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Wednesday, 19 August 2009 14:33

Proposed apartments denied tax breaks

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Neighbors of a proposed 64-unit apartment building to serve low-income seniors in Waynesville have renewed hope that their fight to stop the project isn’t over yet.

They had opposed the project on the basis of its size: a three-story, 400-foot long apartment building fronting a residential neighborhood. Despite opposition, the Waynesville zoning board of adjustment granted developers a necessary conditional-use permit to move ahead in April. The Richland Hills project then became contingent on financing. To make it viable, developers hoped to land federal tax credits for low-income housing projects.

The developers learned last week their application for the tax credits did not make the cut this year, however. Out of 55 projects that applied for the tax credits in the state, only 24 won approval from the N.C. Housing Finance Agency. The tax credits would have offset the upfront capital needed to undertake the project and in turn allow developers to charge lower rent to tenants and generally make the project viable. The project can apply can next year.

“A lot of times the first go-around you don’t get it,” said Cindy Weeks, manager of community investments for Mountain Housing Opportunities, one of the partners in the development. “We are not deterred by it. It is a really great project, and we really think the need is there.”

If the project is stalled too long, however, it could lose its conditional use permit from the town and would force developers to start over at the Waynesville zoning board of adjustments for an extension. By then, the town could have rewritten its land-use plan rules to be more critical of such large projects, neighbors hope.

“Hopefully, it will buy us enough time,” said Anna Eason, a mother of two who lives near the proposed complex.

Eason said the neighbors opposed the scale of the project.

“It is longer than a football field and three stories tall,” Eason said. “Such a large building was too big for the neighborhood.”

Another resident near the proposed project, Kevin Brock, said he is “cautiously optimistic” that the failed tax credit will derail the project, at least in its current form.

“I don’t think there would be any opposition to low-income senior housing,” Brock said. “The size of the building was the objection.”

Neighbors could have been placated with two-story town homes instead of a giant apartment block, he said.

 

One extension granted

Late last week, Denise Mathis, who is a partner in the project, called Town Planner Paul Benson and asked whether the time period for the conditional use permit could be extended. Initially, the developers had a six-month window to apply for a building permit.

Benson has the power to grant a six-month extension, which he said is par for the course on a project of such magnitude.

“We routinely grant those,” said Benson. “It is a long process to get everything ready for a building permit.”

Mathis did not tell Benson that the project had lost its bid for federal tax credits in her phone call or in a follow-up email formally requesting the six-month extension.

Benson granted Mathis the six-month extension, making April 2010 the new deadline for a building permit. The new deadline is still several months before next year’s cycle of tax credits will be awarded. It is unknown whether the developers would move ahead with the expense of securing building permits prior to securing the tax credits.

Benson told Mathis she could seek vested rights for the project, which would buy her an additional two years. However, it would have to go back before the board of adjustment and require another public hearing, Benson said. Vested rights is a concept set up by the state to prevent developers from being caught in the lurch by shifting zoning requirements mid-stream in a project.

The board of adjustment, a quasi-judicial body, previously ruled that the complex is not out of character for the neighborhood.

However, there is another factor at play: a possible tweaking of the town’s land-use plan and zoning requirements. The town has appointed a blue-ribbon committee tasked with assessing problem areas within the land-use plan and recommending changes. The current land-use plan allows high-density development in the neighborhood, which likely influenced the board of adjustment’s favorable ruling on a conditional use permit.

Competition for the federal tax credits was stiff this year and the pool of available funds smaller than usual, according to Mark Shelburne, Counsel & Policy Coordinator to the N.C. Housing Finance Agency.

Richland Hills’ application for tax credits didn’t score as high in two key areas as other projects proposed across the state. It didn’t get extra points for having secured below-market financing, and it lost points for having higher than normal per unit construction costs.

The developers had sought county support for the project, but did not secure an endorsement from county commissioners, who were concerned endorsing this project this year could knock future low-income housing projects out of the running for the tax credits in future years. Shelburne said that had no direct bearing on the project’s failure to land the tax credits.

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