HUD Scandals by Irving H. Welfeld

Author:Irving H. Welfeld [Welfeld, Irving H.]
Language: eng
Format: epub
Tags: Taxation, Housing & Urban Development, Political Science, American Government, Law, General
ISBN: 9781412847810
Google: e9eKngEACAAJ
Goodreads: 14317407
Publisher: Transaction Publishers
Published: 1992-01-01T00:00:00+00:00

Did the fat cats and favored few milk the moderate rehab program at the expense of the poor? The fees that the consultant’s received came out of the developer’s pocket and were not recognized as a cost of the project, which in any event were limited by the FMRs.52

Why were the developers so eager to pay? The projects were profitable. The greatest rewards, however, were not attributable to HUD. Rather, they came from the states. It was far from a discriminating operation. As the GAO noted, “[T]ax credits were awarded up to a maximum amount allowed by regulation on a first-come, first-served basis rather than the needs or merits of individual projects.”53

At best, the cost of the tax credit was far greater than the benefit. The GAO estimated in the syndication, 55 percent of the value was lost. A significant portion of the loss is because the investor will place a lower value on the ten-year credit than the government.54 In addition (actually subtraction) Sheldon Baskin, explained the high handling charges this simple subsidy required:

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