WILLMAR -- Despite a financing setback last year, Southwest Minnesota Housing Partnership still plans to build its $6 million Westwind Estates Third Addition affordable housing project in southwest Willmar, according to a written report provided Tuesday to the Willmar City Council.
The lack of construction had city officials wondering what was happening with the project.
In a wr-itten re-port, the partnership said it hopes to close with its lenders on a new financing package by mid-October and begin construction immediately on 28 twin-homes and 6 single-family homes. The partnership used its interim construction loan to complete work on Nov. 1, 2008, on streets, curb and gutter, underground water and sewer utilities, and storm water detention ponds as required for project development.
The partnership had intended to start twin-home construction this winter and start with the single-family units later in 2010. The partnership had planned to use tax credits to finance the twin homes, but was notified by its tax credit syndication partner, Enterprise Community Investment Inc., that there would be a delay in tax credit investment due to the downturn in the economy until the first quarter of 2009.
Tax credits were created by federal law in 1986 and provide incentives to use private money to develop affordable housing.
In a report July 14 to the Willmar Housing and Redevelopment Authority, Rick Goodemann, housing partnership executive director, said that because of the economic climate, Enterprise broke an agreement to buy tax credits just two weeks before the scheduled closing late last fall.
During the first quarter of 2009, and with the installation of the Obama Administration and the addition of the American Recovery and Reinvestment Act, the partnership was notified of its opportunity to take part in a program through the Minnesota Housing Finance Agency.
The agency said it could exchange its current tax credits for a program that provided "tax credit-like'' financing that did not involve the risk of a potential investor retracting their equity. This type of financing is only available for shovel-ready projects, according to the housing partnership.
The partnership applied for the financing in July. If Minnesota Housing approves the financing, the partnership said it will proceed with closing with its other partners.
The land on which the homes will be built is owned by a community land trust called Partnership Community Land Trust LLC. The trust will lease the land to the tax credit limited partnership during the 15-year tax credit compliance period.
At the end of this period, the twin-homes will be sold as lease purchase to the residents, retaining the community land trust feature. The trust will also own the land under the single-family homes being sold to eligible buyers.
The trust is a mechanism to make the units more affordable but also maintain affordability within the community for years to come with resale provisions, according to the report to the council.
The report was an attachment to the minutes of the Sept. 3 meeting of the council's Community Development Committee. Council members received the committee's report on Westwind as information but did not discuss it.