The $7.4 million project, known as the Westgate Terrace Affordable Housing Complex, will bring 60 low-income apartment units to a four-acre site within the town limits of Franklin. The project passed muster with the town board May of this year, following a recommendation by the town’s planning board.
But the developer, Flatiron Group, which specializes in low-income housing projects throughout the state, was waiting to see if federal low-income housing tax credits would come through. The tax credits were necessary to make the investment viable and offset the lower rent that would be charged. But, there is a limited pool of tax credits, and competition is stiff.
Hollis Fitch, a developer with the group, said after being awarded the tax credits in August, the development is prepared to move forward.
If the project is executed as planned, and barring any winter weather construction delays, the units will be completed by November 2013, Fitch said. He expects construction to begin November of this year.
The sale of the property still needs to be finalized, and the development still needs a building permit from Macon County and a final land development permit from the town of Franklin. But, the permits are procedural, as the development has been approved in concept by the town board, despite objections from some neighbors about the impact of the development on their community.
The 60 units will be a range of one-, two- and three-bedroom apartments, with a rental price regulated to remain low for the next 30 years as a stipulation under the federal tax credits. For example, a one-bedroom unit in the proposed property will start at about $335 per month without utilities, Fitch said.
But the trade-off is only low-income residents, defined as families making less than 60 percent of the area median income, qualify to rent the apartments.
The Flatiron group reported that about 40 percent of the county’s population would meet those criteria. In Macon County, the median income for a family of four is $53,000 so only a family of four making about $31,000 or less would qualify. A single person making less than $22,000 per year would qualify.
Fitch’s group has proposed a host of affordable apartment complexes that capitalize on the low-income housing credits across North and South Carolina and Virginia. Some of them get built, but some are rejected by the community where they are proposed, and others don’t get the competitive tax credits.
Although some low-income housing companies are not-for-profit, the Flatiron group is.
Shortage of affordable housing
Fitch said he was attracted to Macon County because of research studies indicating there was a strong need for low-income housing here. He said a formula is used to calculate the need, taking into account the demand in the area for low-income housing and the number of units offered. Fitch said he has been looking to develop this type of project in Franklin for the past three years.
Town leaders were also eager to bring the project home. The town board voted unanimously to approve the project earlier this year, and the town offered the development reduced fees for sewer and water, Fitch said.
Franklin Town Planner Derek Roland believes neighbors’ concerns about increased traffic stemming from the development can be addressed, and in the end, the project should have a resoundingly positive impact on the community.
“There is an excellent need for this here,” Roland said.
He is also excited to see a construction project after witnessing such a slump in construction since the housing crisis. Roland offered several statistics to back his favor of the complex. He pointed toward the 11 percent unemployment rate in Macon County and the decline in the construction industry.
Last year, there were 79 percent fewer building permits issued in Macon County than in 2007 before the market crashed. In a county where the construction sector was once being the driving force behind economy, a low-income housing project may be one of the few bright spots this year.
Tax credit lynchpin
To realize the project, the Flatiron Group’s project had to win out in a competitive process for the affordable housing tax credits. Though the tax credits are federal, they are divvied out to each state based that state’s population where they are administered through a state agency — here it is the North Carolina Housing Finance Agency.
Fitch said his project was one of several dozen selected from a larger pool of more than 100 applicants vying for the latest round of tax credits.
The Westgate Terrace Affordable Housing Complex was awarded tax credits of just more than $500,000 per year for 10 years. The developers will sell the tax credits to investors to get cash up front for construction. In exchange, the investors get an annual return on their money when the tax credits are paid out.
Selling the tax credits netted $4.4 million toward the project’s $7.4 million cost. The remainder of the financing will come from a $2 million dollar state credit loan with zero percent interest and a nearly $1 million dollar loan from Macon Bank. These creative forms of funding, which avoid hefty debt and large mortgage payments, are what allow a low-income housing complex to maintain low rents.
Yet, the winning criteria for this year’s housing projects was based on those which could offer a greater number of housing units while requesting a lower number of government tax credits. Fitch said the financial support of the community of Franklin was instrumental in making his application competitive.
“A big thanks goes out to the community up there,” Fitch said. “Everyone has been helping out to get this thing on board.”