Bringing the Affordable Housing Capital Stack Together: Why Collaboration is Key

By John Richter, Interview with Don Bernards, Principal, Baker Tilly

In affordable housing, complexity is the norm.

We recently sat down with Don Bernards, principal at Baker Tilly and a leader in the firm’s national affordable housing transaction team, to discuss the affordable housing capital stack, current challenges, and why collaboration matters more than ever.

Don brings nearly 30 years of experience helping developers structure and finance Low-Income Housing Tax Credit (LIHTC) projects nationwide.

Let’s Start with Your Background—Can You Tell Us a Bit About Your Role at Baker Tilly and What Brought You Into This Work?

After nearly 30 years in the affordable housing space, I’ve found one truth holds steady: success depends on strong, aligned collaborators.

At Baker Tilly, I lead our national affordable housing transaction team, where we work closely with developers to help structure and finance LIHTC projects.

These projects are complex—layered funding, strict regulations, countless moving parts—but that’s also what makes the work so rewarding.

Why Is Collaboration So Critical in Affordable Housing?

Because in affordable housing, “it takes a village” isn’t just a saying—it’s a reality. I value working with development teams that embrace collaboration—teams that understand the nuances of affordable housing and are committed to long-term impact.

Over the years, I’ve had the privilege of working with organizations like Catalyst Construction. Their approach fosters the kind of open communication and transparency that these projects require.

Can You Break Down What Typically Makes up the Capital Stack for an Affordable Housing Project?

When most people think about financing an affordable housing project, they picture a loan or a grant—but the reality is far more complicated. LIHTC equity is the foundation, but it rarely covers everything.

A typical capital stack also includes a first mortgage, which may consist of taxable or tax-exempt bonds, HOME funds, TIF dollars, and sometimes support from counties, employers, or even local foundations.

I’ve worked on projects with as many as 12 distinct funding sources. Aligning those sources—each with its own timeline and requirements—is where strong, trusted, and experienced advisors/collaborators make a difference.

Their open-book mentality and proactive communication help keep projects on track, even when the funding landscape shifts midstream.

But financing is just one piece of the puzzle—cost pressures are another growing challenge.

What Are Some of the Major Challenges You’re Seeing in Assembling Financing Today?

One of the biggest challenges I see today is the growing disconnect between rising construction costs and the limited rents affordable housing can support.

Since COVID-19, construction costs have surged over 30%, while wage growth for the residents these projects serve has barely moved.

Market-rate projects can offset rising costs with higher rents. Affordable housing projects can’t. That makes assembling the capital stack even harder, as developers face increased financial gaps that traditional sources can’t always cover.

Are There Any Misconceptions That Developers New to Lihtc Often Run Into?

Definitely. Even with the capital stack in place, developers often run into unexpected hurdles—especially when they’re new to the process.

For new developers, one of the biggest surprises is the timeline. LIHTC projects do not move quickly. From land acquisition to lease-up, you’re often looking at a three-year journey.

There’s a misconception that these projects progress at the pace of market-rate developments, but they generally don’t—and that can be a tough adjustment for those new to the LIHTC space.

What Advice Do You Have for Developers Who Are New to This Space?

Find experienced professionals. Some of the best outcomes I’ve seen happen when developers, general contractors, and financial advisors commit to open, transparent collaboration from day one.

Are There Alternative or Underutilized Funding Tools You’re Excited About Right Now?

Yes—one trend I’m excited about is leveraging essential function bonds and securing investment-grade ratings to reduce borrowing costs.

For example, in a recent project in Charleston, SC, we helped the borrower secure an A+ rating that lowered their cost of capital by 1.5%—a difference that made the deal possible.

These tools aren’t necessarily well known, but they represent real opportunities for developers willing to explore new options.

How Do Public-Private Partnerships Factor Into Getting These Projects Across the Finish Line?

They play a huge role. Some of the most successful projects I’ve worked on have had strong public-private partnerships.

When cities and counties donate land, provide TIF, or expedite approvals, they’re signaling that affordable housing is a priority.

These collaborations work because they align incentives—municipalities get housing, and developers get the support they need.

What’s Your Outlook on the Future of Affordable Housing?

The need for affordable housing is only growing. National reports estimate we’re short over 7 million affordable units in the U.S.

The good news?

The LIHTC program is bipartisan and widely supported.

Right now, the Affordable Housing Credit Improvement Act has been introduced in the House.

According to industry projections, it could help finance up to 2 million affordable units in the next decade—an essential step toward addressing the 7-million-unit shortage we face.

At the state level, many, including Wisconsin, are looking to expand tax credit programs to help meet local demand.

For those of us in the industry, it’s critical that we stay engaged—talking to elected officials, sharing the realities of how these deals come together, and advocating for resources.

What Keeps You Motivated in This Work?

At Baker Tilly, we take pride in helping both seasoned developers and those just starting out. Sometimes that means giving an honest “no” when a site or project doesn’t pencil out. More often, it means rolling up our sleeves and finding creative ways to bridge the gap.

I’ve had the opportunity to work with teams who share our values—integrity, transparency, and a genuine commitment to quality housing. Catalyst is one that brings this spirit to the table, and those collaborative efforts strengthen outcomes and build trust.

Affordable housing can—and must—be built. It takes commitment, creativity, and collaboration. But most of all, it takes people willing to roll up their sleeves and work together to make it happen.

Don Bernards is a principal at Baker Tilly and leads the firm’s national affordable housing transaction team. He has nearly 30 years of experience helping developers structure and finance LIHTC projects across the country. 

John Richter is Catalyst’s Senior Director of Affordable Housing & Senior Living Development, where he uses his legal and business operations background to help Catalyst’s clients bring their plans to life.