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Elizabeth Pagano is the editor of the Austin Monitor.
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Commissioners approve bond money for affordable housing project
Thursday, February 7, 2013 by Elizabeth Pagano
The Travis County Commissioners Court unanimously approved issuance of up to $27 million in multifamily housing revenue bonds from the Strategic Housing Finance Corporation on Tuesday in order to help fund a 228-unit multifamily project. The Paddock at Norwood will be located at US 183 and Norwood Park Boulevard, which is about a quarter-mile east of I-35.
Or, as Travis County Judge Sam Biscoe put it, “east of McDonalds, west of Luby’s, south of Walmart.” Biscoe noted that the proximity to commercial development made it a good location. The project is expected to cost about $31 million.
LDG Development plans to build a three-story garden apartment complex on the land, which is currently undeveloped. The complex will offer a resident service program, intended to serve both adult and youth residents with things such as after-school tutoring and financial planning.
Construction will begin this May, and units will be available as early as fall of 2013. This is good news for an area that has seen little development in recent years.
“Really, the biggest benefit to the community for this project is there has been nothing new built in this part of the city since 1997, and that’s when the last tax credit project was constructed,” said Craig Alter, executive vice-president of the Travis County Strategic Housing Finance Corporation.
By issuing the bonds, the project is automatically entitled to four percent tax credits through the Texas Department of Housing and Community Affairs. Alter called the federal tax credits “essential” for anyone’s ability to construct affordable housing. In this case, the federal tax credits will amount to about $10 million, helping to defray costs considerably.
“You simply cannot offer housing for persons at this income level without having it subsidized,” said Alter.
By pursuing this type of financing, the county’s Housing Finance Corporation receives a federal income tax credit for the contribution they make against constructing the project. This is contrasted with the alternative nine-percent tax credit avenue which, though obviously more lucrative, is a competitive process. (The four percent credit is not.)
“That permits a user of the four percent to determine where they would like to develop the property and when they would like to develop the property, instead of getting into this cycle where it only happens once a year,” Alter told In Fact Daily. “With the nine-percent credit, you have to meet the parameters of the state allocation plan… You need to score very well to get points, to be competitive.
“It’s very over-subscribed. You have many, many more applications coming in than you have funding available,” said Alter. He told the commissioners court that Austin’s allocation amounts to only about two or three a year.
Alter went on to say that there is a high-demand for housing in the area – about 360 units a year. Despite this, he said that there has been little discussion about trying to meet that demand, due to the difficulty of completing such projects without access to tax credits and bonds.
In addition to the tax credit, the property will be tax exempt, allowing money to be paid towards the mortgage.
The Paddock at Norwood is reserved for families at or below 60 percent of the area median income, which is $43,920 for a family of four. This means the rent for the units will be: $752 for a one-bedroom apartment, $894 for a two-bedroom apartment, and $950 per month for a three-bedroom apartment, which is below market rate.
Though they are based out of Kentucky, LDG Development has also worked as a local developer, and already has about 1,300 units in Austin.
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