Little Jon Apartments in line for possible improvements with tax credits
(EDITOR’S NOTE: An earlier story about the Little Jon Apartments contained information that was not correct. We are running the following story to clarify the situation involving the ownership and management of this low-income housing development.)
The potential sale of the Little Jon Apartments in Bigfork is aimed at making improvements to the apartments and keeping them affordable for several more decades, the prospective buyers said last week.
If the sale doesn’t go through as planned, the apartments nevertheless will continue at their current rental subsidy for more than 20 years. There is no risk of Little Jon residents losing their housing or their rent subsidy.
GMD Development, a for-profit company based in Seattle, and Missoula-based Homeword, a nonprofit organization, are applying in partnership to buy, renovate and preserve the 32-unit apartment complex that currently is owned by Bigfork Associates Limited Partnership.
About a year ago GMD and Homeword began exploring the possibility of buying and fixing up the apartment complex. The apartments, located near Bigfork High School, were built in 1994.
“We’ve found a real strength in partnering with one another,” Homeword Executive Director Andrea Davis said, explaining that GMD and Homeword would serve as the long-term owners of the Little Jon Apartments if the acquisition materializes.
Among the planned improvements are the addition of a children’s play area, an outdoor community area and a community garden. Energy-efficient appliances would be installed, along with water-flow saving devices and other upgrades.
The apartments originally were financed primarily with a U.S. Department of Agriculture Rural Housing loan and a small amount of low income housing tax credits issued by the Montana Board of Housing. As a part of the original loan, the apartment complex owner entered into a rental assistance contract that caps the rent at 30 percent of qualified residents’ household income.
On Jan. 19 the Montana Board of Housing, which administers the low income housing tax credit program for Montana, will meet to determine allocations of low-income housing tax credits.
This year’s allocation process is highly competitive, Davis noted, with 20-plus applications from private developers through Montana. While Homeword and GMD “have a really good track record” of getting tax credits, the bottom line, she added, is that there are only enough tax credits to fund four or five projects.
Steve Dymoke, vice president of GMD Development, explained that the tax credit equity allows the partners to reduce the amount of debt and makes the project feasible.
If GMD and Homeword get the tax credits, those credits then are sold to a private investor. Money generated from the sale of the tax credits helps pay for the acquisition and renovation, though it never pays for all of it, Davis said.
“There is long-term debt and we take on a mortgage,” she said.
If the partners are successful in receiving an allocation of tax credits, they will seek approval from USDA-Rural Housing to transfer ownership of the property and to assume the existing mortgage debt, which would be re-amortized over 40 years to extend the property’s affordability, Dymoke said.
On the other hand, if the partners don’t get the credits, the “worse case scenario” is that the Little Jon Apartments rental subsidy remains exactly as it is, he said.
Dymoke said one aspect of the project they’re most excited about is a proposed collaboration with the local ACES after-school program. Part of the renovation to the Little Jon Apartments would be providing classroom space to ACES within the apartment complex.
“Providing classroom space to ACES would be a great benefit to the residents of Little Jon as well as the community,” Davis pointed out.
GMD and Homeword have completed similar community collaborations in other communities they’ve worked in. The Little Jon Apartments would be the seventh affordable housing development that GMD and Homeword have undertaken in Montana to provide affordable housing.
Providing space for the after-school program gives the partners a stronger chance of getting the tax credits.
“It weighs into their [Montana Board of Housing] decision that we’re connecting with the community and have community support,” Dymoke said. “It makes a stronger application.
If the application and plan are successful, renovation of the Little Jon Apartments would begin next spring.
Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.