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Environmental Analysis
During the planning process, the Board and planning team conducted a detailed review of NNEHIF’s strengths, weaknesses, opportunities, and threats (SWOT). Below is a synopsis of the full SWOT report.
Strengths
NNEHIF’s strengths are vested heavily in its staff, whose expertise, knowledge, and relationships form the backbone of the organization’s capacity. Similarly, the Board is recognized for the technical expertise of its members, which range from banking to housing to development. Another strength is NNEHIF’s sound financial position, as well as adequate physical infrastructure headquartered in downtown Portland, Maine. As a regional nonprofit syndicator, NNEHIF also benefits from its unique understanding of the northern New England market and system. Unlike national syndicators, NNEHIF is focused on improving affordable housing exclusively in Maine and New Hampshire.
Weaknesses
A key organizational weakness is NNEHIF’s relatively small size and limited geographic reach compared to national syndicators. In terms of governance, the organization could more fully and effectively employ Board expertise by better focusing members’ attention on strategic issues. Finally, outreach efforts need to be enhanced to help NNEHIF better respond to growing market competition. This includes increased presence in New Hampshire comparable to the level of visibility in Maine.
Opportunities
Opportunities exist within the current low income housing tax credit (LIHTC) program as well as in new ventures. Strengthening the LIHTC syndication program is a priority. This program is a vital resource for the region and NNEHIF is committed to maximizing its potential and effectiveness. NNEHIF expertise in affordable housing and real estate provide a foundation for new products and services. Finally, opportunities exist to bolster public leadership in affordable housing.
Threats
A number of threats to NNEHIF’s mission and viability were identified. Many of these are related to increased competition in various sectors of the affordable housing market. Specifically, low income housing developers in Maine and New Hampshire have begun to partner with large national syndicators who offer favorable price and terms. An example of a group that has entered the northern New England LIHTC market is Boston Capital, an enterprise with an $11 billion portfolio that has helped create 147,000 units of affordable housing in 48 states.
Also of concern is the continuing aggregation of banks, which has the potential to affect NNEHIF’s LIHTC business. For example, senior banking officials are increasingly located outside the region. This is in contrast to the environment of a decade ago, when senior decision makers were located nearby, and in some instances served on the NNEHIF Board of Directors. Banks themselves, along with their Community Reinvestment Act staff, face increased competitive pressure to improve performance. National banks have the option of using proprietary, as opposed to multi-investor, funds in which they are the sole investor and therein have a high degree of control over pricing, geography, and underwriting.
Structural shortcomings in the LIHTC program itself also are cause for concern. While project level expenses continue to rise, maximum revenue potential under the program is capped. If unaddressed, this growing wedge between expenses and payments could threaten the financial viability of LIHTC-financed projects and diminish NNEHIF’s ability to invest.
In terms of market share, the ramifications of the above issues are captured in the following chart:
NNEHIF Historical Market Share by State
All (9% and 4%) Tax Credit Transactions
