The first time I did a low-income housing tax credit deal, we had a wheel chart. Six large boxes of required documents, every one triple-checked before it went to the housing authority. Six boxes. For one deal. At the closing table there were 21 people. Twenty-one. I counted, because I had never seen so many people at a closing. So when a state announces a new financing program to unstick stalled apartment deals, my first question is not whether it works. It is how many chairs they need. Massachusetts says three sentences of law and a term sheet. Bisnow wrote it up this week. I went and rebuilt the math on three markets to see if it holds. 𝐈 𝐰𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐫𝐞𝐜𝐨𝐦𝐦𝐞𝐧𝐝 𝐭𝐡𝐞 𝐥𝐨𝐧𝐠 𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐭𝐨 𝐚𝐧𝐲𝐨𝐧𝐞 𝐥𝐚𝐜𝐤𝐢𝐧𝐠 𝐚 𝐫𝐞𝐚𝐥 𝐠𝐞𝐞𝐤 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐢𝐧 𝐰𝐡𝐲 𝐚𝐟𝐟𝐨𝐫𝐝𝐚𝐛𝐥𝐞 𝐡𝐨𝐮𝐬𝐢𝐧𝐠 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐠𝐞𝐭 𝐛𝐮𝐢𝐥𝐭. 𝐅𝐨𝐫 𝐞𝐯𝐞𝐫𝐲𝐛𝐨𝐝𝐲 𝐞𝐥𝐬𝐞, 𝐭𝐡𝐞 𝐰𝐡𝐨𝐥𝐞 𝐭𝐡𝐢𝐧𝐠 𝐢𝐧 𝐮𝐧𝐝𝐞𝐫 𝐚 𝐦𝐢𝐧𝐮𝐭𝐞. Capping rent on a fifth of your units costs a Boston developer 17 cents on the dollar. In DC it costs 35. Median family income is about $164,000 in both. The difference is an income limit table and eight years of DC choosing not to update it. Every market I tested is negative leverage. The building earns less than the loan costs. Borrowing more makes it worse, discount or no discount. Which means this is not a leverage play, it is a cost of capital play. The state comes in at the ten-year Treasury plus two points, call it 6.6%, where a private investor wants 12%. The developer's equity check gets cut roughly in half. It's magic; your IRR might work now. Does the cheaper capital cover the rent giveback? Roughly. Within a few dozen basis points of building market rate and going home. A coin flip, and it lands on whether the deal needs a 25% set-aside or 20%. The state prices its money at the ten-year Treasury. The subsidy shrinks when rates rise, which is exactly when deals stall. A fire hose that loses pressure during a fire. 40B offers two doors: 25% of units at 80% of median, or 20% at half of median. The deep door costs 2.4 times more, and every deal so far walked through the shallow one. That is not a scandal, it is arithmetic. Put that menu in front of anyone rational and they pick the same door you would. The program is most fundable exactly where it buys the least affordability. It is still a good program. It writes a smaller check, and a smaller check is worth more than this argument usually gives it credit for. Just do not sell it as a machine that pays developers to build affordable housing, because it is not one. As for how many people sat at the Massachusetts closing table, I have no idea. But count the parties: a state agency, Freddie Mac, Berkadia, a preferred equity member, a managing member, two Delaware LLCs, and a baseball arbitrator on standby in case anybody disagrees about some on page 1,122 of the documents. I'm going to go ahead and guess it was more than 21.