Agenda - 06-26-1996 - IX-B - Laserfiche WebLink

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5 3 COMPETITIVENESS The allocation of available investment tax credits in each state has become extremely competitive. In North Carolina last year there were applications for six times the amount of tax credits that were available. The NCHFA predicts even more competition this year. First Centrum Corporation's application to the NCHFA is very competitive in every area but one-- total "off-site" cost requirements, of which the Orange County school impact fee of $186,000 is by far the largest component. First Centrum has developed over 170 affordable housing communities, and..our experience is that "off-site"costs typically total about $500 per unit in local jurisdictions similar to Carrboro and Orange County, which would be $62,000 for a project of this proposed size (124 apartments). As the Carrboro Conditional Use Permit review progressed during March, the total "off-site" costs reached about $364,000, consisting of the $186,000 Orange County school impact fee, $30,000 of OWASA "street frontage" requirement to extend the water distribution system (not required by Carolina Spring itself), and $148,000 of Town of Carrboro requirements to make off-site road improvements on it road frontages. Potential "off-site" costs of $364,000 would be about $3,000 per unit and would represent over 5% of the total development cost for a project budgeted at $59,000 per unit. (Orange County's schhool impact fee by itself would represent over 2.5% of the total budget.) That magnitude of cost burden for "off-site" requirements is unsupportable for affordable housing projects in the view of lenders, investors, and state housing agencies, particularly for affordable housing projects that would be totally occupied by senior citizens who do not create significant demand on schools, roads, water or sewer. The North Carolina Housing and Finance Agency will be reviewing in excess of one hundred competing tax credit applications from communities around the state. In the annual tax credit workshops, the NCHFA informs developers that it hopes to allocate tax credits to developers in communities that demonstrate, not just a philosophical support for affordable housing, but financial commitment as well, whether in the form of local project grants, tax abatements, exemptions from fees, waivers of proffers etc. The NCHFA feels that the State's annual tax credits for affordable housing are too limited to be allowed to be used to fund "non-housing" local community objectives, no matter how meritorious. As the enclosed NCHFA - required development budget ("Project Development Costs Description") indicates, the NCHFA does not even provide a line item category for off-site costs. During the CUP Review on March 26 by the Carrboro Board of Aldermen, First Centrum went through the same explanation of affordable housing that is contained in this letter. The Board. of Aldermen unanimously amended the Carrboro "off-site" requirements, reducing road improvement requirements from $148,OOOto about $35,000, and strongly encouraged First Centrum to request exemption or reduction of the OWASA requirements and Orange County school impact fee. A copy of the Town of Carrboro's endorsement of an exemption from the school impact fee is being forwarded to you from Mayor Nelson. We are simultaneously requesting exemption from the OWASA expansion requirement.