Wednesday, January 14, 2009

Ketchum snags $8M in housing funds

Tax credits help Ketchum CDC close in on affordable rental project


By JON DUVAL
Express Staff Writer

Nearly $9 million in federal tax credits could help the Ketchum Community Development Corporation build 32 affordable rental units.

Michael Carpenter, chair of the CDC's Affordable Workforce Housing Team, announced Friday that after a competitive application process against 19 other projects throughout the state, the nonprofit organization was awarded $8.8 million in tax credits by the Idaho Housing and Finance Association.

The application was made with the help of Allied Pacific Development, the development arm of Seattle-based affordable housing consulting company Pacific Housing Advisors.

Like most other construction plans made in this weak economy, the project isn't without its financing hurdles, but backers were optimistic.

If all goes to plan, Allied Pacific Development will oversee construction of a five-building project called Northwood Place, which would total 32,000 square-feet on a 0.84-acre parcel of land located at the north end of the city-owned Park and Ride lot adjacent to the Wood River Community YMCA.

The CDC would lease the property for 99 years for an estimated $890,000, 75 percent of which would be paid at the start of construction.

The project would include 12 one-bedroom units, 14 two-bedroom units and six three-bedroom units, with sizes ranging from 617 to 1,234 square feet and monthly rents estimated to fall between $430 and $1,074, depending on the size of the unit.

The project would include 1,468 square feet of community, office and storage space, and 33 parking spaces. None of the buildings would be over three stories tall and 41 percent of the parcel would remain open space.

"Affordable rentals for our workforce are a necessary component in creating the sustainable and vibrant community that we all want to live in," Carpenter wrote in a press release. "With this funding, the Northwood Place project will balance affordability with sustainable building and design to create something that fits well with the architecture of Ketchum."

Greg Dunfield, a director at Allied Pacific Development, said the next step is to syndicate and sell the federally regulated low-income-housing tax credits.

Dunfield said large corporations and banks invest in this kind of credit market to offset their tax liabilities by purchasing tax credit at a discount to the actual value offered by the program. That means the CDC can offer $8.8 million in tax credits but will only receive a portion of that amount in order to provide an incentive for companies to invest.

Because of the state of the economy, Dunfield said the market for these credits has suffered just like other markets, making the sale a challenge.

Last summer, when the project was first devised, Dunfield said he thought it could bring in around 80 percent of the value of the credits. Now, that figure could be closer to 65 percent, he said. That would still represent about $6 million for the project, which Dunfield said would cover the estimated cost of construction.

As well, a long-term mortgage loan, paid off by the rents generated from the project, would provide the balance of funds necessary to complete it if needed, Carpenter wrote in his release.

The principals of Allied Pacific Development have combined experience in over 45 housing projects funded by tax-credit programs, leading to Dunfield's confident anticipation of a ground breaking in spring or early summer. That timetable would have the units available for use by spring 2010, Dunfield said.

"What's great about this project is that if it's a success, we could likely do one or two more of them—it opens a lot of possibilities," Ketchum Councilman Larry Helzel said. "It will be really nice to see what kind of community we can put together there and how quickly the units are spoken for."

Carpenter emphasized the benefit of the project to the community, not only in that it would provide affordable rental housing, the only of its kind in the valley, but also come at zero cost to city taxpayers.

By using the tax-credit program, the rents on the units will be restricted to workers who make about $46,000 or less, calculated as 60 percent and below the Blaine County mean income of $74,800.

"This is a big win for Ketchum and validates our investment in the Ketchum Community Development Corp.," Ketchum Mayor Randy Hall said. "This project is a superb example of a public-private partnership between Ketchum, the CDC and Allied Pacific. By infusing $9 million in construction activity and providing 32 homes for families, we meet two important objectives—economic development and affordable workforce housing."




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