Economic times hinder affordable housing expansion
Poor economic conditions have turned investors away from buying tax credits from Rhode Island Housing, whose sale fi- nances affordable housing construction, according to Brigid Ryan, senior project manager for the Church Community Housing Corporation.
The CCHC is a non-profit organization that works out of Newport to promote affordable housing through projects in Newport County.
CCHC Executive Director Steve Ostiguy said the tax credits are sold, and that money is used to build affordable housing. But the usual buyers of the credits aren't buying this year, and so CCHC will not be able to build new affordable housing units at the Bayside Apartments in Jamestown, Ryan said.
Jamestown Town Planner Lisa Bryer is looking to other funding vehicles for affordable housing.
"Affordable housing is a big puzzle," Bryer said. "You just kind of have to fill in the pieces."
Ryan said CCHC is looking at a couple of undisclosed sights to build new housing units with other financing mechanisms.
"We will need to further apply for Federal and state and further financing," Ryan said.
The tax credits are filtered to RIH through a Federal program that allocates a certain number of credits per state, Ryan said, and RIH allocates them to non-profit organizations. Investors, who are typically large, for-profit businesses, buy the credits and use them to pay their taxes, Ryan said.
Ostiguy said the tax credits work to the benefit of businesses, because they can buy them from non-profits, like CCHC, for less than face value. Ostiguy said in past years, CCHC has received quotes for 95 cents on the dollar.
"Today we're quoted at 65 cents on the dollar," Ostiguy said, adding later, "There are different buyers out there, if there are buyers at all."
Ostiguy explained businesses may be able to purchase a $1 million tax credit for only $850,000, and then get to pay $1 million in taxes with only having spent $850,000, but they must use the credits over a 10-year period. But businesses are holding back this year, even if it means sacrificing a cheaper way of paying taxes.
"The buyers of those credits are all in financial trouble … the funding mechanism does not work," Ostiguy said.
Bryer said the town was aware of the financing problems at least a year ago, when an affordable housing project on Southwest Avenue fell through. The Bayside Apartments project was financially connected to the Southwest Avenue project, and so it too fell through, Bryer said.
However, the recent Community Development Block Grant application includes construction of new affordable housing, if the town gets 100 percent of the requested funding. Bryer said the funding for that project isn't from tax credits, which are just one way of financing.
"I think what they're saying is they can't look for tax-credit projects, even if they found a sight that would work," Bryer said.
Ostiguy said the tax credits were a way towns could achieve their goal of having 10 percent affordable housing.