Two Arkansas Coming Home Programs Awarded Low-Income Housing Tax Credits

May 14, 2003
The Arkansas Development Finance Authority (ADFA) has announced that two Coming Home affordable assisted living demonstration projects -– Fruit of the Spirit in College Station and Whispering Knoll in Pine Bluff -- have been awarded federal low-income housing tax credits.

Both projects will serve predominantly low-income, Medicaid-eligible elderly -– a population that is substantially lower income than the minimum income required for a tax credit project.

Given that nearly half of all Arkansans over age 65 have an annual income of less than $20,000 and a third of Arkansans over 65 report having two or more disabilities, the potential outcome of the award of these low-income tax credits is considerable.

Fruit of the Spirit in College Station, an extremely low-income community in Pulaski County, received $300,000 in tax credits to fund a 40-unit assisted living development. Presbyterian Village, a high-end non-profit nursing home, will make its first venture into both assisted living and to serving low-income people by serving as the services partner to Fruit of the Spirit.

Whispering Knoll in Pine Bluff, a mid-size community in Southeast Arkansas, received $201,030 in tax credits toward funding its 40-unit assisted living development. David Life Care will make its first venture into assisted living by serving as the services partner to Whispering Knoll.

“ADFA’s decision to fund two assisted living projects affordable to Medicaid-eligible tenants is a bold step to begin to address the huge needs of very low-income frail Arkansans,” said Jim Gray, NCBDC Vice President. “While this type of project may carry with it more risk, the return on investment with respect to the population served will be huge.”

Approximately $5 million in federal low income housing tax credits in total were allocated to developers of affordable housing which will result in Arkansas gaining 996 affordable rental apartments. Ten percent of the allocation went to these two Coming Home projects.

The tax credits act as a financial incentive for developers and builders to produce affordable housing. Developers are allowed to claim the credits as a dollar-for-dollar deduction on their personal or corporate income taxes for a ten-year period as long as units remain affordable to low-income families for at least 15 years. Developers are allowed to claim the credits themselves, or they can syndicate the credits to investors.

“Often people in economic development positions concentrate on bringing commercial development, or businesses to an area,” said ADFA President Mac Dodson. “The reality is that they need the affordable housing to attract jobs. To a company considering relocation, the questions are simple: Is housing affordable? And is it available?”

The Tax Credit Program is designed to provide financial incentives that would not otherwise exist when developing affordable rental housing. The tenant benefits from rents that are lower than what would be considered feasible without credits. Rents are set according to federal guidelines.

Laura Tucker, ADFA multi family housing manager said, “Because of the cost of new construction, most developers would be unable to build affordable housing without the help of Tax Credits.”

NCB Development Corporation is a national, non-profit organization that for 25 years has provided innovative financial development services and technical assistance to improve the lives of low-income individuals, families, and communities. NCBDC’s Coming Home Program (funded by a grant from The Robert Wood Johnson Foundation) seeks to advance the development of affordable assisted living by helping states create a supportive policy environment, demonstrate the viability of financing facilities, and build partnerships among state agencies, housing developers, and nonprofit providers.

NCBDC staff provides technical assistance to states and local sponsors to create affordable assisted living projects to serve Medicaid-eligible individuals. NCBDC is currently working with twelve state governments and more than 70 demonstration projects to create and support affordable assisted living nationally.