AHFC uses new financing tools in Anchorage developments
Anchorage will soon have 72 new affordable housing units when the first developments done under the Alaska Corporation for Affordable Housing are complete.
Residents began moving in to the 18-unit Susitna Square townhome cluster East Anchorage’s Russian Jack neighborhood earlier this month and the 70-unit Ridgeline Terrace development in nearby Mountain View should be done by the end of the year.
The Susitna Square townhomes replaced 16 units of “old, worn down” public housing built in the 1970s through the federal Department of Housing and Urban Development, Alaska Housing Finance Corp. CEO Bryan Butcher said during a tour of the homes.
Combined, the projects took $29.5 million to construct, and that money came from many different places, Butcher said.
“To be able to put something together where the rent is at an affordable housing level takes a lot of levels of financing,” he said.
It also would not have happened without the Alaska Corporation for Affordable Housing, an AHFC subsidiary.
“(The Alaska Corporation for Affordable Housing) allows AHFC to have the powers to work more broadly with partners to put together projects for affordable housing,” Butcher said.
On Susitna Square and Ridgeline Terrace, those partners included HUD, through its Neighborhood Stabilization Program, the Rasmuson Foundation, the mortgage arm of AHFC and KeyBank.
A state appropriation through AHFC also contributed to the financing structure. About $2.6 million in grant funding from HUD, the state and the Rasmuson Foundation went into the $5.4 million needed for Susitna Square, according to AHFC.
While not directly involved in the financing, Cook Inlet Housing Authority is managing the completed properties for AHFC.
Formed after the passage of its enabling legislation in 2011, the Alaska Corp. for Affordable Housing gives AHFC an arm to meld private financing in its projects, which in the past had to be completely publicly financed.
AHFC sold a tax-exempt bond to finance construction. A limited partnership was then formed with KeyBank, which purchased $10.5 million in federal energy and affordable housing tax credits from AHFC to become a direct equity investor in Susitna Square and Ridgeline Terrace.
The bond is being paid off using federal and state assistance, according to AHFC.
The credits fulfill KeyBank’s federal requirements under the Community Reinvestment Act for investment in low- and moderate-income housing, Key Community Development Corp. Vice President Jennifer Seamons said in an interview.
“We get those tax credits to help offset our federal tax liability for the corporation, as opposed to receiving interest on a construction loan, but at the end of the day we are investing in real estate so there’s the investment component,” Seamons said. “So we need to make sure our limited capital we have to invest every year is invested in good projects with good sponsors in areas that we have a need to make sure that we are satisfying our investment requirements.”
AHFC Planner Dan Delfino said KeyBank purchased the credits for 99 cents on the dollar.
The 30 percent energy tax credits were available because of solar panels for hot water and electricity at Susitna Square, as well as the fact that all the units are at least 5 Star energy rated be the Department of Energy, Butcher said.
Nationwide, KeyBank has more than $1 billion in similar investments. Annually, the bank invests about $200 million through its community development arm, according to Seamons.
She called the partnership KeyBank’s “flagship project” with AHFC and Cook Inlet Housing and something that shows the bank’s commitment to the Alaska market.
With such high construction costs in the state, she said there is really a need for these types of programs and partnerships to make developing affordable and senior housing feasible.
“We continue to look for good opportunities in the Alaska market — and certainly building on the partnerships we have with Alaska Housing and Cook Inlet (Housing) and some of the other developers” in the state, Seamons said.
The one-bedroom Susitna Square townhomes are being rented for $934 per month, while the two-bedroom units go for $1,182 per month plus electricity. They are restricted to tenants earning 60 percent or less of the median Anchorage income — $37,600 for one person or $43,000 for a two-person household.
According to HUD, housing should account for 30 percent of a household’s income.
“We routinely see people paying 50-60 percent of their income on housing,” Butcher said.
The tight Anchorage housing market, with rental vacancy at less than 4 percent, was the primary reason AHFC went to work on its inaugural Alaska Corp. for Affordable Housing project there, he said.
“This is something that as we work through the end of this cycle we’re going to be looking at potentially doing statewide,” Butcher said. “Of course, it all depends on funding.”
AHFC’s Delfino said quality low-income developments are extremely difficult to pull off without direct grant assistance, but the public housing agency will not stop trying to pull together money from all sources, even if the state doesn’t contribute in the future.
Elwood Brehmer can be reached at [email protected].