Housing authority uses tax credit model to move projects forward
Getting affordable housing units online for low-income residents is difficult — and the process behind construction has undergone change since the late 1990s.
The Santa Fe Civic Housing Authority — an independent nonprofit that works to ensure rental units remain affordable in the city — has sought out limited partners for projects in the push to get units online. In these cases, the authority serves as the "general partner" and has less than a 1% ownership stake in many properties in its portfolio.
The quasi-governmental organization has an annual budget of around $15 million, Executive Director Ed Romero said, with about $10 million coming in grants and the other $5 million from a combination of federal contracts and tenants' rent payments.
housing-authority.pdf
Among the properties in the housing authority's portfolio are Española Public Housing, which spans 178 units; Villa Hermosa, a 116-unit public housing community in the St. Francis Drive corridor; and Phase 2 of the Tierra Contenta project, which has 80 units. In the town of Bernallillo, it also controls the 96-unit Village in the Bosque.
Romero noted the authority has fewer units on the east side of Santa Fe, a historic area with more stringent restrictions for construction. The nonprofit's affordable housing projects in Santa Fe have land-use restrictive agreements, or LURAs, guaranteeing they receive a specific number of Low-Income Housing Tax Credits from the federal government over a specific time period.
The model is one in which housing authorities have converted public housing stock to project-based rentals, leveraging federal government programs that allow them to convert public units to Housing Choice aid vouchers to ensure affordability for low-income residents. The investor in these projects assumes the role of limited partner and receives tax credits in return.
"The way the tax credit project works is you have a deal in which you bring on an equity investor," Romero said. "The equity investor gets credits, plus they get 99% of the income and losses of a property for the next 15 to 30 years, depending on how long they want to stay in the project.
"But what they bring to it is 70% of the capital that is required to remodel the apartments," he said, "and it's a structure that HUD turned to back in '97, '98 when they stopped funding the construction of affordable housing."
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But the city is also aware that the project is of strong interest to many residents in the Gig Harbor North area, and has been in 'proactive and regular communication with the property owner and their agents in order to be responsive to what they may need to accomplish the project,' she said. In an interview on May 29, Rose noted that without a residential component or viable grocer as a possibility, the Village at Harbor Hill site likely would go back on the market. Since the community meeting with Gig Harbor residents in 2024, he said, 'probably six or seven grocers have brought their boats into the dock for a look, and most of them have taken a look and moved on.' As Rose explained, 'It's one thing to take over a space, like if the QFC emptied, you're buying a used space where it was built with dollars and expenses that were from 30 years ago. It's like buying a used car, you don't pay the same as new for a used car.' 'And some of the grocers, some of them that are particularly well liked and desired, have never done a ground-up retail,' he added. 'They don't have to. There's some in particular that just go to 15,000-square-foot spaces that are already there.' But he also noted there is some good news about the site, with several grocery entities that 'have stuck around.' 'And with the apartment idea, we have checked it with other apartment developers, just to make sure we're not chasing a dream. And there's interest from both sides.' While Baker, the Gig Harbor community development director, said the site has been rezoned to allow for multifamily development, Rose remained neutral on any MFTE benefits to the project. 'We'd love if our project was helpful, but the city needs to meet certain growth targets ... mandated by the GMA, and the affordable housing is also mandated,' he said. 'So it's up to the city. If it's offered as a program, people who develop multifamily and our project will consider using it.' 'If they don't offer it, there will still be apartments, and they just won't meet any affordable housing criteria,' he added. 'So we're not going to weigh in and start lobbying people. This is an internal issue for the city more than it's an issue for us.' 'But I can tell you, there's legitimate and strong interest from grocers — more than one. And same with the multifamily.' Previous reporting from The News Tribune contributed to this report.
