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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

Even with success stories such as the Monte Cristo, Peterson still said the supply of affordable housing is not keeping pace with the demand. To increase opportunities and make low income housing more efficient and in-line with Smart Growth principles, he would:

• Make all layers of housing subsidies work seamlessly together.
• Encourage mixed income developments.
• Encourage more urban density and land efficiency.
• Build more affordable housing around public transit.
• Encourage more Green Building practices.
• Create some form of inclusionary zoning that generates housing units.
• Streamline zoning, permitting and other development processes to control spiraling costs.
• Ask For-Profit and Non-Profit to work together more.
• Push for better results from programs and services that work with special needs housing such as those serving disabled, homeless, farm worker and offender re-entry populations.
• Add another layer of subsidy to the Tax Credit program to develop Workforce Housing.

Wright frequently writes about smart growth and sustainable communities. He and his wife live in a restored historic home in the heart of Miami’s Little Havana. Contact him at: stevewright64@yahoo.com

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

In the Pacific Northwest, Bob Peterson – Manager of the Tax Credit Division of Washington State Housing Finance Commission -- is particularly proud of the historic Monte Cristo Hotel in Everett, Washington.

The hotel, which once set vacant and neglected for more than two decades, was converted to affordable housing 15 years ago and is still going strong. One hundred percent of its 68 units are rented to people earning no more than 60 percent of the Area Gross Adjusted Income, the standard LIHTC requirement.

The rehabilitation of an old hotel has a mix of studios, one- and two-bedroom units. Because Washington requires tax credit recipients to maintain affordability for 40 years, the Monte Cristo’s units will be available to low income renters for at least another quarter century.

“Housing needs differ not only from state-to-state but also within counties,” Peterson said. “More flexibility should be given to local communities to `fill’ in their housing gaps using these current resources. It would be nice to have incentive-based programs vs. legislating the development of affordable housing.”

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

Egan also promotes a holistic approach to affordable housing, such as those detailed in “Increasing the Availability of Affordable Homes -- A Handbook of High-Impact State and Local Solutions,” prepared by the Center for Housing Policy (CHP).

The publication details how Fairfax County, Virginia recently approved a plan to rezone an area near a mass transit stop to increase density substantially on land formerly occupied by an older, low-density subdivision of 65 homes plus five acres previously used for surface parking.

The new MetroWest development will have about 2,250 condominiums, apartments and townhouses; up to 300,000 square feet of office space; and, up to 190,000 square feet of retail space.

“During negotiations over the proposed MetroWest development, Fairfax County secured a promise from Pulte Homes, the developer, that approximately five percent of the homes would be affordable — almost double the number required under current Fairfax County provisions for developments of this density,” the CHP handbook explains.

NHC’s Egan said higher density zoning with boosted Floor Area Ratios for development can create room for affordable housing on even a pricey piece of land, quipping “God isn’t making anymore land, but he is using FAR.”

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

The State of Ohio also now requires projects that receive tax credits -- family, senior, disabled and permanent supportive housing for the homeless – to remain affordable for 30 years. The demand for low income housing remains so high that the state is still only capable of funding about one out of every four applications each year.

To further assist with gap financing, Ohio created a housing trust fund. To generate dollars for the trust fund, the state doubled the fee people pay for recording all official documents with the County Recorders.

Conrad Egan, President and CEO of the National Housing Conference (NHC), praised the federal tax credit program administered by states for its “overall efficiency, economy of delivery and longtime sustainability.”

But he said affordable housing is too much of a “lasagna deal,” with several layers of financing required in addition to tax credits to make an affordable rental project’s numbers work.

Egan said it would be easier for affordable rentals to be created if all the layers of funding were done in one cycle, so developers would not be carrying land costs and hamstringed from breaking ground until several different agencies approve their projects.

“Nothing drives developers crazy like a lack of predictability,” he said.

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright
While many are trying to make historic tax credits more available for affordable housing preservation, the state of Ohio is among the leaders in setting aside conventional Low-Income Housing Tax Credits for the restoration and preservation of existing units.

Ohio is one of eight states that reserves 25 percent or more of its LIHTC for preservation. To make sure preservation really works on older properties, the state requires extensive rehabilitation work to bring the existing up to modern code, to boost energy efficiency and to upgrade to minimum accessibility standards of the Americans with Disabilities Act.

“We are making a number of efforts to preserve affordable housing,” said Kevin Clark, the Housing Credit Allocation Manager Ohio Housing Finance Agency. “We set aside a quarter of our tax credit allocation for preservation of existing affordable housing -- most for preserving a Section 8 building, or properties financed by HUD, some created with rural development funds and also older tax credit properties, deals that had to be affordable for 15 years but now could go market rate.”

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

In less than two years, the Friedman and Dublin team worked its magic and a new developer -- Eagle Point, a Maine firm with strong ties to St. Louis -- was in place. The $12 million dollar rehabilitation construction is well under way with completion expected by year end and residents moving back into an exquisitely-restored historic building by early 2008.

Encouraged by the National Trust for Historic Preservation, some areas are using historic tax credits as a way of preserving affordable rental housing.
Mercy Housing in Savannah received the Trust’s prestigious National Preservation Honor Award for creating 70 units of affordable housing in buildings that were historic, but rapidly deteriorating.

According to the trust, Heritage Corner was originally constructed as housing for low-income workers in the early 1900s in what is now known as Savannah’s Cuyler-Brownsville Historic District -- one of the city’s oldest and poorest neighborhoods. Before Mercy Housing’s purchase and restoration, Heritage Corner families struggled with blight and overcrowding.

“Heritage Row, a continuous block of buildings constructed in 1912, was also in need of considerable rehabilitation to make them habitable,” a Trust press release states. “Where apartments once were unheated and raw sewage often ran through courtyards, residents now enjoy comfortable homes with modern conveniences, playgrounds, a community garden – and even a new branch library.”

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TAX CREDITS CREATE AFFORDABLE RENTAL HOUSING

By Steve Wright

With construction costs and land prices soaring, developers of affordable rental housing are constantly pressed to make the numbers work.
In St. Louis, the Friedman Group, Ltd. and Dublin Capital, lobbied policymakers, layered financing and launched an uphill yet successful battle to clean up and preserve a rapidly deteriorating 115-unit affordable rental building.
Eric Friedman, president of the Friedman Group and the St. Louis Association of Realtor’s Commercial Division Realtor of the Year, created a case study on the salvation of the Winton Churchill Apartments.

“An ongoing problem for the property was crime, which amounted to more than 300 police calls each year. In addition to safety problems, the apartments were only about 40 percent to 50 percent occupied and many of the tenants were not paying rent,” Friedman said. “The owner of the 115-unit building had renovated the property in 1995, but was facing increasing pressure from the City of St. Louis, the police department and community leaders to make further changes.”

The question for the owner was how to proceed in solving the problem? At that point, Friedman Group, Ltd. and Dublin Capital were asked to step in and provide expertise and solutions. The two firms and owner decided to search for a buyer/developer who would be able to rehab the building and continue providing affordable housing.