East side apartments to move forward with credits
Ace Apartments, slated for 4602 Cottage Grove Road, was recently awarded crucial, competitive federal tax credits to create 59 units of affordable housing. Kathryne Auerback, executive director of Movin’ Out, Inc., said Monday she was "very pleased" to learn about the award.
The Ace Apartments by Mirus Partners (which after a merger is known as The Commonwealth Companies) and Movin’ Out will provide 70 units of housing, 59 of which would be affordable.
Section 42 tax credits are awarded annually through the Wisconsin Housing and Economic Development Authority and can account for the majority of a project's development cost. The $18.5 million Ace Apartments project will receive $10 million in tax credits over 10 years.
The credits were previously slated for the Heartland Housing permanent supportive housing project at 1202 S. Park St. Heartland Housing recently returned the credits after deciding to pull out of the project and those credits were then redistributed to the Ace Apartments, along with some remaining unallocated 2019 credits. The Ace project was chosen because it was the highest scoring application that did not receive credits, said Sean M. O'Brien, director of commercial lending at WHEDA.
The city’s Affordable Housing Fund was created in 2014 with the goal of creating 1,000 affordable units in five years. Local commitments from sources like the AHF make project applications more competitive in the WHEDA scoring system.
In 2018, the city allocated AHF funds to four affordable housing projects. Two of those projects were awarded WHEDA credits this spring, but the Ace project was passed over.
At the time, Jim O’Keefe, the city’s community development division director, called this “just a matter of their score not being high enough to make the cutoff” in a “very competitive process.” Auerback said the organization was “exploring various options for next steps,” including reapplying in the next round.
Now the organization won’t have to wait. It will receive $1 million in tax credits annually, which are purchased by an investor, though "current pricing suggests that the equity coming in would be less than $10 million," O'Brien said.
The project will include first-floor commercial space, and the affordable units will be limited to tenants making 30 to 60 percent of the area median income. For an individual in 2018, that would be someone making between $19,250 and $38,520 a year. For a family of four, 30 to 60 percent of area median income would be between $27,500 and $55,020.
The project will also host 14 supportive units for households including a veteran or individual with a disability.
"Movin' Out develops affordable housing in order to provide options for community-integrated independent living for people with disabilities," Auerback said in an email. "This inclusive, stable foundation is essential for people to thrive as valued members of the community."
The project still must go through the city land use approval process to receive a conditional use permit, O’Keefe said. The project is still working on securing additional funds, but hopes construction could begin by the spring of 2020, Auerback said.