The debate continues with Steve Willson’s original post below:
John Collins sent this rebuttal:
Which elicited this reply from Willson:
The intellectual debate continues with this footnoted piece from Collins:
Point-by-Point Response to the Rebuttal
First, a word on credibility: Mr. Wilson’s 42 years in municipal finance deserve respect, and
several of his points land.
But professional experience in analyzing multifamily projects also means being held to a higher standard of precision and his rebuttal has some significant analytical gaps.
On the per-unit cost comparison
Mr. Wilson argues that the only valid comparison is market condo prices, and that at $233,000
for an average McHenry condo, Taylor Place costs more than twice what the market delivers.
This sounds compelling but conflates two completely different asset types.
A condo is a for-sale unit in an existing building, priced on today’s resale market.
Taylor Place is new construction of a 50-unit rental complex on a formerly contaminated industrial site requiring environmental remediation and the adaptive reuse of a 150-year-old brick mill.
The correct market comparison is the cost of building a comparable new multifamily rental project, not buying an existing condo.
The average cost to build a home in Illinois in 2024 ranges from $257,500 to $405,000, and when including all associated costs can reach $415,440 and that is for a single-family home with the economies of a production builder, not a multi-story apartment complex with a historic rehabilitation component.1
A meaningful apples-to-apples comparison would require pricing what it would cost to build 50 new market-rate rental units in McHenry today.
That figure would be far closer to Taylor Place’s cost than $233,000.
On the tax credit subsidy argument
This is where Mr. Wilson’s finance expertise cuts against his conclusion. He is correct that tax credits represent a government subsidy, that is not in dispute, and his original response could have been clearer on this point.
But characterizing LIHTC as simply the “taxpayers” getting “fleeced” misunderstands how the mechanism works.
Under the LIHTC structure, private sector investors, not taxpayers, bear the financial risk and are closely involved in monitoring and oversight.2
Developers sell tax credits to private investors, primarily financial institutions and corporations with large tax liabilities, who provide equity capital in exchange for a dollar-for-dollar reduction in their federal tax liability over ten years.3
The government’s cost is foregone tax revenue, not an appropriation.
That is a real cost, but it is economically distinct from a cash expenditure, and it is leveraged to attract substantial private equity that would not otherwise flow into affordable housing.
This pay-for-performance structure has driven private sector discipline to the program, resulting in a foreclosure rate of less than 0.1%, far less than comparable market-rate properties. 4
Mr. Wilson is right that without these subsidies, the project would not be built. He frames that as proof of irrationality.
The counterargument is that the private market also does not build adequate workforce housing at rents of $1,000/month without subsidy, by definition, because the rents do not cover market construction and operating costs.
That is not a failure of the project; it is precisely the market failure the program is designed to address.
On the $350/month voucher alternative
This is the most financially sophisticated point in the rebuttal, and it deserves a direct engagement.
Mr. Wilson argues a $350/month direct rental subsidy would achieve the same outcome at a fraction of the cost.
On a pure per-unit arithmetic basis, the math is reasonable.
However, it rests on three assumptions that do not hold in McHenry County:
First, vouchers require available units in the private market willing to accept them. Of the 64 Public Housing Authorities in Illinois administering Housing Choice Vouchers, 77% have closed waitlists, and 95% of all vouchers in Illinois are administered by PHAs with closed waitlists.5
McHenry County Housing Authority’s voucher waiting list has effectively been closed, when it briefly opened in 2024, only 5,000 applicants were selected by lottery with no notice of when the list will reopen.6 T
here is no reserve army of $1,350/month market-rate apartments waiting to absorb voucher holders.
Second, the $350/month figure assumes current market rents stay stable. The whole premise of Taylor Place is that the McHenry rental market is undersupplied.
Adding 50 households chasing the same limited pool of $1,350 apartments with vouchers in hand would, in a tight market, bid rents upward, partly eroding the subsidy advantage Mr. Wilson calculates.
Third, a voucher is portable and administratively continuous, which means the subsidy cost persists indefinitely, not just 30 years.
Mr. Wilson’s $1.2 million annual savings calculation assumes a 30-year horizon, but a voucher program has no sunset.
Where the Mr. Wilson is correct
In fairness, Mr. Wilson’s core concern about LIHTC efficiency is not unfounded.
Academic analysts have noted that LIHTC is economically inefficient because it drives up transaction costs
of affordable rental housing deals, and that the syndication process can consume between 10 and
27 percent of project equity.7
This is a legitimate policy debate, and the complexity and expense of tax-credit financing is a real problem that housing advocates themselves acknowledge.
As the Chicago Department of Housing has stated, it would be far cheaper for the federal government to
directly fund construction of affordable housing rather than routing it through equity markets.8
If Mr. Wilson’s larger argument is that Congress should reform the LIHTC structure to reduce transaction costs and deliver more units per dollar, he has allies across the ideological spectrum.
But the alternative to an imperfect Taylor Place is not a cheaper, better-designed program, it is nothing.
The McHenry workforce housing shortage is real, the voucher system in McHenry County is effectively closed, and the families now housed at Taylor Place had no other viable option.
The project may be the product of an imperfect financing system; that is different from aying the project itself was a mistake.
Footnotes
1 NewHomeSource, “How to Build a House in Illinois” (Dec. 12, 2024).
https://www.newhomesource.com/learn/build-house-illinois/
2 Enterprise Community Partners, “About the Low-Income Housing Tax Credit.”
https://www.enterprisecommunity.org/capabilities/low-income-housing-tax-credit/about
3 Tax Policy Center, “What is the Low-Income Housing Tax Credit and how does it work?”
4 Illinois Housing Development Authority, “Low Income Housing Tax Credit.”
https://www.ihda.org/developers/tax-credits/low-income-tax-credit/
5 Housing Action Illinois, “Not Even a Place in Line: Shortage of Housing Choice Vouchers and
Closed Waitlists in Illinois” (Sept. 22, 2025). https://housingactionil.org/blog/2025/09/22/new-
report-on-illinois-housing-voucher-crisis-not-even-a-place-in-line/
6 Affordable Housing Online, “McHenry County Housing Authority — Section 8 and Public
Housing.” https://affordablehousingonline.com/housing-authority/Illinois/McHenry-County-
Housing-Authority/IL116
7 Urban Institute, “The Low-Income Housing Tax Credit: How It Works and Who It Serves.”
https://www.urban.org/sites/default/files/publication/98758/lithc_how_it_works_and_who_it_ser
ves_final_2.pdf
8 Crain’s Chicago Business, “What Makes Affordable Housing Development So Expensive” (Jan.
19, 2024). https://www.chicagobusiness.com/equity/what-makes-affordable-housing-
development-so-expensive
