The Mobile Housing Board was recently approved for a federal program that could help it finance future projects, but a proposed change in how tax credits are doled out by a state agency could mean the MHB will still have gaps to close in a $750 million redevelopment plan for two neighborhoods.
Executive Director Dwayne Vaughn announced the U.S. Department of Housing and Urban Development approved the MHB for the Rental Assistance Demonstration program, which will allow the board to borrow money from banks for the first time for housing developments.
The RAD program would also lock MHB into a 15-year funding contract with HUD, making it susceptible to future cuts. Vaughn believes it would also help the board manage an estimated $80 million in capital needs.
“We are smiling as broadly as we can,” Vaughn told board members. “We’re very, very excited about what’s going on. We think what’s happening in Mobile is one of the most exciting things in the Southeast.”
While some housing authorities are given RAD approval for specific projects, Vaughn said, MHB was given a portfolio-wide pass, meaning that in addition to the proposed new construction campaign, the board could also use it to renovate its existing housing stock.
“There are a small number of authorities that have portfolio-wide RAD,” Vaughn said.
But the approval marks a conditional approval from HUD. MHB will have a year to submit expansive RAD applications, explaining how it proposes to transform each of its affordable housing developments and secure additional financing to make the transfer to RAD possible.
Late last year, MHB announced a $750 million public-private, mixed-use, mixed-income redevelopment project for Thomas James Place, R.V. Taylor Plaza and Boykin Tower on the city’s south side. This year the board also announced a $200 million redevelopment project for Roger Williams Homes on the city’s north side and the award of a HUD grant to complete planning for both.
While RAD approval was good news, Vaughn said the board’s plans could still be complicated by new rules presented in a draft Housing Credit Qualified Allocation Plan presented by the Alabama Housing Finance Authority.
The success of many public-private redevelopment projects relies on a developer’s ability to secure federal tax credits issued through state governments. The credits, available in 4 percent and 9 percent increments, are then purchased by banks.
Vaughn said the AHFA’s proposal to award the competitive 9 percent credits based on a point system, giving additional points to projects proposed in nonpoverty, nonminority areas, would negatively impact MHB’s efforts to redevelop other areas of the city.
“Roger Williams is in a high-poverty, high-minority area. It doesn’t mean it can’t benefit from new housing,” Vaughn said.
Kristi Gates, a spokeswoman for AHFA, wrote in an email message the change was made based on HUD’s fair housing final rule and a U.S. Supreme Court ruling from June regarding Disparate Impact Standards for violations of the Fair Housing Act. As a result, the 2016 QAP must work to overcome “historic patterns of segregation, achieve truly balanced and integrated living patterns, promote fair housing choice and foster inclusive communities that are free from discrimination,” she wrote.
Gates also explained the 2016 plan is designed to “develop diverse neighborhoods” and “provide affordable housing in high-opportunity areas.”
Vaughn said the MHP asked for an amendment to add extra points to projects awarded a HUD Neighborhood Choice grant and within a federally recognized manufacturing community. Both would benefit MHB’s two redevelopment proposals.
While it’s not impossible for MHB to get the coveted 9 percent tax credits without changes to the draft QAP, Vaughn said in order to compete they’d need the most points possible.
In addition to RAD and federal tax credits, the MHB will also have to rely on private financing to complete the projects. The level of tax credits will determine how many low-income units they can have built as part of the projects. The units funded through private financing and without tax credits will be market rate.
Gates wrote that approximately $6 million worth of 9 percent credits will be awarded in 2016 and annually they receive 40 to 50 applications. MHB was last approved for 9 percent credits in 2008. A final decision on the QAP is expected by Dec. 9.
In other business, housing board Vice President and Chief Financial Officer Lori Shackleford announced MHB had lost $472,628 through the first three quarters of 2015. The biggest issue for the board is the public housing program where they’re seeing a “large loss.”
“We’ll continue to struggle because of (housing stock) age, maintenance and reduced funding,” she said. “RAD will help address issues with the program.”
Collection losses are greater than expected and add to the deficit, Shackleford said.
The board also agreed to accept a $30,000 appropriation from County Commissioner Merceria Ludgood. The money will be used to improve academic and developmental outcomes for children in Birdville and Three-Mile Trace neighborhoods.
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