A West Des Moines property development company wants to build a 36-unit apartment complex on the site of the former Perry High School, more recently used as the Junior High School, on Willis Avenue between 10th and 12th Streets.
Plans for the low-income senior housing project were presented to the Perry City Council Nov. 4 by Newberry Management Company, and a public hearing on the proposed development was held Nov. 18 at which the council approved selling the land to Newberry and then refunding the purchase price to them.
The Nov. 4 presentation was led by Newberry Management President Frank Levy, with Bob Rafferty, attorney with the Brick Gentry law firm in West Des Moines, discussing the financing details and Brent Schipper, lead architect with ASK Studios in Des Moines, explaining the design for the buildings.
The plan at present calls for a pair of two-story apartment blocks of 18 units each. They would be built in a "prairie style," according to Schipper, which would mean an "increased cost due to our emphasis on the aesthetic qualities of the building and the greater amount of green space."
Details of the project are still provisional and very fluid—Newberry reduced the number of proposed units, for example, from 40 to 36 just within the two weeks between the November city council sessions—but the construction could cost as much as $7 million and take a year to complete.
Newberry also told the Perry City Council it would seek a partial property tax abatement of $9,300 a year for ten years from the city, but this request was withdrawn at the Nov. 18 council meeting when the project was scaled back to 36 units.
City Administrator Butch Niebuhr said the council would probably not approve an abatement.
Newberry said the project has a good chance of attracting funding from the US Department of Housing and Urban Development (HUD), in particular in the form of Low-Income Housing Tax Credits (LIHTC) and HOME program funding.
HUD encourages public-private partnerships in low-income housing projects, and privately financed projects like the Newberry plan increase their chances of approval when they can show a buy-in from the city.
The Perry City Council showed its willingness to partner with Newberry by agreeing basically to donate the land for the apartments following an appraisal. In addition, the Perry Planning and Zoning Commission voted seven to zero at its last meeting to rezone the Willis Avenue parcel from residential duplexes to multi-family apartments.
These measures by Perry will earn the Newberry project points with the Iowa Finance Authority (IFA), which assesses applications. In 2012, for example, 46 projects applied for almost $24 million in tax credits, and the IFA awarded almost $10 million in credits to 17 projects.
Newberry Management is no stranger to LIHTC financing. It has newly built or refurbished 35 low-income senior housing complexes around Iowa since 1990, according to its city council presentation. It won LIHTC funding for two of its Des Moines projects in 2012, each amounting to about $800,000 in tax credits.
Financing development projects using LIHTCs is complex, but the basic process work like this: In an effort to increase the supply of decent, affordable housing around the country, HUD annually allocates to the states, via the Internal Revenue Service, a certain dollar amount of LIHTCs. The allocation is based on a state’s population.
These pools of tax credits are in turn allocated by the states to various low-income housing projects. In Iowa, the IFA rates the applications and parcels out the tax credits, and developers like Newberry Management compete for the tax credits.
Iowa’s 2013 allocation amounts to $6.8 million, a slight increase over 2012 but a big drop from the $27 million made available in both 2009 and 2010 as a result of disaster relief following the 2008 floods.
Once the 10-year credits are awarded, Newberry would sells them to private investors—usually through a middleman, known as a syndicator—using the money from the sale to pay for the apartment construction.
Newberry Management, which until October managed Spring Valley Assisted Living in Perry, is also seeking to fund the construction of the apartments by means of HOME Program funding, another HUD program aimed at increasing the nation’s supply of decent, affordable housing.
The scramble for HOME funding is even more competitive than for LIHTCs, Levy said, but HOME funds are needed "in order to keep the rents low and to improve the aesthetic qualities of the complex," Levy said.
"Rents need to be very affordable for seniors in Perry," Levy said, "in the low $600s for a two-bedroom unit."
Perry currently has several apartment complexes serving either low-income or senior residents, such as the Quail Run Apartments, a 30-unit, low-income complex at 2902 Iowa St. built in 1999, and two sets of Candleridge Apartments, 24 units at 2620 Mckinley St. built in 1994 and 23 units at 916 18th St. built in 1991. Southlawn Apartments and Perry Park Apartments, both located at 2519 Perry Park Ave., also serve ow-income residents.
Everything depends on Newberry’s landing a portion of the LIHTCs allocated annually by the IFA. If Newberry’s application for these credits is approved, they will then sell the credits and use the proceeds to finance the apartment project.
The deadline for LIHTC applications is Dec. 9, with awards announced in March.