When investors seek windfall returns from affordable housing, underserved communities pay the price – The Stockholm Manor Story and Its Implications for Affordable Housing Nationwide
The Low-Income Housing Tax Credit (LIHTC) Program has been a significant source of new multifamily housing for more than 20 years, providing more than 2.2 million units of affordable rental housing. As LIHTC investments mature, however, the affordable housing industry is becoming alarmed at growing efforts by private equity and other investors to secure unplanned payments as a condition for exiting the investment, threatening the properties’ long term affordability and draining resources from mission-focused organizations.
In this episode of Cinnaire’s Advancing Communities Podcast, Cinnaire’s Chief Strategy Officer Jim Peffley is joined by Scott Short, CEO of RiseBoro Community Partnership, a non-profit organization based in Brooklyn, NY, committed to neighborhood revitalization. RiseBoro, like a growing number of non-profit affordable housing developers, is engaged in a legal battle with an investors to retain the property rights to Stockholm Manor, an affordable housing development in Brooklyn, NY. The case is being followed closely in the industry by owners and developers concerned with the growing threat to our nation’s supply of affordable apartments by private sector entities seeking to extract additional capital beyond the tax credits the program was designed to provide.
Jim and Scott discuss the challenges RiseBoro faces with Stockholm Manor to retain property rights as the LIHTC matures and maintain it as affordable housing in a community experiencing a 24% poverty level. If precedent is set with a loss in this case, some investors will become further emboldened to test the financial limits of nonprofit partners and ownership of millions of units of affordable housing could change hands from community-based, mission-driven nonprofits to profit-driven corporations. Listen in as Jim and Scott discuss this important case and provide insight into how owners and developers can protect themselves and their affordable housing properties from these abusive practices.
You can read more about RiseBoro’s fight to protect affordable housing here and also join RiseBoro’s Coalition of Support for the Stockholm Manor case, which will have implications to protect low-cost housing not only in NYC, but set a precedent to protect affordable homes across America for decades to come.