On Oct. 19, Housing Plus LLC and The Kitchen Inc. formally cut the ribbon on the $5.3 million McClernon Villas, wrapping up a complex senior-living development reliant on tax credits.
Housing Plus co-owners Debbie Shantz Hart and Becky Selle are used to these complexities. All of their projects lean on state and federal tax credits, and navigating those programs is their specialty. Housing Plus developments such as Fulbright Springs in Springfield and Highland Ridge in Nixa wouldn’t exist without them.
“The state low-income housing credit is crucial if you’re truly going to provide access to quality affordable housing,” Hart says.
For McClernon Villas, a five-building, 36-unit community for individuals ages 55 and older, Hart and Selle worked with The Kitchen on their second development together; Beacon Village last year was the first. Through the McClernon arrangement, The Kitchen owns the property built by HP Construction LLC, Housing Plus’ contracting division, with six units guaranteed for veterans. Rent payments at McClernon – which is 97 percent occupied – go into a fund that pays for operating costs, maintenance and utilities.
Housing Plus gets paid for back-office consulting work and from a pool of rent payments at their various properties, should each exceed the money needed for operations. Though Housing Plus is a for-profit endeavor, the owners say the work often can be community-centric and light on revenue. It’s more about impact.
“We have a focus on providing not only quality, energy-efficient affordable housing, but also to do something that provides services to help individuals and families move along the continuum,” says Hart, declining to disclose revenue figures. “We realized early on that the only way we could get there in terms of providing those services is if we partnered with the right nonprofit partners.”
Housing Plus’ philanthropic nature fits well with The Kitchen’s goals, says Randy McCoy, director of housing for the homeless services nonprofit.
“We probably wouldn’t be in affordable housing if it wasn’t for Becky and Debbie,” he says. “We know homelessness. We know just enough about building affordable housing to be really dangerous, meaning that it’s incredibly complex.
“I still don’t understand all the complexities of it, but they do.”
The planning process for McClernon – located northwest of Interstate 44 and Glenstone Avenue at 1320 E. McClernon St. – began at least two years before the development started welcoming residents in May.
Hart and Selle submitted the project to the Missouri Housing Development Commission to gain access to the low-income housing tax credit program.
Developers who apply for the credits must be extremely specific, with line-item criteria such as costs and number of units, as well as demonstrating the housing need and how the development would benefit the community. Housing Plus makes it work, utilizing Selle’s skills as a certified public accountant and former co-owner of Affordable Housing Solutions, along with Hart’s experience as a real estate and business attorney, including 13 years as general counsel for John Q. Hammons Hotels & Resorts.
“You are really guessing at least 18 months ahead of time at what prices are going to be,” Hart says. “There’s a fine art to that on the construction side.”
For instance, on McClernon Villas, Selle says contractors hit a lot of rock when they began digging, and project funds had to be diverted to clear the ground. As a result, items such as geothermal energy efficiencies were cut.
Once tax credits are secured, then there’s the challenge of selling them. Also a complex process, Selle connects with investors who specifically work with tax credits, aka syndicators.
“They’re large nationwide companies that do that – Raymond James, Alliant Capital – and then those companies go and find the Googles and the Verizons and the businesses that are actually buying the credits to utilize them,” she says. “They’re a matchmaker between the seller and the buyer of the credits.”
Housing Plus is wrapping up its next project, a senior-living complex dubbed Harrisonville Villas near Kansas City. Hart says the center for seniors 55 and up is scheduled to be finished within 30 days.
After that, the Housing Plus owners aren’t sure what will come next. The state in January began a concerted effort to examine the efficacy of tax credits, on Gov. Eric Greitens’ orders.
According to findings by the Governor’s Committee on Simple, Fair and Low Taxes presented in June, Missouri redeemed more than $575 million in tax credits in fiscal 2016, with low-income incentives leading the pack at $101.9 million. The committee recommended several changes to tax credit programs, including the conversion of the low-income program that Housing Plus relies on, into a low-interest loan program for affordable housing construction.
“That still means that there’s debt on the project,” Hart says. “That impacts the operating budget and that means you have to charge higher rents.”
Applications to obtain low-income tax credits next year originally were due to the MHDC in September, but the agency twice has pushed back the deadline, Hart and Selle say.
“We don’t really know what’s going on,” Hart says, noting even with the backing of its lobbying group, the Missouri Workforce Housing Association, answers are scarce.
While the state low-income tax credit is on hold, the Housing Plus owners say so too is the federal credit.
“While one is held up, the other is held up,” Selle says.
Should the low-income tax credit disappear or diminish, Housing Plus will have no choice but to switch gears, the owners say.
While Housing Plus already has crossed state lines for projects including Muskogee Arts District Homes in Oklahoma, the vast majority of their developments are in Missouri.
“The good thing about being in southwest Missouri, we’re pretty close to some other states,” Hart says.
Search sponsored by:
Springfield’s third Culver’s restaurant is underway at 1400 E. Sunshine St.
Not all labels are created equal. Natalie Menzies-Spradlin with Ample Industries gives you four things to think about to make sure your labels are durable, cost effective and meet your product …