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The Basics

Syndication means creating a partnership to divide up some of the elements of ownership. In the case of affordable housing, developments are usually syndicated in order to obtain Low Income Housing Tax Credits, a very substantial subsidy for affordable housing.

Using the LIHTC can bring a lot of money into a project, but it has a downside, too. There are huge paperwork requirements for the LIHTC -- lawyers and accountants spend so much time on it that one expert estimated that only half the subsidy goes to create new housing -- the other half goes to the lawyers!

In addition, the Tax Credits are only useful if someone buys them. This buyer is a partner to the residents -- the residents must share some power with that partner, who typically is a "limited partner" and must have a limited role. Such a partner, though, is almost never prepared to turn over total control to the residents. They often bring in a third party to keep an eye on the residents, and to take over if things start going badly.

So while the LIHTC brings in dollars, it results in less control for the residents. This is a compromise that many residents, though wary, have been willing to make.

Massachusetts Examples

bullet    Mission Main
bullet    Stafford Heights
bullet    Tent City (syndication without LIHTC)
bullet    Voces de Esperanza
bullet    Roxbury Corners
(all in Boston except Voces in Holyoke)

For More Information:

bulletA detailed description of tax credits in layperson's language
bulletThe debate over whether a resident organization can be a general partner in a LIHTC deal



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Revised: October 02, 2003.

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