A proposed 28-unit affordable-housing project in north Ketchum called Northwood II will not get the tax-credit financing needed for the project to break ground.
The Idaho Housing and Finance Association notified the Ketchum Community Development Corp. last week that its application for tax-credit financing had been denied, according to the KCDC.
The KCDC successfully obtained tax-credit financing 10 years ago to develop the Northwood Place affordable-housing project, and aimed to replicate that success with Northwood II.
Northwood II applied for $4.7 million and needs $7 million total to fund construction. The KCDC applied for the 9 percent Low Income Housing Tax Credit, which was going to be the main source of funding for Northwood II.
IHFA received $141 million worth of applications for tax-credit financing statewide this year, but only had $51 million to award, according to the KCDC.
Northwood II would be built on a city-owned parcel of land next to Northwood Place, along Saddle Road. Last summer, the Ketchum City Council voted to transfer the land to the KCDC if the project would be built.
KCDC Executive Director Charles Friedman and Ketchum Mayor Neil Bradshaw said they would consider alternative funding options, including increasing Ketchum’s stake in the project.
“Housing is a top priority for our city,” Bradshaw said. “No effort towards achieving workforce housing is wasted. We learn with every step and we will continue our pursuit of more housing for our community.”
In addition to the property transfer, the city provided the KCDC $40,000 to support the tax-credit financing application. The Ketchum Urban Renewal Agency offered $250,000 to help pay down the project’s public infrastructure costs, if it were built.
More money from the city’s in-lieu housing fund may be needed. The city has $2.4 million in the fund, with $200,000 committed.
“While it can be difficult to get projects funded with the competitive (tax credit) program, there are other affordable-housing funding options which are more available, but will require more local funding,” the KCDC stated. “The development team will continue to work with the city of Ketchum on alternatives to obtaining the necessary funding to get Northwood Place II built.”
The IHFA determined that the Northwood II application did not score well enough to beat out other projects statewide.
If tax-credit financing had been awarded, Seattle-based GMD Development would have been the project’s co-developer with the KCDC. GMD built the original Northwood Place project.
In a statement, developer Greg Dunfield of GMD said the project’s scoring should have provided more recognition to the local support Northwood II had, as well as the fact that members of the development team were offering their services at below-market costs.
The Northwood II project would have 28 units of affordable rental housing, with a blend of one-, two- and three-bedroom units. The interiors would range from 672 to 1,300 square feet in size, and 90 percent of the units would be deed-restricted affordable for at least 44 years.
According to the KCDC, the units would be rented to people earning between 30 and 60 percent of median income in Blaine County. That is $77,200 in 2018, so Northwood II would be devoted to households earning $16,250 to $61,200.
The project’s timeline was to begin construction in 2019 and be completed by July 2020.
When the City Council voted to conditionally transfer the land to KCDC in August, Dunfield warned that Northwood II would not score well on a crucial metric—tax credits per unit—and the competition for the tax credits would be stiff statewide.
He noted that this year, IHFA had more tax credits to issue than it normally does, at more than $5 million or $50 million over a 10-year period.
“We’re not going to be a top-scoring applicant,” he said in August. “If we’re not successful, it’s going to take more local funds.”
IHFA’s tax-credit financing program was a source of debate in the mayoral election in Ketchum in 2017. Bradshaw campaigned on pushing the city to use the KCDC to make new applications to IHFA.
During the campaign, he noted the success with Northwood Place and that a subsequent application for an affordable-housing project on Washington Avenue was rejected by IHFA.
“We’ve only really applied twice,” he said then. “We won once and we lost once, so we’re batting .500.”
He said it was incumbent on the city to try again.
“You’re not always successful,” he said. “You don’t have a chance if you don’t apply. If you get everyone on board, there’s no question in my mind that we can get more tax-credit finance.”
His opponent, then-Mayor Nina Jonas, predicted future failure for an application in Ketchum for the 9 percent tax credit.
“I don’t think the city of Ketchum would qualify for that 9 percent rate,” she said before the election.