If the Jefferson City Council approves plans for a 40-unit multifamily residential complex, the developer hopes to make the apartments affordable housing.
Private developer Lohman Investments submitted a preliminary planned unit development plan proposing a 40-unit multifamily residential complex in Westview Heights, which was introduced to the council July 3. If approved, Lohman Investments plans to apply for a tax credit program with the Missouri Housing Development Commission - an organization created in 1969 to help provide funding for construction of affordable housing.
Another proposed apartment complex, Capitol Lofts, is currently in limbo as it awaits approval of a low-income housing tax credit from MHDC. If approved, the Vecino Group plans to convert the 110-year-old East Capitol Avenue shoe factory into 75 apartments.
Jayme Abbott, Jefferson City's neighborhood services coordinator, said it was uncommon in past years for developers to apply for MHDC assistance.
"Historically, there have not been a lot of applications submitted to MHDC, but in the last year, that's changed," she said.
With 42 percent of Jefferson City households making 80 percent or less of the area median income (AMI), according to the city's 2013 Analysis of Impediments to Fair Housing Choice report, more housing developers are seeking MHDC funding.
Incentives to develop
MHDC oversees Section 42 - or low-income tax-credit - housing. The commission gives private developers and investors incentives to build affordable rental houses by offering grants and tax-credit programs to both nonprofit and for-profit developers. These programs are the Rental Production and Preservation Program, federal HOME program, Missouri Affordable Housing Assistance Program, Low Income Housing Tax Credit program and a national housing trust fund.
Abbott said LIHTC is the most popular program, providing federal and state housing tax credits to investors for setting aside a certain percentage of apartments for low-income individuals. Investors can use the LIHTC every year for 10 years, according to the MHDC website.
MHDC offers 9 percent and 4 percent tax credits. Since the 9 percent credit is a larger incentive, it tends to be more competitive, said Stacy Jurado-Miller, co-owner of the Vecino Group.
"It's harder to make a 4 percent bond deal work financially because there's less tax credit - obviously 4 versus 9 percent - and so the deals are a lot tighter, which means less people apply for that," she said.
The Vecino Group applied for a 4 percent tax credit through MHDC for Capitol Lofts.
To qualify for LIHTC, at least 40 percent of the total number of units must be affordable to people making 60 percent of the AMI ($27,000 for a one-person household), according to MHDC website, or 20 percent of the units be for individuals making 50 percent of the AMI ($22,500 for a one-person household).
Jefferson City's 2017 median income was $64,200, according to the U.S. Department of Housing and Urban Development.
These units would rent for less than the fair market rent - how much a property could rent for on average at a particular time.
According to HUD, the 2017 fair market rent for a one-bedroom apartment in Jefferson City is $495 and $647 for two-bedroom housing, according to HUD.
Missouri's statewide fair market rent is $638 per month for a one-bedroom apartment and $815 per month for a two-bedroom apartment, according to the National Low Income Housing Coalition (NLIHC), an organization that advocates for low-income affordable housing.
MHDC affordable housing is income-restricted, and these income restrictions are based per person.
Some requirements to receive MHDC tax credits are the developments must provide affordable housing to low-income individuals, meet an affordable housing need, show local support and be feasible, according to the MHDC website.
Last fall, Entrepreneurs Enterprise proposed a 50-unit East McCarty Lofts affordable housing project for the 700 block of McCarty Street, which received opposition from area residents. The developer sought MHDC funding, but the project died in December after the commission denied funding, because the location was not ideal.
Currently, MHDC is not approving or denying low-income tax credit applications until Gov. Eric Greitens' Committee for Simple, Fair and Low Taxes releases its report on finance cuts to state tax rates, which will experience cuts to tax reform legislation and tax-credit programs.
Affordable options
Tax-credit housing is not just for private developers. The MHDC also oversees tax-credit units through the Housing Authority, Cynthia Quetsch, Jefferson City Housing Authority executive director, said.
Similar to private developers, the Housing Authority rents tax-credit units below the fair market rent to make them affordable.
The Housing Authority does not offer rent assistance in tax-credit-only housing, because residents could afford rent at tax-credit-only housing since it's already below the fair market rent, Housing Supervisor Michelle Wessler said.
Rent assistance housing, also known as public housing, provides federal funding overseen by local housing authorities. About 1.2 million households live in public housing units, according to HUD.
The Jefferson City Housing Authority oversees 988 housing units, 318 of which are public housing units, Quetsch said.
In rent assistance housing, tenants use 30 percent of their gross income to pay for housing. This means the rent on each unit is individualized - a tenant who makes $900 a month would pay $300 in rent, while another tenant making $300 a month would pay $100 in rent for the same apartment.
The Housing Authority also can provide a utility allowance to help pay for "reasonable utility costs," according to HUD's website.
"This isn't kids leaving the door open or turning the heat up to 75 or 78 in the winter time and running around in shorts. This is leaving your thermostat at 68 and you're in there properly clothed," she said. "So we stress for them to stay at 30 percent, and if you can get it less than that, then great - because the less you're having to worry about paying out yourself, the better."
Both types of housing have income limits; some housing complexes require tenants to make 50 percent or less of the median income, while others require 60 percent or less. Hamilton Towers requires tenants to make 80 percent or less of the median income. If they make more than the income limit at the time of move-in, then they will not qualify for the Housing Authority's affordable housing.
The income limits are based per person, not per income. This means if a household contains two people, and only one is making an income, then the household has to be under the two-person household income limit.
If someone's income increases and surpasses the income limit, as long as that person qualified for the affordable housing at move-in, he or she does not need to move out of housing overseen by the Housing Authority, Wessler said. However, if that person is staying in a rent assistance unit, the rent will increase but remain at 30 percent of the household income.
Some Housing Authority complexes, such as Capital City Apartments, offer both rent assistance and tax credit.
Residents in housing through the Housing Authority are supposed to report changes in income and household size within 10 days of the change. The Housing Authority also does annual recertification, which verifies a person's income, household size and criminal record history.
Tenants can't allow visitors who are not on the Housing Authority's trust pass policy into their units, prevent pest control from entering their units every month or use drugs. Tenants also can't move their friends in without them being on the lease, which could impact the rent since rent assistance units are based on the income of a household.
The Housing Authority also provides the housing choice voucher program - most commonly known as Section 8 - which is when a voucher is provided to the landlord to reduce rent. Participants can choose any housing that meets the program's requirements. The voucher can be used at tax-credit housing if the landlord allows it.
The voucher is tenant-based, which means tenants can use the voucher anywhere in the country. Project-based assistance, such as utility allowances, is tied to the complex, so if residents move, then they can no longer use the project-based assistance.
While the voucher program is provided by the Housing Authority, it cannot be used for housing through the Housing Authority. Only private developers can accept individuals' vouchers, but it is at the discretion of the landlords.
There is a limit to how much the vouchers can pay for, which is known as a payment standard. The payment standard depends on the number of bedrooms in an apartment.
There are wait lists for rent-assistant and tax-credit housing through the Housing Authority, and the length of the wait lists depends on where residents want to live. The longest wait list is the voucher program, which has at least a 4 1/2-year wait because it is less restrictive and allows people more options of where to live.
Quetsch said having a variety of affordable homes provides people with more options and chances to save money.
"Without this, most of these people would have no place to live," she said.
"They would be living in their cars, bouncing from one spot to another. Our whole goal is to give someone a roof over their head. It may not be the Taj Mahal, but it's clean and it's safe."
Jurado-Miller said she thought there was a need for not only more, but also diverse affordable housing in Jefferson City, which is why she hopes the Vecino Group receives the MHDC tax credit for Capitol Lofts.