Due to the COVID-19 pandemic and resulting impacts on the economy and financial markets, as well as the Federal Reserve’s raising of short-term rates to stave off inflation, interest rates and construction costs have risen dramatically, resulting in funding gaps that many multifamily affordable housing developers in the four percent Low Income Housing Tax Credit space have had difficulty filling. States, cities and localities have allocated resources to address such shortfalls, and private companies, such as Amazon, have made available subordinate loans for this purpose, but even with such other sources of capital, challenges remain. Despite these headwinds faced by developers, opportunities exist to utilize creative tax-exempt bond structuring techniques to potentially generate an additional source for these transactions, and one such opportunity is the focus of this article.
