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Nonprofit Greccio Housing will likely develop the first project ever to use a special type of bond financing granted to Colorado Springs by the Internal Revenue Service.
The project: A 54-unit affordable housing project for seniors age 62 and up, dubbed Atrium at Austin Bluffs. It's located at Austin Bluffs Parkway and Templeton Gap Road.
The financing: Private activity bonds, which can be used by projects that successfully apply for extremely competitive Low Income Housing Tax Credits through the Colorado Housing and Finance Authority. (These federal tax credits provide capital for affordable housing developments, and in return, investors who purchase them receive a dollar-for-dollar break on their taxes.)
In the past, Colorado Springs has given away its allocation of private activity bonds for projects in El Paso County.
But City Council decided to keep its private activity bond allocation for 2018 and 2019. The city now has about $49 million total financing available to help fund affordable housing projects, says Housing and Urban Development Program Manager Steve Posey. Atrium at Austin Bluffs would use about $8 million, should Council approve the bond allocation at its July 23 meeting. (The city could not incur any debt by allocating the bonds.)
Colorado Springs also donated the parcel of land where the project will sit, Posey says.
"The thing that's really exciting about this project, is that we've got a local nonprofit housing provider, that’s Greccio Housing, we’ve got the city donating a piece of land to make this project happen, and then we've got the city playing a key role in the financing for this project, and that’s a first," he points out.
The project includes:
- six units for people making less than 30 percent of area median income ($19,550 for a two-person household);
- six units for people making 40 percent of AMI ($26,070 for a two-person household) or less;
- 21 units for people making 50 percent of AMI ($32,600 for a two-person household) or less;
- and 21 units for people making 60 percent of AMI ($39,100 for a two-person household) or less.
While plans aren't yet finalized, the development will likely also include a health center, community room, fitness center, grab-and-go library and business center, says Lee Patke, Greccio Housing's executive director.
Atrium at Austin Bluffs doesn't just represent a new kind of way to tackle affordable housing for the city, but is also something new for Greccio, Patke says.
"Our primary method of bringing new units on board in the past has been acquisition and renovation of existing properties," he says. "The upside to that is, when there is an available supply of apartments, that tends to be less expensive — because the property already exists, and so all we do is renovate."
But four or five years ago, he adds, a changing real estate market made acquiring such properties much harder, and Greccio had to begin looking at new ways of adding affordable housing.
"Not only is real estate much more expensive now than it was five years ago, but it’s much more competitive, which has also driven up prices," Patke says. "So the older model doesn't work as well, because not only are prices higher and there's a need for a greater level of financing, but there just aren't as many available apartment complexes available for sale right now."
This is the first time Greccio has been the primary developer on a project that uses tax-credit financing, and Patke hopes it won't be the last.
In the meantime, Posey says there's several projects "in the pipeline" that could likely use the remaining $41 million of the city's private activity bond allocation. It's too early to announce details, he says: "They’re projects where the development team is still working out how many units can they put on the site, can they make the numbers work for the project, do they think that they can get all the approvals that they need for the project, and what income levels are they trying to help with those rentals."
In June, five developers applied
for tax credits to build affordable housing in Colorado Springs. The winners of those awards, who would be eligible for private activity bonds, have yet to be announced.