About $2.1 million in annual tax credits will help fund the first new affordable housing units built along the Columbia Pike in decades, the Arlington Partnership for Affordable Housing announced on Monday.
The nonprofit affordable housing developer will partner with Bank of America Merrill Lynch as their Low Income Housing Tax Credit equity partner.
“They do good work, we are very pleased,” said APAH President Nina Janopaul. “We believe in getting the best value in our partners.”
The federal program’s $2.1 million in tax credits were awarded to APAH, which the organization then sold to the bank.
According to the HUD website, federal housing tax credits are awarded to developers such as APAH. Developers then sell these credits to investors such as Bank of America. This reduces the debt that the developer would need, and the lower cost can be passed on as lower rents.
Investors receive a credit against their federal tax liability each year over a period of 10 years, according to HUD.
The credits have helped maintain and build 2.5 million affordable housing units targeting households living below 60 percent of the Area Median Income, 81,000 of them in Virginia, the press release says.
APAH looked into other banks but Bank of America was the clear decision for the organization, said Janopaul.
“The bank rose to the top with a competitive [purchase] proposal,” she said.
The Arlington Mill Residences at 901 S. Dinwiddie Street, is part of the Arlington Mill Community Center redevelopment and will house 122 units. All the units will be affordable to people earning at or under 60 percent of the AMI, about $64,000 for a family of four in Arlington, according to the APAH.
Ten percent of the units will be available for families earning 40 percent of AMI, about $45,000.
Also included are eight efficiency units, one-room apartments for those especially difficult to house.
According to Janopaul, the design and development has come a long way thanks to the tax credit created in 1986.
The affordable housing developments built in the 1960s and 70s were unattractive and created ugly houses, she said.
“Now you drive by affordable housing and you wouldn’t know it,” she said.
The Arlington Mill Residences are scheduled to start construction in August 2012 and finish by December 2013, according to APAH. The total cost of the project is $30 million.
AHC Inc., another low-income housing provider, has plans to construct an apartment building on Columbia Pike at S. Greenbrier Street.