What a Difference a Year Makes: Moving Projects Ahead in a Troubled Market. (Auditorium)

Transcription

1 What a Difference a Year Makes: Moving Projects Ahead in a Troubled Market (Auditorium)

2 Biographical Information George Hezel, Esq. founded the Affordable Housing Clinic at UB Law School in 1987 and has directed the Clinic since its founding. Collaborating with not-for-profit community-based organizations throughout Western New York, the Clinic has produced more than 2,000 units of affordable housing by leveraging more than $165 million in federal, state and local government funds as well as equity raised through the sale of low income housing tax credits. Mr. Hezel has participated in numerous training events targeting the use of low income housing tax credits for the U.S. Department of Housing and Urban Development, the American Bar Association s Forum on Affordable Housing and Community Development Law, the New York State Division of Housing and Community Renewal, the New York State Office of Mental Health, the New York State Office of Mental Retardation and Developmental Disabilities, the Supportive Housing Network of New York, and the Association for Community Living. Apart from his teaching at the UB Law School, which focuses on affordable housing financing and development, Hezel has also served as a faculty advisor to the American Bar Association Journal of Affordable Housing and Community Development Law. The Journal is edited at UB Law and published quarterly. For his work in affordable housing Mr. Hezel has been awarded the Caritas Medal by Niagara University, the Distinguished Alumni Award by the University at Buffalo Law School, and the designation as leader in the field by Business First. For his teaching, he was awarded the Faculty Award of the year by the 2002 graduating class of UB Law. Hezel has published articles in the Buffalo Law Review on subjects ranging from real property tax assessment practice to community development law. He also serves as Town Justice in the Town of Aurora. Brian E. Lawlor was appointed Executive Deputy Commissioner of DHCR in February 2007 and also serves as the Chief Executive Officer of the Housing Trust Fund Corporation. As Executive Deputy Commissioner he oversees all of DHCR's offices and the agency's implementation of the Governor's and Commissioner's policies and initiatives. Throughout his career in affordable housing development, he has served in various policy making and legal positions including Assistant Secretary to the Governor for Housing, Counsel to the State Director of Housing and Deputy Counsel for Community Development. Mr. Lawlor was the co-founder of the New York State Bar Association's Committee on Low Income and Affordable Housing and its first Upstate Co-Chair; he was named Advocate of the Year in 2005 by the New York State Association of Affordable Housing. Mr. Lawlor received a Bachelor of Arts from Hofstra University, Hempstead, New York and a Juris Doctor from New York Law School, New York, New York. Joseph Eicheldinger is a Sr. Relationship Manager who leads Key Bank community Development Lending for western New York and Rochester districts of Key Bank. Its mission is to provide financing for affordable housing and community revitalization in low and moderate income communities. Key provides construction loans and investment equity for projects qualified for Low Income Housing tax Credits, Historic Rehabilitation Tax Credits and New Market Tax Credits in upstate New York.

3 Richard S. Goldstein focuses his practice on transactions pertaining to the financing and development of affordable rental housing and, in addition, he represents clients in legislative and regulatory matters before the United States Congress and federal agencies. Mr. Goldstein has handled numerous transactions utilizing the low-income housing tax credit, representing syndicators, investors, for-profit and nonprofit developers, and public agencies. His work involves structuring of offerings; acquisition of interests in housing tax credit projects; and tax, housing, partnership, and real estate advice in connection with these transactions. He has been involved with the housing tax credit program since its inception, having lobbied Congress on behalf of trade association clients prior to its enactment in 1986 and in subsequent legislative amendments to the program. In addition, he has worked extensively with the Internal Revenue Service in conjunction with the issuance of various regulations and other rulings and with the National Council of State Housing Agencies in connection with their advisory work with state housing credit agencies. A frequent speaker at national conferences concerning the housing credit, Mr. Goldstein is considered one of the foremost authorities on the credit program and transactions involving it. Susan Sturman Jennings, Esq. is General Counsel and Vice President of Conifer Realty, LLC, a developer, owner and manager of affordable housing, based in Rochester, New York. Susan closes all of Conifer s tax credit syndications and most of its loan closings, as well as advising on construction and property management issues. Prior to joining Conifer, Susan was a principal of Hessel & Aluise, P.C., in Washington, D.C. where she represented developers, nonprofits and lenders in FHA, FNMA and conventional financing transactions and advised clients on HUD subsidy programs and State agency regulation of affordable housing. Susan began her career as an attorney at the US Department of HUD. Susan received a B.S. degree from Cornell University and a J.D. from the State University of New York at Buffalo Law School. Susan chairs the Federal Assistance Programs Committee for the ABA s Forum on Affordable Housing and Community Development Law, is Vice President of the Board of Directors of Cornell Cooperative Extension of Monroe County and is a member of the Building Community Impact Team of the United Way of Greater Rochester.

4 H.R The Housing and Economic Recovery Act of 2008 An Initial Assessment of Some Potential Impacts on New York State Introduction Congress has recently passed, and the President has signed, the Housing and Economic Recovery Act of This legislation, characterized by Senate Banking Committee chairman Chris Dodd (D-CT) as the most comprehensive housing legislation in over a generation, is extremely complex and, among many other things, includes: an increase in the volume cap for tax-exempt mortgage revenue bonds and changes to improve their administration; increased CDBG funding to respond to the foreclosure crisis; changes to increase the allocation of Federal Low-income Housing Credits, simplify their use and enhance their value in creating and preserving affordable housing; provisions to restore confidence in Fannie Mae, Freddie Mac and the Federal Home Loan Banks and create a new oversight agency to regulate their activities; additional tax incentives for homeowners; and, provisions to modernize FHA. The following is a brief summary of some of the important changes mandated by H.R as well as preliminary estimates of some of the impacts these changes will have on New York State. Additional Volume Cap Creating $11 billion in new housing tax-exempt bonding authority H.R creates $11 billion in additional private activity tax-exempt bond authority often referred to as volume cap to be used in 2008 and carried forward over the next two years exclusively for housing. New York State s total share would be approximately $604 million. Over the three-year period, this represents a 13% annual increase in the state s annual $1.64 billion allocation. Importantly, the cap created under the bill needs to be allocated in 2008 in accordance with the state s allocation statute. It is anticipated that the primary agencies that will be able to take advantage of the additional volume cap will be HFA, SONYMA and New York City s Housing Development Corporation. Recycling multi-family volume cap H.R will enable the bonding authority for multi-family housing bonds to be used again if the original bonds are refinanced or paid off within four years of issuance. This change will bring the Federal government s treatment of multi-family housing bonds in line with its treatment of single-family housing bonds. While it is too early to tell how much additional volume cap will be generated by recycling, initial estimates by the New York City HDC and the New York State HFA are approximately $150 to $200 million per year, most of which is generated by HDC. HFA estimates that in 2008 at most it will generate $15 million from recycling. Volume cap for refinancing subprime loans Prior to the bill, volume cap could only be used for mortgages for first time homeowners. With the bill, tax exempt bonds are available until December 31, 2010 to refinance subprime adjustable rate loans made between 2002 and Issuers have wide

5 discretion in defining subprime loans, but income limits, purchase price limits and recapture still apply. According to SONYMA s view, there is a very limited class of borrowers who can be helped with simply a rate advantage, and therefore recommends the State manage expectations on the impact of this provision of the bill. Exempting housing bonds from the Alternative Minimum Tax (AMT) The legislation would exempt new money housing bonds issued by the state and local housing authorities, as well as the IDAs, from the Alternative Minimum Tax, which is imposed on taxpayers with incomes above a certain threshold regardless of other deductions. Although HFA/SONYMA bonds are currently exempt from Federal, New York State and New York local taxes, they are not now excluded from AMT calculations. Exempting new money housing bonds from the AMT is expected to broaden the audience of investors for housing bonds issued by New York State issuers and should result in lower borrowing costs for SONYMA and HFA. For example, for SONYMA s offering marketed the first week of August the change resulted in approximately 50 basis points reduction in spreads. These lower interest rates, in turn, could be passed on to single-family homebuyers and multi-family developers of affordable housing. Low-Income Housing Credit (LIHC) Program Temporarily increasing the LIHC allocation by 10% H.R will temporarily increase each state s LIHC allocation by 10% in 2008 and In 2008, DHCR s LIHC allocation will increase from about $38.6 million per year to about $42.5 million. In 2009, DHCR s LIHC allocation will increase from about $39.6 million to about $43.5 million. In 2008 and 2009, DHCR s LIHC allocation will therefore increase about $3.9 million per year. Because the LIHC is taken every year for ten years and because it currently has an average credit equity pay-in price of $0.85, this increase means that there will be approximately $33.2 million in additional LIHC equity available to finance affordable housing for New York State in 2008 and again in Repealing the Alternative Minimum Tax (AMT) on housing credits H.R permanently repeals the AMT on housing credits for buildings put in service after December 31, This should increase the LIHC s value to investors (potentially increasing the average credit equity pay-in price) and make more dollars available for affordable housing, but it is not yet possible to quantify the impact of this change. Modernizing LIHC program regulations H.R makes several changes in the LIHC program designed to clarify and simplify program administrative requirements, increase the discretion of state program administrators, and make it easier to use the credit to preserve existing affordable housing. Among other things, these changes will: clarify the circumstances under which a building is considered to be Federally-subsidized and the circumstances in which Federal assistance will be taken into account in calculating the LIHC, allowing some buildings placed in service after enactment and before 12/31/2013 to qualify for a higher credit rate (i.e., a minimum 9% credit rate) and more credit equity financing; provide State housing agencies with greater flexibility to select sites for low-income housing and allocate amounts of credit for projects; clarify the rules relating to determinations of current income; provide developers with more time to begin construction of low-income

6 housing projects after the credits have been awarded (one year instead of current law six months); reform rules pertaining to sales of low-income housing buildings; allow projects to establish housing units for individuals who share common characteristics; relax income rules for rural areas; and eliminate technical barriers to rehabilitating low-income housing projects. Modernizing the LIHC will benefit New York State, although it is not yet possible to estimate the value of the cost savings that may result. Mandating additional record keeping H.R requires states to annually provide HUD with information describing the characteristics of households living in each LIHC assisted project including: race; ethnicity; family composition; age; income; and, use of Section 8 and other rental assistance. This new reporting requirement may increase the cost of LIHC compliance monitoring for DHCR, but it is not yet possible to estimate the additional cost. Community Development Block Grant Program (CDBG) Providing $3.92 billion in supplemental CDBG funding for neighborhood stabilization H.R provides $3.92 billion in supplemental CDBG funds to be allocated to states and localities and used to stabilize neighborhoods and communities impacted by foreclosures. The funds may be used for: the discounted purchase and redevelopment of foreclosed homes and abandoned residential properties; the establishment of land banks for foreclosed homes; the establishment of financial tools such as "soft" second and shared equity mortgages and loan loss reserves; the demolition of blighted structures; and, the redevelopment of demolished or vacant properties. The allocation of the funds will be based on a formula to be established by HUD within 60 days of the passage of the Act. The formula is supposed to ensure that the money goes to the states and cities that need it most and must take into account: the number and percentage of home foreclosures in each state or locality; the number and percentage of homes financed by subprime mortgages; and, the number and percentage of homes in default or delinquency. These supplemental CDBG funds must be distributed by HUD not later than 30 days after the establishment of the formula, and states and localities must use these funds within 18 months after they receive them. The funds are intended to primarily assist households at or below 120 percent of area median income. At least a quarter of the funds must assist very low-income households. Under current law, for 2008, the New York State CDBG program received an annual allocation of approximately $47 million for use in communities that do not receive funding directly from HUD. In addition, a total of approximately $293 million in CDBG funding was directly allocated to 48 jurisdictions of general local government across New York State. While preliminary estimates vary somewhat, it appears likely that New York State and its localities will receive a total of approximately $117 million to $118.5 million in additional CDBG funds as a result of this legislation. Foreclosure Prevention Increasing funding for housing counseling H.R provides $180 million for foreclosure counseling and foreclosure-related legal assistance. These funds are in addition to, and are provided under similar, but not

7 exactly the same, terms and conditions as a previous $180 million appropriation for 2008 which is being administered by the Neighborhood Reinvestment Corporation (dba NeighborWorks America). Most of these additional funds are to be used for foreclosure counseling, but H.R sets aside $30 million to assist homeowners with legal issues related to their foreclosure. It is not yet possible to estimate the total amount likely to be awarded to New York State agencies and organizations when this second $180 million is distributed but it may be helpful to review a summary of the February 2008 funding round in which Neighborhood Reinvestment Corporation awarded $130 million of the $180 million previously appropriated for foreclosure mitigation counseling. In the February round, awards were made in three categories: HUD-approved housing counseling intermediaries; state Housing Finance Agencies; and, chartered members of the NeighborWorks network. The New York State Housing Finance Agency/State of New York Mortgage Agency received $747,718 which is 2% of the $38,664,516 awarded to 32 HFAs nationwide. Eighty-two chartered NeighborWorks network members received a total of $11,417,501 including eight New York- based organizations receiving a total of $835,400. Lastly, sixteen HUD-approved housing counseling intermediaries received $80,356,391 of which approximately $3,230,800 which was distributed among New York and northern New Jersey-based not-forprofits. Housing Trust Fund Create a national affordable housing trust fund H.R will establish a permanent Housing Trust Fund with a dedicated source of funding to provide grants to states to increase and preserve the supply of rental housing and to increase home ownership for extremely low and very low-income families. These funds will be capitalized by annual contributions from Fannie Mae and Freddie Mac. The amount of the GSEs' contributions will be based on a percentage of each company's annual new business. The GSEs are required to each set aside 4.2 cents per $100 in total new business each year (unpaid principal balance of mortgages purchased or securitized) starting in Using the formula in the bill, the National Low-Income Housing Coalition estimates that the amount in 2007 would have been $557 million. Also, because their new business is increasing, the amount in 2008 is expected to be higher. However, each year 25% of the GSEs' contributed funds must go to a reserve fund at the Treasury to offset "scoring problems." Of the remaining 75%, 65% goes to the HTF and 35% goes to the CMF. In addition, the bill gives HUD up to 12 months after enactment to establish an allocation formula for HTF dollars. And, in the first several years after enactment, all or some of the HTF funding must be diverted to the HOPE for Homeowners reserve fund. (100% is diverted in FFY 2009, 50% is diverted in 2010 and 25% is diverted in 2011). As a consequence of these factors, it appears that New York State will get no HTF funding until FFY 2010 and will not get a full HTF allocation until FFY Assuming GSEs will contribute a total of about $600 million in each of the next four years: - $0 in HTF funding would be available for allocation to states in FY 2009; - $146.3 million in HTF funding would be available for allocation to states in FY 2010; - $219.4 million in HTF funding would be available for allocation to states in FY 2011; - $292.5 million in HTF funding would be available for allocation to states in FY Assuming New York State s share is between 3% and 6% of the total amount allocated to states (a fairly conservative estimate), New York State s HTF allocations in the next four years will be as follows: 2009 = $0; 2010 = $ 4.4 million to $8.8 million; 2011 = $6.6 million to $13.2 million; and, 2012 = $8.8 million to $17.6 million.

8 Other Provisions In addition to the changes described above, and among many other provisions, H.R will: Create a first-time homebuyer credit H.R provides a refundable tax credit that is equivalent to an interest-free loan equal to 10% of the purchase price of a home, up to $7,500, by first-time home buyers. This provision will apply to homes purchased on or after April 9, 2008 and before July 1, Taxpayers receiving this credit will be required to repay any amount received over 15 years in equal installments. In addition, taxpayers receiving this credit would not be eligible for mortgages funded with mortgage revenue bonds. For NYS, this means that borrowers would not be eligible for a SONYMA mortgage. Provide an additional standard deduction for real property taxes H.R will provide home owners who claim the standard deduction with an additional standard deduction for State and local real property taxes. The maximum amount that may be claimed under this provision is $500 for single filers and $1000 for joint filers. This applies to taxable years beginning in Reform Fannie Mae, Freddie Mac and Federal Home Loan banks H.R will create a new, independent agency, the Federal Housing Finance Agency (FHFA), to regulate Fannie Mae, Freddie Mac and the Federal Home Loan Bank System. This new oversight agency will be funded through assessments on those GSEs. FHFA will be required to consult with the Federal Reserve before issuing any proposed or final regulations, orders or guidelines related to GSE management, operations, capital requirements and portfolio standards. The consultation requirement will expire December 31, Also, the bill will permanently increase the cap on mortgage loans Fannie Mae and Freddie Mac can purchase (conforming loan limits). Effective January 1, 2009 the bill increases FHA loan limits for single-family residences to the lesser of 115 percent of the local area median home price (but no lower than a floor of 65 percent of $417,000) or 150 percent of the GSE high cost loan limit of $417,000 or $625,500 (similar increases for other 2-4 unit single-family properties). Reform FHA H.R will authorize $300 billion in loan guarantees through for a voluntary program to help at-risk borrowers refinance their mortgages. Lenders will have to agree to take a substantial write-down to make the new loans affordable with the FHA lender paying off the discounted mortgage. Only owner-occupied principal residences will be eligible. The amount of the new mortgage cannot exceed 132 percent of the 2007 conforming loan limit ($417,000 for 1 unit) for a property of the applicable size. The authority to commit to insure new mortgages begins October 1, 2008 and ends Sept. 30, Increase project-based voucher program flexibility H.R will increase administrative flexibility in the Section 8 project-based voucher program by: increasing the maximum Section 8 voucher contract period from 10 years to 15 years; allowing project-based voucher rents in Housing Credit developments to reach normally allowed voucher maximum rent, even if greater than Housing Credit rent; eliminating HUD's subsidy layering review for project-based vouchers if a state or locality has completed such review for Housing Credit purposes; repealing the requirement that PHAs undertake environmental review for housing assistance payments contracts unless otherwise required; and clarifying standards for voucher rent reasonableness for Housing Credit developments.

9 Joseph G. Eicheldinger, VP Sr. Relationship Manager Keybank Community Development Lending 50 Fountain Plaza, 16th Floor Buffalo, N.Y Tel: Fax: Moving Projects Forward in Times of Tight Credit When times are more difficult for credit or investment decisions, the borrower can help 'smooth' the process by: 1. Providing very recent financials with partial year internally-done interims for non-individual guarantors and sponsors, 2. Providing solid examples of past experience in the development team in 'exactly' what you are asking the lender to do 3. Providing recent contractor financials including 'contracts in progress' and other risk assessment info the surety uses to write the bonding line. 4. Getting appraisal done and reviewed 30 days prior to anticipated close 5. Any lender policy exceptions are harder to get approved 6. If something feels 'shaky' to you, it will be more 'shaky' to a lender. Work on your risk mitigation arguments. Vet them with your more conservative team members. 7. Lenders look for more construction contingency funds than 'usual'. On new construction, must be 5%. On new, pretty close to 10% on rehabs. 8. Just generally expect more questions to assess lease up, operational risk of default. 9. Negotiate as much 1%, 'cash flow if available', non-amortizing money as you can. 10. Get environmental Phase I done and approved ASAP. 11. Accept the risk that pricing may be a little higher on bank debt than 'usual' due to higher 'liquidity premiums' for banks. (Our money costs more because of lack of liquidity in money markets.) 12. Because of perceived rises in construction costs, and perceived market 'weaknesses', it will be more difficult to negotiate increased (or even historical) developer fee draws before construction completion and CO. NONE from bank debt.

10 5 th ANNUAL UPSTATE NEW YORK AFFORDABLE HOUSING CONFERENCE SEPTEMBER 23, 2008 Susan Sturman Jennings Conifer Realty, LLC A Developer s Perspective on the Difficult Market - Equity Market Conditions: o Fred Copeman of Ernest & Young projected that only 2 in 5 tax credit deals will be placed with an investor in 2008 o HERA increased the supply of tax credits in a market with too much supply o Yields are close to 8% and climbing o Pricing is in the low 80s o Equity commitments generally expire in 90 days o No predevelopment loans o Investors are not warehousing, so closings can be more difficult o Investors bailing from deals o No market for small deals o CRA is driving investments since many banks do not have income o In Search of Cookie Cutter Deals Over $5 million in equity Sizeable markets 9% credits New construction No special needs housing Expanded, as well as personal, guarantees o Under HERA, housing credits may offset alternative minimum tax and interest on bonds is exempt from AMT, which may increase investor pool - Lending Market Conditions: o It s all about Decreasing Risk Increased Collateral and security assignments of member interests, capital contributions, developer fees, tax credit awards, permanent loan commitments Expanded, as well as personal, guarantees

11 No developer fees during construction Demanding deposits A Developer s Reaction to Dealing with the Difficult Market Susan Sturman Jennings Conifer Realty, LLC - Market to Investors and Lenders o company experience, balance sheet, portfolio o brand recognition o team expertise and breadth o 3 rd party management and construction contracts o Offer bank deposits and debt business o Joint ventures with nonprofits - Find New Investors o Financial institutions do not have income, so do not need tax credits o FannieMae and FreddieMac have slowed investment o Direct investing - Package Small Deals o Offer a cookie cutter deal with a small or more risky deal o Under HERA, the income limit for 9% projects in rural areas is greater of AMI or national non-metro median income could increase tenant base and make projects more feasible - Seek out Soft Loans o FHLB o HOME (especially now that the below market federal loan concept is eliminated) o HTFC - Anticipate Construction Cost Increases o high oil prices are impacting construction costs

12 o closing delays result in seasonal price adjustments, especially in Upstate - Close Everything At Once o Make sure the deal you close is one you can live with o modifying loans, increasing debt, etc. after closing has gotten difficult o folks you created a relationship with at closing may no longer be employed by the investor o investor consent, especially if the investor has syndicated the deal, may not be forthcoming (especially if the new debt is intended to decrease deferred development fees or cost overruns guaranteed by the managing member) - Request More Tax Credits o Under HERA, may request increase of up to 30% if needed for financial feasibility project treated as being in a difficult to develop area o Increase in 2008 and 2009 credits available in New York State?

13 CONIFER REALTY, LLC CONIFER REALTY, LLC 5 th ANNUAL UPSTATE NEW YORK AFFORDABLE HOUSING CONFERENCE SEPTEMBER 23, 2008 Susan Sturman Jennings

14 A DEVELOPER S PERSPECTIVE ON THE DIFFICULT MARKET Equity Market Conditions: Fred Copeman of Ernest & Young projected that only 2 in 5 tax credit deals will be placed with an investor in 2008 HERA increased the supply of tax credits in a market with too much supply Yields are close to 8% and climbing Pricing is in the low 80 s A DEVELOPER S PERSPECTIVE ON THE DIFFICULT MARKET Equity Market Conditions: Equity commitments generally expire in 90 days No predevelopment loans Investors are not warehousing, so closings can be more difficult Investors bailing from deals No market for small deals CRA is driving investments since many banks do not have income

15 A DEVELOPER S PERSPECTIVE ON THE DIFFICULT MARKET Equity Market Conditions: In Search of Cookie Cutter Deals Over $5 million in equity Sizeable markets 9% credits New construction No special needs housing Expanded, as well as personal, guarantees A DEVELOPER S PERSPECTIVE ON THE DIFFICULT MARKET Equity Market Conditions: Under HERA, housing credits may offset alternative minimum tax and interest on bonds is exempt from AMT, which may increase investor pool

16 A DEVELOPER S PERSPECTIVE ON THE DIFFICULT MARKET Lending Market Conditions: It s all about Decreasing Risk Increased Collateral and Security assignments of member interests, capital contributions, developer fees, tax credit awards, permanent loan commitments Expanded, as well as personal, guarantees No developer fees during construction Demanding deposits A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Market to Investors and Lenders: Company experience, balance sheet, portfolio Brand recognition Team expertise and breadth Third party management and construction contracts Offer bank deposits and debt business Joint ventures with non-profits

17 A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Find New Investors: Financial institutions do not have income, so do not need tax credits FannieMae and FreddieMac have slowed investment Direct investing A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Package Small Deals: Offer a cookie cutter deal with a small or more risky deal Under HERA, the income limit for 9% projects in rural areas is greater of AMI or national non-metro median income could increase tenant base and make projects more feasible

18 A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Seek Out Soft Loans: FHLB HOME (especially now that the below market federal loan concept is eliminated) HTFC A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Anticipate Construction Cost Increases: High oil prices are impacting construction costs Closing delays result in seasonal price adjustments, especially in Upstate

19 A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Close Everything At Once: Make sure the deal you close is one you can live with Modifying loans, increasing debt, etc. after closing has gotten difficult An individual you created a relationship with at closing may no longer be employed by the investor Investor consent, especially if the investor has syndicated the deal, may not be forthcoming (especially if the new debt is intended to decrease deferred development fees or cost overruns guaranteed by the managing member) A DEVELOPER S REACTION TO DEALING WITH THE DIFFICULT MARKET Request More Tax Credits: Under HERA, may request increase of up to 30% if needed for financial feasibility project treated as being in a difficult to develop area Increase in 2008 and 2009 credits available in New York State?