"HUD has gotten more innovative or flexible in trying to makesure that its financing programs work better with a variety offinance programs, including low-income housing tax credit, historicrehabilitation credits and NMTCs," Nesbitt tells GlobeSt.com.

That trend dovetails a similar one in which developers havebegun focusing more on NMTCs to raise equity for apartment projectsthat also have a commercial component, Banghart says. These creditswere never intended to drive production of apartments, he explains,which has made combining NMTCs with other forms of finance inmultifamily deals tricky—but not impossible.

For example with historic tax credits, a deal typically needstwo partnerships: one that is owned by the developer, which holds afee interest in the property and leases it to the otherpartnership, and one for the master-tenant partnership, which isowned by the tax credit investor.