Political Quotes

“In answer to that question, there are significant tax liabilities for an owner who walks away from a project. There were tax benefits which accrued to the people who produced the project in the first place. Walking away means they lose not only the property, but they also are subject to significant tax recapture. There is a proposal from HUD that the write-down include funds sufficient to pay any tax liabilities. I do not agree with that. I do not think that in the housing business we should change the tax implications. But there are very serious tax implications if they walk away. The second mortgage is one which does not require payments in the initial years while the first mortgage is being paid off. To address the deferred maintenance, the owners will have access, for the first time, to residual sums which had been set aside in the past for maintenance, and by converting a portion of the debt on the project to the soft second and freeing the owners from the responsibility of paying that portion, paying current debt service on that portion, that will free up money for the deferred maintenance. Will it handle all of it? We cannot say. But there will be a substantial sum made available. We are calling it a demonstration project because we do not know for sure how this will work, but it is our best idea of how to deal with these related problems.”