Senior housing off, for now
- Published: May 10, 2012
An effort to build affordable senior housing on the Barr property downtown was thwarted last month when the project was denied its request for 2012 federal tax credits. However, project organizers consider the set-back only a delay, as they plan to re-apply in 2013.
The low-income housing tax credits would have attracted $4.4 million in private investment funding, about 80 percent of the total cost to build the 34-unit, two-story apartment at the northeast corner of Xenia Avenue and Limestone Street. A joint venture between the local affordable housing group Home, Inc. and the Buckeye Community Hope Foundation of Columbus, the apartments would mainly serve people 55 and over with incomes at or below 60 percent of area median income for Greene County, which would be about $30,000 for a couple.
The Yellow Springs proposal came up short in a competition against 102 other affordable housing projects in the state administered by the Ohio Housing Finance Agency. Out of 20 projects in its group, four were funded, while Home, Inc.’s proposal finished eighth. In total, 37 projects in Ohio were given tax credits this year worth more than $29 million.
Home, Inc. Executive Director Emily Seibel said she was encouraged by how close the project came to being funded, but nevertheless disappointed it did not get approved.
“It’s disappointing because of all of the work everyone’s put in, because of how much the project’s needed and because of what a great site it is,” Seibel said. “I am also excited about how well our project scored in a brand new scoring system.”
Undeterred, project leaders hope to apply for 2013 tax credits. The low-income housing tax credit program gives equity investors in affordable housing projects dollar-for-dollar reductions in their federal income tax, making them highly-attractive to banks and other investors. About 90 percent of all affordable rental housing built each year is financed through this credit, according to the National Council of State Housing Agencies. Projects must be completed within two years of the end of the year the credits were awarded and remain affordable for a minimum of 30 years.
Since Buckeye Community Hope’s purchase option on the 1.6-acre property, owned by Friends Care Community, expires this fall, a new contract may have to be negotiated if project leaders pursue 2013 tax credits. Friends Care’s board of directors will make a decision about the property at its May meeting, according to Friends Care Director Karl Zalar. Friends Care, which was gifted the property in 2008 by the Morgan Family Foundation, previously pursued its own senior housing development on the site.
Roy Lowenstein, vice president of Buckeye Community Hope Foundation, said that the Barr property site was the best he’s ever submitted to the state and that he hopes to re-apply.
“My inclination is to try again if the site were available or there was another good site,” Lowenstein said, since there is so much momentum and support in the community for the project. Buckeye Community Hope has received funding for 60 tax credit projects since 1992.
The affordable senior housing development is projected to cost $5.55 million, including $375,000 to purchase the property from Friends Care. In addition to a potential $4.4 million in equity from the tax credits, the project would be funded with a $250,000 Morgan Family Foundation grant for four market-rate apartments for seniors making over 60 percent of area median income and a projected $395,000 from the Ohio Housing Finance Agency’s Housing Assistance Development Program. About $475,000 would have to be financed.
Overall, the Yellow Springs project received 62 out of a total 100 points and was six points shy of being funded. While the project received the highest points possible for local collaboration and targeting very low-income households, points were missed because of the area market and the project’s economic characteristics. The Ohio Housing Finance Agency is still working on its 2013 application. When it is released, Home, Inc. and Buckeye Community Hope may consider changes to the project to increase the project’s chance of being funded in 2013 if they decide to move forward, Seibel said. But since the application is a “moving target,” no changes will be made until the application is released, she added.
For example, where the one- and two-bedroom units are slated to rent for approximately $560 and $660, respectively, including utilities, rents might be adjusted to improve the market criteria score, Seibel said. Rental vouchers, such as those offered by Greene Metropolitan Housing Authority, or real estate tax abatement through the Village of Yellow Springs may be considered if they are part of the 2013 application, added Lowenstein. And points may be gained for developing a vacant property in an area impacted by foreclosure. Home, Inc’s preliminary data shows that Yellow Springs may have a higher foreclosure rate than both the surrounding area and Ohio. A finalized report could secure these points.
But some aspects of the market criteria cannot be improved. The comparatively low score in this section resulted from the fact that the Yellow Springs project is in a less populous area compared to others in the suburban geographic pool. Yellow Springs is considered suburban because Greene County is part of the Dayton metropolitan area. The Yellow Springs project would thus have to capture a higher percentage of the eligible low-income senior households in its market area, which includes the surrounding 127 square miles and the municipalities of Yellow Springs, Xenia, Enon, Cedarville and Clifton. If the local project were evaluated in the rural pool, it would have scored higher than any other project and been funded, Seibel said.
Even though the project was docked points for market criteria, Seibel said that there are enough income qualified seniors in Yellow Springs to fill the apartments.
A high point of the application was that a full eight points were received for local economic collaboration, Seibel said. Points were received because Village Council approved the project’s density and use, the Village of Yellow Springs gave a donation of $19,645 to offset the cost of its utility tap-in fees, the Morgan Family Foundation grant was funneled through the Village and Village documents express the community goal of affordable housing. Points were also received for a 2006 Morgan Family Foundation study of the Barr property. And over a dozen letters and public statements received by the agency demonstrated local support for the project, Seibel said.
“Really it’s the local senior community that has been the biggest champions of the projects,” Seibel said. “Their voices were heard.”
One “cloud on the horizon,” according to Lowenstein, is that next year’s tax credit proposal could yield 15 to 20 percent less money for the project, because a temporary provision setting the tax credit rate at a fixed 9 percent will expire in 2013. The tax credits will revert to a floating rate, which is currently around 7 percent, pending Congressional action, he said.
“There’s no way to make that up,” Lowenstein said. “In the future it will be harder to do these projects.”
Non-competitive federal tax credits are available to build the apartments, but would only cover 30 percent of the project’s cost, Lowestein said, requiring the project managers to incur more debt. All affordable housing requires a subsidy, whether it is upfront, like tax credits, or when it is operating, Lowenstein said.
Home, Inc., a community land trust, finished construction last month on its 16th permanently-affordable house in the village since 2001.