When the affordable Adare Manor housing development opened on Fairview Avenue in Boise in September 2019, it was full within three months and has been on a waiting list ever since. It is one of nearly 50 affordable housing developments in Boise.
Rent ranges from $ 662 per month for a one bedroom to $ 1,104 for a three bedroom unit, with income limits ranging from $ 26,400 to $ 52,440, which meet federal income guidelines for affordable housing.
According to ApartmentList.com, the median rent for a typical two-bedroom apartment in Boise is $ 1,303 as of this month.
Even with these high prices, vacant apartments are difficult to come by in the Ada and Canyon counties – the vacancy rates at the end of 2020 were 1.05% and 0.9% respectively.
City and county officials across the state have identified a need for more affordable housing as the state continues to grow, but that’s a lot easier said than done. And the lack of government investment or incentives to build affordable units makes the proposal a lot harder, developers and officials say.
Nearly a dozen sources of funding were cobbled together to make Adare. to support
Thomas Mannschreck owns Thomas Development, a Boise-based company that has developed more than 75 affordable residential complexes of nearly 4,000 units, including 134 units that make up Adare Manor. Mannschreck said Adare was built with the same finishes as many high-quality homes in the area, but 11 layers of local, state, and private investments had to come together to create a viable funding structure.
State dollars are not involved in affordable housing across the state. Unlike 46 other states that use a housing trust fund to support projects, Idaho has a state housing trust fund that was established in 1992 – but never financed.
Cory Phelps, vice president of project finance for the Idaho Housing and Finance Association, said affordable housing depends on how much permanent debt can be supported while still meeting the rental restrictions that come with federal funding.
“We really only have federal funding, we don’t have government funding when it comes to filling that void,” Phelps said. “… We just don’t have a lot of what we call gap funding.”
Adare is unique in that it started with approximately $ 1.6 million in Boise-owned real estate leased to the developer for $ 100 a year.
“That’s a direct advantage,” said Mannschreck. “We should have raised the resources to buy this floor.”
About $ 2 million in funding came from block grants awarded by the United States Department of Housing and Urban Development to the City of Boise and the Idaho Housing and Finance Association. Four other Boise City programs contributed funding for the project and $ 700,000 from Capital City Development Corporation, the city’s urban renewal agency.
The $ 9.2 million permanent mortgage is backed by Idaho Housing and Finance Association tax-exempt bonds and is just over $ 12 million at an interest rate of 3.75%.
The housing and urban development subsidies, on the other hand, bear 1% interest, which helps to keep rents manageable.
“One of the premonitions with these offers for affordable housing is that the builders will put a lot more money in their pockets when these funds come in – that is not the case,” said Mannschreck. “The real benefit, what I just said, is the ability to ask for lower rents.”
Developments also often depend on a business’s willingness to invest in the property in order to reduce its income tax debt based on the amount of growth in sales the apartment is expected to generate over a period of time.
In Adare’s case, American Express was the investor and the low-income tax credit they earned was $ 11 million.
While Mannschreck tried to secure funding for Adare, the 2017 US Congress passed the bill that lowered corporate tax rates and threatened development’s viability.
“Anecdotally, two developments we were working on in Albuquerque, New Mexico and Phoenix, Arizona, were unable to move forward on these two transactions because of the lowering of tax equity prices,” said Mannschreck. “… Without all of this, we would have to drive up our rents. Then we are just another shared apartment at market prices. “
Long-term commitment to affordable housing is also important. Auditors on all sides of the project finance, along with auditors from American Express and others, review the income and rents associated with each entity.
“The chance for mischief is somewhere between zero and none,” said Mannschreck.
The head of the state budget says they determine the role of the state in relation to the private sector
In his view, Phelps said that more government funding would make affordable housing projects financially feasible.
“If a developer is looking to build affordable housing, they will likely look around to find more resources,” Phelps said. “We’re getting a little more interest (from developers), but when you’re a developer and Oregon has all of those resources, it just makes your business easier. The more resources you have, the more homes you can build. It’s about finding all the necessary financial components to cover the costs of the project. “
Oregon has a solid list of affordable housing grants and tax breaks, as well as a long list of more than 2,700 developments by county.
Mannschreck was frustrated with what he said, a generally unsupportive atmosphere from government agencies and Idaho’s affordable housing legislation. No affordable housing bills were presented to the legislature at that session, and Governor Brad Little did not mention it as one of his priorities in his January speech on the state.
“Now we have this $ 800 million surplus, and we could take a fraction of it – let’s say $ 40 million – and create hundreds of developments with the resources already available,” said Mannschreck. “The affordable housing crisis isn’t just a Treasure Valley issue. It is everywhere.”
Alex Adams, Little’s chief budget officer, said the governor has hosted industry round tables across the state and one of the topics that comes up at almost every meeting is affordable housing.
“It’s safe to say that we are debating what role the state can play in this,” said Adams.
However, some of the American Rescue Plan Act’s dollars adding to the surplus may not help resort areas like Ketchum, where affordable housing is badly needed because the area’s median income is too high.
Adams said the governor’s office also let local government partners know that they would like to take a look at when government regulations hinder the development of affordable housing. But so far, he said, most of the bureaucracy identified has been with local authorities rather than state administrative regulations.
On options like proposing funding for the state housing fund or tax credits for affordable housing, Adams said he couldn’t comment without seeing concrete suggestions.
“We keep talking … trying to answer the question of what role the state plays in relation to the private sector,” he said.
Mannschreck has as good as given up the measures of the legislature. A few years ago he pushed for an amendment to the property tax law that would exempt the value of the tax credit from annual assessments. The bill passed the House of Representatives but died when it reached the Senate committee.
“The Idaho legislature has a very unwise – and to my knowledge, unique among the 50 states – view of what affordable housing should be for tax purposes,” said Mannschreck.
Despite his frustration with the state and the complicated nature of the work, Mannschreck said he continued to work in this niche market because of the people who help them. On an affordable property he owns in Butte, Montana, a young woman with children came up to him and asked him if he was the owner. When he said yes, she started crying.
“She said, ‘This is the most beautiful place I’ve ever lived in my entire life. Will you please build more so my friends can move in? ‘”Said Mannschreck. “And what is it worth?”