Much has changed since Barrington resident Maria F. Barry started in the commercial-credit department of Fleet Boston Financial in 1987, starting with the regional bank’s acquisition by national lending giant Bank of America. Twenty-seven years later, Barry is now community-development-banking national executive for Bank of America Merrill Lynch, in charge of the bank’s affordable and mixed-income housing investments. With demand for rental housing soaring across the country and government-housing subsidies static at best, affordable developers and their lenders are struggling to fill financing gaps.
PBN: Rental demand is increasing, but government spending on housing isn’t, so where does that leave a lender like Bank of America?
BARRY: There is tremendous need and we are seeing deals and projects become a little more difficult to finance because of the level of state and federal subsidies needed. But overall our production has gone up. In 2013 we helped produce 13,600 affordable-housing units nationwide, up from 11,000 in 2012. Also we provided more debt and equity in 2013 than 2012. We are doing more, so there is still a lot of activity out there. It is challenging for developers to pull subsidies together, but they are making it happen. To do that our clients are looking at other solutions, such as mixed income, where the level of subsidy can be less and still have an affordable opponent. The low-income tax credit is still the No. 1 driver in the creation of affordable housing and we invested $1.1 billion in low-income tax credits last year. But I am also seeing clients trying to make projects affordable by combining some local subsidies with historic tax credits or a tax abatement, or something keeping cost down to keep some units affordable.
PBN: On aggregate, are the levels of subsidy available for affordable housing higher or lower than they have been in the past?
BARRY: It varies by geography. When we look at the financing structure for the low-income tax credit, we have overall financing, such as a construction loan, tax credits and then the soft money to help close any gaps. In some states we are seeing it be a little more challenging to get that gap money needed, particularly as state budgets get tighter there is less money to close the gap. But as I said, our production is up so there is a real effort out there to find a way to continue to create affordable housing.