You look at conversions such as the knitting factory being turned into loft apartments on the near Southside and you wonder ‘How could they afford to do this, in this market?’
The answer is Low Income Tax Credit Financing. A brief overview is you design a project, go to the state (WHEDA) and apply for tax credits. If all goes well and you are approved, you receive federal income tax credits. There is a formula based on the amount you spend, the number of units that are reserved for occupants below the county median income and a bunch of other factors.
These credits will be far in excess of what a normal investor/developer can personally use. So they “syndicate” the tax credits to an investment group. The investors get income tax saving in exchange for the money you need to put the project together.
It is a very competitive application process. It is a very intense process. It is a fairly expensive process. If you are looking for an easy dollar, you are looking the wrong way. I speak from the experience of having tried and failed at obtaining tax credit financing to create accessible infill housing on the near north and near south sides of Milwaukee a bit over a decade ago.
But if you can break into this market you can do well, while doing good.
So it was a decade ago and I haven’t tried since, so why bring it up today? The July Apartment Association meeting features Keith Broadnax of Great Lakes Capital Fund, one of the tax credit financing investment groups. Years later I still find this was an intriguing opportunity.
- Tim Ballering, AASEW Board member & Owner of Affordable Rentals
You do not want to miss this meeting!
When: Monday, July 15, 2013 at 7:00 p.m.
Where: The Best Western, 1005 S. Moorland Road, Brookfield 53005
Who: Keith Broadnax of the Cap Fund
Cost: Free for current AASEW members, $25 for guests and expired members.