|
University
Lofts Apartments: Using the Affordable Housing Assistance Program
to
Revive Washington Avenue
By Paul N. Tice
The
State of Missouri has multiple tax credit programs to provide incentives
for investments and charitable contributions to approved projects.
This regular column
will feature examples of how the various Missouri state tax credit
programs benefit the State, generally, and St. Louis in particular.
Washington
Avenue in Downtown St. Louis is at the beginning of a revival.
That revival is happening, in part, because artists have been
attracted as pioneer residents, and because developers are accessing
the myriad of tax credit programs that Missouri makes available
as incentives for such redevelopments. University Lofts Apartments
is one such project.
University
Lofts is located in the Washington Avenue historic district
at 1627 Washington Avenue. This eight-story, 60,000-square-foot
warehouse was converted into 26 apartment units, on floors two
through eight, with a restaurant and the Desmond Lee Art Gallery
of the Washington University School of Art on the first floor.
The project has been such a success that all of the apartments
were leased before the building opened in January.
This
project was a unique collaboration between the Regional Housing
and Community Development Alliance (RHCDA), Bank of America
and Washington University, involving one of the last downtown
properties owned by Washington University. They, like many other
developers in the district, used Certified Historic Rehabilitation
Credits to help pay the tremendous cost associated with rehabilitating
a historic building. In addition, the University Lofts Apartments
benefited from the Missouri Low-Income Housing Tax Credit and
the Affordable Housing Assistance Program (AHAP) Tax Credit.
It's
the use of AHAP tax credits that made the project's financing
so unique, by closing the final financing gap, keeping Washington
University involved in the project, and transforming a deteriorating
building into a community asset. Eleven million dollars worth
of AHAP credits are available each year with a pre-project limit
of one million dollars. All of the available AHAP tax credits
have been allocated over the past several years so the application
process is very competitive.
The
AHAP tax credit program allows the Missouri Housing Development
Commission (MHDC) to allocate tax credits to nonprofit applicants
that sponsor affordable housing developments. If a qualified
donor makes a donation of cash, real estate or valued services
to the nonprofit sponsor of an AHAP-assisted project, then the
donor can receive Missouri tax credits equal to 55% of the donation.
This benefit is in addition to the charitable deduction the
donor receives for the gift. A qualified donor is a tax paying
"business firm," which includes corporations, partnerships,
limited liability companies and individuals with business income.
Once
an AHAP application is approved and a reservation letter issued,
and upon receiving evidence of the donation, the MHDC will
then
issue a tax credit certificate to the donor. This certificate
can be used to offset bank and other financial institution taxes,
gross premium taxes on insurance companies, franchise taxes,
income taxes, and the annual tax on gross receipts of express
companies.
If
taxpayers decide not to apply the credits against their own
tax liabilities they can sell the tax credits to qualified
Missouri taxpayers.
A
project receiving an allocation of AHAP tax credits must agree
to restrict the rents of a certain number of its units in
relationship to the AHAP donation to the project's total development
cost and agree to rent to tenants whose income is less than
50% of the area median income. This obligation lasts for 10
years and is reflected in a land use restriction agreement
recorded against the property.
The
AHAP nonprofit sponsor in the University Lofts Apartments
redevelopment was RHCDA. RHCDA received an allocation of AHAP
tax credits from the MHDC in exchange for having some of the
units rent restricted for tenants whose income was below 50%
of the area median income. Washington University donated the
building and additional land being used as the project's parking
lot. For their donation, Washington University received AHAP
tax credits equal to 55% of their donation. Because Washington
University decided not to use the tax credits, it sold them
to another Missouri taxpayer. The proceeds from the tax credit
sale were then returned by Washington University to the University
Lofts Apartments redevelopment. Specifically, the money was
spent to create the Desmond Lee Art Gallery, to rent one
apartment unit for a visiting Art School professor and an
art workshop in the basement, to be used for the tenants future
Art School students and area children.
The
Bank of America, and its Community Development Corporation,
purchased the Federal and State historic tax credit and
Federal and State low-income housing tax credits, in addition
to providing the first mortgage debt financing.
The
AHAP tax credits provided a source of funds to create special
affordable housing, helped to give additional life to a resurging
historic district, and helped to build an art gallery and
an art workshop.
People
interested in finding out more about how the AHAP tax credit
program can help finance a project may contact Jane Anderson,
Program Administrator, at Missouri Housing Development Commission,
3425 Broadway, Kansas City, MO 64111, (816/759-6662).
Paul
N. Tice is a principle of DFC Group Inc., tax credit consultants
to the Firstar Tax Credit Clearinghouse.
|
