To the Editor:
Regarding the recent story, “Woodstock’s Prairie View apartment community changes hands” (Feb. 12): I’ve been in the municipal bond business for 40 years, and I know how “affordable housing” deals work.
An investment banker finds a nonprofit and says, “How would you like to make money in real estate with no risk to you?” “Sure!” they say.
Then the banker finds the owners of an apartment complex and says, “How would you like to sell your apartment complex for 20 percent to 30 percent over market value?” “Sure!” they say.
Then the banker finds a local governmental agency and says, “How would you like to make a fee by issuing some bonds for which you’ll have no obligation?” “Sure!” they say.
Here’s the gag: Once owned by a nonprofit, the apartment complex will stop paying property taxes. That means the cash flows will be high enough to support a 20 percent to 30 percent higher price than market value. The bond deal is sized accordingly, the bonds are sold, and the apartment complex changes hands.
The banker makes money. The issuing government makes money. The nonprofit makes money.
Do veterans get lower rents? No! The apartments are rented at market rates! If there’s any benefit to veterans, it will be hard to find and hard to quantify.
And we all pay higher property taxes to cover the loss.