RM 04-13-89 - Laserfiche WebLink

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South Bend Redevelopment Commission Reschedule4 Regular Meeting - April 13, 1989 6. NEW BLJS=S (Cont.) b. Coritinued... to assume that there were going to be LING grants or loans to put this project together, or extensive Ccmmmmity Development Block Grant funds, so we really began to look for a new source of do lays to be able to put together an affordable housing project. In 1986 there was new federal legislation which was part of a Reagan program which I call a trickle -down program which tried to encourage the private sector to get olved in the development of low income housing through a federal tax credit program for low income housing. And that is really the financial tool that our o 'zation is looking at for developing thE housing on West Washington Street. To put it as simply as I can, what this program does is provide a federal tax 't to investors who become limited paxtners in the development of low income housing and rental projects. The investors will often finance approximately 30% of the total cost of this project in exchange for federal tax 'credits and also for real estate derreciation, but not cash flow: that is scm thing they do not take out of the project. This formula of tax credits and rez 1 estate depreciation allows us, the SoLth Bend Heritage Foundation, who would be the general partner, to then lower our rer ts and make it available for affordable housing, and when we say affordable, we're talking about people whcse income is 60% of the median As we see the project today, it will not have federal dollars, it will not have local City or government dollars, but will be an infusion of dollars from corporate investors, an infusion of dollars from local lenders, or enders from part of a national pool of ney. That's the financing mechanism tha we are proposing to use to develop h ing in the West Washington corridor. -17-