The Susan S. Bailis Assisted Living Center in Boston’s Fenway neighborhood was one of the first in a long line of specialty projects to receive LIHTC funding.

There are not enough credits, but there is plenty of credit for the federal low-income housing tax credit as the initiative celebrates 20 years in existence.

“It is complicated and can be very technical, but the program is (providing) billions of dollars of private investment for new and renovated rental housing across the country,” observed Goulston & Storrs attorney and LIHTC expert David M. Abromowitz. “It has been a very effective tool for that.”

Borne of the landmark 1986 federal legislation which changed tax laws a myriad of ways, the LIHTC has yielded nearly 1.5 million units of affordable rental housing since, averaging more than 100,000 units annually in recent years from developers aggressively vying for the limited pool of credits. “It is the only program nationally that is building affordable housing today,” said Boston Capital Corp. principal Richard J. DeAgazio, whose firm has been syndicating LIHTCs since their inception. “We’d really be lost without it.”

Initially a pilot program before being made permanent in 1993, the process offers dollar-for-dollar federal tax credits to corporations who acquire them from developers awarded the credits through designated state agencies, in the Bay State’s case the Massachusetts Department of Housing and Community Development. Projects are given preference based on various criteria, including the level of affordability generated by the plan and other factors, among them access to public transportation, community support and the ability of the developers to proceed. In Massachusetts, the award is capped at $1 million per project, and each plan must yield at least eight affordable units and remain affordable for upwards of 30 years.

Another pool of credits can be generated from the Massachusetts Housing Finance Agency and MassDevelopment through bond financings. The DHCD tranch is based on state population and is currently pegged at $1.90 per resident, or approximately $12.2 million for 2006. Developers applying for the first of two rounds scheduled this year were required to submit their plans in mid-February, with the DHCD expected to announce the winners later this spring.

DHCD officials declined to identify the projects meeting this month’s deadline, but Goulston & Storrs is representing at least one developer seeking credits, a Fitchburg mill owner proposing a renovation into senior housing. In addition to assisting corporations in buying credits, Goulston & Storrs helps ensure that projects meet the strict criteria mandated to qualify. “We are doing tax credit deals every day of every week, both locally and nationally,” said Abromowitz, adding that such undertakings as the Fitchburg plan would be nearly impossible to construct without the LIHTC component.

“It helps fill the gap between what it costs to produce a unit of decent affordable housing in Massachusetts today and the return on investment needed to make the project (financially viable),” said Abromowitz, who estimates a price tag of $250,000 to $300,000 to build one rental unit in the state, although that range could be higher given spikes in materials pricing.

DHCD officials estimate that 35,000 units have been generated in Massachusetts as a result of the LIHTC. In the latest round announced last month, 18 proposals received credits that should create 709 apartments. A 1970s-era Rockland apartment development will undergo an extensive renovation that will be fueled by nearly $1 million in credits, while other ventures were awarded backing in such communities as Boston, Chelsea, Fall River, Lawrence, Lowell, Somerville and Springfield. Developers of the Brown School in Peabody received $878,000 to create 61 affordable units there, Nuestra Comunidad was given $648,000 in credits for a Mattapan project that will generate 45 units and an 18-unit project in Chelsea was granted $233,000 in credits.

Tax credits have already successfully helped revitalize Plumley Village in Worcester, a 428-unit affordable apartment complex owned by the Community Builders Inc., while the Cape Ann Housing Opportunity Inc. was given $619,000 in credits last year for creating 115 units of housing at a former glue factory in Gloucester, 43 of which will be deemed affordable. Also recently, the Museum Park Apartments in Springfield was given credits through DHCD to develop 92 affordable units from a former hotel.

Although the need for standard housing remains strong – by one estimate, the nation loses 150,000 apartments annually due to deterioration – the LIHTC is increasingly being used to develop specialty projects such as assisted living. The Susan S. Bailus Assisted Living Center in Boston’s Fenway neighborhood was one of the initial beneficiaries of that trend, and DeAgazio noted a similar facility now being constructed in Charlestown using LIHTC.

Boston Capital is especially familiar with the program, given that its leadership played a key role in getting the LIHTC included in the Tax Reform Act of 1986 in the first place. Previously a syndicator of the real estate tax shelters ripped asunder by the 1986 reform measure, Boston Capital created a new industry in marketing the tax credits upon passage of the bill, with the firm particularly active selling to individual taxpayers. That so-called retail business was restricted in that individuals could only acquire a limited amount of credits, eventually leading other syndicators such as the erstwhile Boston Financial Group to pursue the corporate side of the business, with those entities able to buy as many credits as they desired.

At one time responsible for 90 percent of the retail syndication, Boston Capital finally forsook that operation last year, DeAgazio said, as the firm determined that the corporate world will be the dominant user of the credits going forward. Corporations typically receive the credits from the developers for about 80 cents on the dollar, and can use them to offset taxes for up to 10 years. DeAgazio estimated that Boston Capital has about 15 percent to 20 percent of the corporate syndicaton business, placing more than $500 million annually. The remnants of Boston Financial Group’s syndication program is now being run through MMA Financial through its Hub office.

Having been among the architects of the program, with CEO John P. (Jack) Manning instrumental in its creation, Boston Capital is proud of the results of the LIHTC during the past 20 years, said DeAgazio. Besides being made permanent in 1993 and having the amount of funds made available adjusted upward to reflect inflation in 2003, the LIHTC is much the same as it was when launched in 1986. “It’s very unusual for a program of that size to remain unchanged, but it really has,” said DeAgazio, adding he is also enthused by the response among investors.

“Every dollar of tax credit available gets picked up every year,” he said. “It’s impossible to meet the demand.” That is true even as competition for the credits has cut yields by nearly 50 percent, while competition among developers has been so strong that states are often able to impose new guidelines such as smart growth precepts advocated by Governor Mitt Romney.

The LIHTC is also playing an important role in addressing the hurricanes that swept the southern part of the United States last autumn, noted Boston Capital official David Gadsden, part of a working group which lobbied for additional tax credits to help restore communities devastated by the natural disasters. To spark development, tax credits amounting to $18 per capita have been designated for Louisiana, Mississippi and Alabama during the next three years, explained Gadsden. “It is a critical piece” of the recovery plan, said Gadsden, who said the bigger challenge will be to get the housing underway physically.