Tax credits for smaller apartment complex sought
SALEM – A Cleveland firm proposing an apartment complex off of Pershing Street and Butcher Road has applied for low income housing tax credits again, this time for a 60-unit development.
“We’re hoping it gets funded this year. We’re anxious to build something new in Salem. We think it’s a good community,” NRP Group assistant developer Mary Hada said Thursday.
The 2014 proposal for Salem Pointe, the name chosen last year for the development, was to be posted to the Ohio Housing Finance Agency website today at www.ohiohome.org.
According to the website, the housing tax credit program “is a tax incentive program designed to increase the supply of quality, affordable rental housing by helping developers offset the costs of rental housing developments for individuals with low- to moderate-income.”
NRP still holds an option to purchase a more than 67-acre tract of land located south of East Pershing Street and bordered to the east by Butcher and Cunningham Road roads. The company approached the city last year to request a zoning change on part of the property and agreed to conserve nearly half of the western portion to prevent any development on wetlands and create a buffer near current single-family dwellings on four dead-end streets.
Salem City Council agreed last March to rezone 6.9 acres south of the East Pershing Street extension to Butcher Road from commercial to multiple family residential. Another 14.3 acres just east of the deadends of Oak Street, Tanglewood, Kennedy and Edgewood drives was rezoned from multiple family residential to single family residential to form the buffer zone between current homes and the proposed apartment complex.
Plans last year called for construction of 90 units in two-story garden walk-up style buildings on 6 acres, with plans for future development of more apartments and single-family homes on another 29 acres. At least 32 acres on the western half of the 67-acre tract remain planned for preservation through the Western Reserve Land Conservancy.
Hada said the size of the development was reduced to 60 units in order to reduce the amount being requested in housing tax credits in hopes to have a better chance of getting funding. The development just missed out on funding last year in the new rental units pool for rural areas after applying for a tax credit amount of $1,215,000.
This year the amount being requested is $815,982 for 60 units which will equal 120 bedrooms and cover 75,911 gross square feet. The building type is still the same: two-story garden walk-up style. Apartment renters will have to meet maximum income requirements of 60 percent or less of the area median income.
At this point, she explained a family of three with a maximum income of $29,520 would qualify, but that number could change by the time apartments are ready to be occupied, based on the area’s median income that year.
The breakdown of units is 20 one-bedrooms, 20 two-bedroom units and 20 three-bedroom units. Based on the numbers at this time, monthly rents would be $521 for a one-bedroom, $600 for a two-bedroom and $700 for a three-bedroom, subject to change based on the area’s median income, determined through the county.
The project narrative described how the workforce housing development will address the shortage of affordable housing in eastern Ohio in areas where there are oil and gas activities related to Utica Shale. The narrative mentioned a training center to be located in the clubhouse to help prepare future employees to fill the needs of Salem companies and also noted the close proximity to shopping, dining, service and healthcare facilities.
Hada said the citizens can expect a good, high-quality apartment complex. She said she thinks they’ll be pleased with the finished product.
She said the city’s been very helpful in cooperating with the information needed for this year’s application. New letters of support from the government entities were not necessary this time around.
She said they’ll find out whether they’re receiving the tax credits on May 14.
The website description of how the program works said “the amount of housing tax credits is based on the total development cost to be financed. Developers use the credits by selling them to investors to raise cash for acquisition, rehabilitation, and construction costs. The individual or corporation that purchases the housing tax credit will receive the credit for 10 years and can subtract the amount of the housing tax credit on a dollar-for-dollar basis from federal income tax liability. In exchange for the credits, the owner of the development must maintain income and rent restrictions for 15 years. Following the compliance period, the owner must enter into an extended use period of an additional 15 years by filing a Restrictive Covenant on the development with the county recorder. The IRS regulates the HTC program, and additional details can be found in Section 42 of the Internal Revenue Code.”
According to the Salem Pointe proposal, the total project cost is estimated at $9,472,789.