Housing Authority

of the City of Clay Center 330 West Court St., Clay Center, KS 67432

www.claycenterhousing.com Equal Housing Opportunity (785) 632-2100 * Fax (785) 632-6363

KS Relay Center TDD 800-766-3777

Executive Director’s Report

MARCH 6, 2017

OCCUPANCY

We still have 1 vacant unit in Parkview, 2 vacant units in Apollo and 2 in Tolin Terrace.

HOUSING TAX CREDITS 200

The Cantwell Affordable Housing Credit Bill of 2017 was introduced to the U.S. Senate today. A similar bill will be introduced in the House shortly. There is heavy bipartisan support for the bill that will expand the state’s available credits by 50% and will increase the basis by 30% to assure feasibility of projects. If the price stays around 90 cents or higher then this will help us greatly. In fact, based on my attached illustration, we may be better off applying for 4% tax credits with bonds. Currently, the 4% credits calculate at 3.22% but the Cantwell Bill will permanently change it to a full 4%. This would basically guarantee the funding of our project.

Even with an increase in tax credits allocated to our state next year there were 55 tax credit applications (9%) this year and less than 20 will probably be funded. That means at least 30 from this year re-applying next year with even more applications assuming this legislation becomes law. That means that, while we will score higher than many of the other applications, there is still a good chance of not receiving 9% credits in 2018.

However, with 4% tax credits we apply to KHRC for tax exempt bonds and there are usually more bond funds available than applications. Once we receive the bonds, we apply for the 4% tax credits and there is no competition so we would receive them. The bonds are paid off with equity at project closing. With the new housing law we should be able to easily fill the funding gap with other sources.

Occupancy levels should increase as well since we will no longer have to deny households because of income due to the new income averaging and new 80% AMI ceiling. This new rule along with the tenant rental subsidy would strengthen the appeal of our property to those households under 80% of AMI who are looking for affordable housing while broadening the demographics of our households even more.

I want to clarify that I have no intention of pursuing tax credits for any of these projects until the new housing bill passes with the above mentioned changes. The current limitations imposed by the Tax Credit program is why I did not have an interest in using tax credits on other projects until now.

NEW DEVELOPMENT

With the added features of the Affordable Housing Tax Credits Act, there has never been a more opportune time for us to develop 3-bedroom apartments for larger households who are under 40% of AMI. There are no rent subsidized properties currently offering this size of units in our community and the proposed Meadowbrook houses will not be affordable for these households nor will it have tenant subsidy.

After meeting with Mike Folks, I believe the Board of Education would consider an affordable offer for the 1.5 acres located at 7th and Crawford. We could easily develop 10 units on that property. We do not have authority to purchase land so we will need to ask the City of Clay Center to purchase the property and then lease it back to us.

CONSULTING SERVICES

For now, I have stopped pursuing consulting opportunities as I have been very busy with annual reporting and planning our own development. However, the 2017 Affordable Housing Tax Credits Act adds significant preferences to developments on Indian Reservations so, with my past relationships with tribes in the Southern Plains, I believe we could eventually help them bring in capital to develop and preserve affordable housing while bringing revenue to our own operations. While Michael Bowen continues to suggest I contact many of these tribes and housing authorities it does take time and money to do so and it will take a lot of my time to plan and complete our own project over the next 3 years or so. And, quite frankly, while we significantly reduced our administrative burden and significantly increased our operating revenue, we depleted most of our replacement reserves in the process and that was the main reason I wanted to pursue consulting services. If we complete the project I have projected, we would be rewarded with somewhere over $200,000 of additional replacement reserves from developer fees reducing the need to look for more sources of replacement reserves.

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