Changes in the way low-income housing tax credits are allocated in Wyoming could put Teton County back in the running for one of the most surefire approaches to building truly affordable housing.
The current policy all but ensures applications from Jackson Hole are destined to fail. High construction costs generally bar the valley’s projects from consideration by those who dole out tax credits, a federal subsidy program that incentivizes development of housing for the poorest residents in a community.
“Right now,” said April Norton, director of the Jackson/Teton County Affordable Housing Department, “we’re essentially just excluded from that funding source.”
What’s at stake
The issue came to light earlier this year when Connecticut-based Westmount Development tried to obtain tax credits for the 174 King St. housing project, 30 apartments that were to be priced for the county’s lowest income bracket. To secure that level of affordability, the proposal relied heavily on the credits.
Westmount applied to the Wyoming Community Development Authority, the state agency that distributes credits, but to no avail. It applied a second time with the same outcome, after which the Town Council abandoned that strategy and switched the project to the Jackson Hole Community Housing Trust.
Based on nearly every category the authority uses to rank its applicants — including quality, affordability and need — the project was a prime candidate. But because of its exorbitant cost, the rules outlined in the authority’s “Qualified Allocation Plan” dictated it could not be funded.
Norton, along with other Jackson representatives and some developers — including Rick Ross, president of Westmount Development — recently met with authority officials in hope of convincing them to level the playing field for Teton County. They made the case that despite its high costs the area’s dire housing shortage warrants their attention.
Now the authority is considering revisions to its procedure, said John Batey, director of affordable housing development at the authority.
“We felt the need to address what happens with high-cost projects that exceed our cost limitations, but otherwise show merit,” he said. “We wanted to give those projects an opportunity to move forward.”
‘Half of a solution’
The new strategy, copied from Utah’s model, is “still very much in its concept stage,” Batey said. Essentially, though, it would provide some money to “statistical outliers” like the King Street project as leverage to pursue the rest of the financing they need.
They wouldn’t get their full request. Instead they would receive a prorated amount based on the average cost of the units in the other qualifying projects. Beyond that, they’ll still have to find another source of financing for the remainder.
“I think it’s kind of half of a solution, honestly,” Ross said. “The question is, ‘Can you come up with enough to close that gap?’ and that remains to be seen.”
Mayor Pete Muldoon, who was also in the meeting with the authority, doesn’t think uncertainty is necessarily a problem. Funding from local government is one obvious way to supplement tax credits, and he noted the Town Council likely would have contributed to the King Street project if the authority had been willing to award a lesser amount in tax credit funding.
“We were prepared to put some more money into that to get that low-income housing that we desperately need,” Muldoon said. “Even the ability to do that is valuable.”
Nevertheless, he added, “Whether that will get us to a project, I don’t know. We just don’t have enough info right now.”
Based on the dollar figures from the most recent rounds of tax credits, officials are analyzing what would have been the delta between King Street’s allocation and the overall project cost.
Batey said the authority will write the new procedure into the next iteration of its Qualified Allocation Plan, which it will draft in the spring. He said it should be available for public review around June.
No guarantee, but a good start
Batey noted that allocations to high-cost projects “would always be subject to funding availability.” In other words, the authority won’t fund high-cost projects over those that qualify under current criteria. If eligible projects exhaust all the money in a given cycle, the more expensive ones will still be out of luck.
That may not be a problem. Ross noted that not once in the past three funding cycles has the authority used all the available tax credits it receives from the Internal Revenue Service to meet the state’s housing needs. After the King Street project, it still would have had leftover.
However, even when it does have extra cash, the authority may choose only the single project closest to the rest of the low-cost projects. Jackson Hole projects tends to land on the upper end of the cost spectrum.
Norton said some states have policies that Wyoming could emulate to accommodate the different economic conditions under which housing in Teton County operates.
For example, the authority could set aside one deal for Teton County — and perhaps Lincoln County — every couple of years to ensure the region can develop low-income housing on a regular basis. It could also formally acknowledge the different types of construction, such as tuck-under parking, that come with a higher price tag.
Still, Norton said she’s “super grateful to [the authority] for thinking outside of the box.”
Ross agreed, saying that after the frustration of trying to navigate a process weighted against him, he’s encouraged the authority is trying to remove those obstacles.
“I certainly think there’s a need to continue the conversation to try to craft a program that’s going to work for everybody,” he said. “Overall it’s a step in the right direction, but I think a few more steps need to be taken.”