an October spending bill. "It's a wonderful thing that Massachusetts is doing here, stepping up to the plate on housing."
The push comes as Gloucester and Rockport renew their push to boost their affordable housing stocks.
In Gloucester, the Action Inc. shelter's bid to expand the number of beds it can use to house overnight visitors — on hold after a Zoning Board of Appeals meeting Thursday — has spotlighted the lack of housing into which those who stay at the shelter can go.
Gloucester is also facing a Chapter 40B development pegged for the Brier Neck area near Good Harbor Beach because the city does not meet the state's 10-percent minimum level for affordable housing. And in Rockport, a new downtown master plan outlined earlier this month focuses in part on affordable housing needs, including ways to help residents on fixed incomes pay for repairs their homes require.
The federal government provides $14.2 million in tax credits in Massachusetts, according to Novogradac & Company, a certified public accountant company. That's compared to the $10 million the state has provided in recent years.
As part of the supplemental budget passed in October, the state will increase its tax credits from $10 million to $20 million for two years, ending June 30, 2014, meaning that for those two years the state awards will surpass the federal awards.
Without the increase, all of the tax credits would have gone toward state matching funds for only public housing redevelopment efforts in South Boston and Taunton, according to Citizens Housing and Planning Association (CHAPA).
With the increase, according to CHAPA, private investment will increase and an estimated 25 developments, 1,200 housing units and 1,224 jobs are expected to advance.
Sean Caron, CHAPA's director of public policy, said demand outpaces supply for tax credits by a 4-to-1 margin and he expects the developments will advance after a competitive process.
Caron said constituent concerns over rental costs helped generate support for the bill. "A lot of legislators are really seeing how much rents are rising thin their district and just how tight the rental market is," he said.
Since 1986, most large affordable housing developments throughout the country have been funded by banks and other major companies seeking federal tax breaks. In 1999, the state launched its own tax credit program.
"Before '86, really all of the federal affordable housing programs were classic, government programs where the government gave grants or subsidized loans directly to developers," said Mark Curtiss, managing director of the Massachusetts Housing Partnership. The funding change 25 years ago "imposed a private market discipline" on a program that had previously lacked oversight, Curtiss said.
The way the program works is developers compete for tax credits, and once they have those credits the developers seek investment from large corporations, which stand to gain those tax breaks by investing in the housing projects, Curtiss said.
Tax credits are the largest resource for developing affordable housing in Massachusetts, but because of their reliance on private investment they are subject to market forces.
"That market was devastated in 2008 after the Lehman collapse," said Curtiss. "There was nobody to buy those tax credits."
Material from the State House News Service was used in this report.
CEO Salaries Become Sore Issue in Labor Disputes
Facebook Sued by Investors Over Disclosures
HP to Cut 27,000 Jobs, Save Up to $3.5B
Investors Slap Facebook 11 Percent Lower
Yahoo to Reap $7.1B From Alibaba Stake
Facebook Shares Close Up Just .23 at $38.23
Future Uncertain for Post-IPO Facebook
Facebook Shares Spike 10% Higher at Open
Mark Zuckerberg Rings Nasdaq Opening Bell
Verizon to End Unlimited Data Plans
Facebook IPO: What You Need to Know
GM Says It Will Stop Paying for Ads on Facebook
On Zuckerberg's Mind: People, Not Shareholders
Dimon Survives Votes on Pay, Chairmanship
Raw Video: Protesters Target JP Morgan Meeting
Poll: Half of Americans Call Facebook a Fad
Could JP Morgan Losses Have Been Prevented?
Fuzzy Resumes: A Look at Leaders Undone
More Questions After Yahoo Leadership Fiasco
Ground Broken for New Whole Foods in Detroit
