Investors mine for profits In affordable housing, leaving tenants at risk

Source: Beth Healey & Christine Willmsen, WBUR Investigations

Tenants' Development Corp. officials never imagined this scenario when they tapped into the federal Low-Income Housing Tax Credit program back in 2003, to renovate their buildings. Under these deals, a nonprofit forms a partnership with an investor (often a large bank) that provides funding in exchange for tax breaks. At the end of 15 years, the nonprofit generally gets to buy out the investor’s stake, taking ownership of the property for well below market value.

At least that was Congress’s intent, housing specialists say — keeping properties affordable for the long-term and in community hands. But the game has changed in recent years, as some project funders began selling off their partnership interests to investment firms with more aggressive profit motives. And those firms are demanding bigger payouts to exit the deals.

If investors are successful and properties are sold on the open market, the risk is that new owners could eventually abandon the affordable housing mission, charge higher rents or convert apartments to expensive condos. It’s a risk that looms on the horizon for thousands of residents in Massachusetts and across the country.

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