This blog is part one of four on our recent proposal for Buckeye Fields Senior Apartments.
Community Building Partners recently submitted an application for the 9% Low-Income Housing Tax Credit program, in conjunction with Buckeye Hills Support Services (BHSS) and Lowenstein Development. This project, called Buckeye Fields Senior Apartments, would provide 64 affordable 1 bedroom apartments for senior citizens just outside Marietta, Ohio. We’re particularly proud of this proposal, in part because it has several unique features–features we think can be replicated elsewhere in the state. Over the next few blog posts, we’ll take the time to explore them.
First, a word about the 9% tax credit. One of the most common challenges in developing quality affordable housing is that the below-market rents that would make the building affordable aren’t enough to pay for the operating costs and the mortgage debt on a new building. The low-income housing tax credit program is designed to spur private developers to build affordable housing by using tax credits to lower their construction costs, and therefore their mortgages. With lower debt service payments, they can afford to keep rents low. The “9%” refers to the value of the credit: 9% of eligible development expenses per year for 10 years. In effect, this means that a huge chunk of all the development costs (usually 80% or more) can be covered by the tax credit, reducing the mortgage to a small, manageable amount.
The 9% credit is so valuable that OHFA uses a competitive process to award them. Each proposal has to meet certain standards for design; beyond that, OHFA awards points to different aspects of the proposal. Some points are awarded for aspects of the design itself, such as including a fitness center in the building. Others are for the project’s location, such as being in a census tract in great need of senior housing or being close to a supermarket. The competition is fierce, but when our development partners found the right location to make a competitive application in Marietta, we jumped on it. (More about that later.)
In the design process, we made critical choices to meet three goals:
- We wanted to reduce the cost of development, so as to reduce payments on our permanent mortgage, but still deliver a quality product at low rents.
We wanted to reduce the cost to operate the property, to ensure the rents could remain affordable for years to come.
We wanted to incorporate supportive services for residents as a core feature of the property, not just an afterthought.
In our next post, we’ll explore our cost-effective development model–and how it can be applied elsewhere.