Leveraging Kansas’ First 9% Low-Income Housing Tax Credit Match Preserves Affordable Housing for Seniors August 27, 2024

With easy access to health care providers, a grocery store, restaurants, a theater, houses of worship, financial institutions, a post office, and more, the Brookridge Plaza Apartments have long served as a convenient place for seniors (ages 62+) to live in Derby, KS. And with monthly rents for the property’s 46 one-bedroom apartments offset by rental subsidies through a Housing Assistance Payment contract with the U.S. Department of Housing and Urban Development (HUD), Brookridge Plaza is also an affordable option for older adults who want to live in the Wichita suburb but might not otherwise be able to find quality housing without devoting an outsized portion of their monthly income to rent.

Thanks to a Low-Income Housing Tax Credit (LIHTC) resyndication and rehab project launched last December that’s the first to leverage a new state tool to preserve and create affordable housing in Kansas, Brookridge Plaza will continue to provide seniors in Derby with a high-quality, affordable housing option for decades to come.

Led by Dalmark Development Group (Dalmark) – which served as the developer when the property was last renovated and converted to affordable housing nearly 20 years ago, has since provided property management services at Brookridge Plaza, and now owns the apartment complex – the project is designed to update aging components that threaten its long-term viability as a quality housing option in the community. This includes replacing outdated interior finishes and fixtures in each of the apartments, installing a new elevator to increase accessibility for senior residents, repairing the foundation to address issues caused by the settling of the building structure over time, replacing the roof and private patios and decks attached to each apartment, repaving the parking lot, pouring new concrete walkways, rerouting rainwater runoff from the property, and otherwise modernizing the property to make it a more stable, functional, and comfortable place to live for current residents – all of whom are being temporarily relocated at no cost during construction.

“Brookridge Plaza has provided quality affordable housing to seniors for a long time, and it’s important to preserve properties like this one with Project-Based Section 8 assistance because of how difficult it is to build new and secure the rental assistance needed for very low-income residents,” says Scot Sperry, Dalmark’s vice president of development. “The work that’s taking place right now is designed to set Brookridge up for another 30-year run so that it can continue to be a quality place to live for seniors with limited income.”

Preserving affordable housing for seniors is particularly important in Derby, where the need to diversify housing options for a variety of age groups and income ranges was identified as a priority in a city-sponsored housing needs analysis published in 2022 as part of a comprehensive plan to guide municipal decision-making. Of note was the local need for additional housing options for seniors with limited income, underscoring the importance of preventing existing affordable housing like that offered at Brookridge Plaza from being demolished and redeveloped or otherwise converted to market-rate units.

Crucial to Dalmark’s ability to rehab Brookridge and preserve the affordability of the apartments for senior residents is newly passed legislation in Kansas designed to expand access to affordable housing statewide to support economic and community development. Signed into law in June 2022, the legislation established a state fund to match Low-Income Housing Tax Credits (LIHTCs) allocated by the federal government, providing developers with an additional tool to raise the capital needed to build or rehab affordable housing across the state.

Like federal LIHTCs, Kansas’ Affordable Housing Tax Credits enable investors to provide cash to developers that have been allocated tax credits by the Kansas Housing Resources Corporation to subsidize construction/rehab costs in exchange for the tax credits, which reduce the investors’ state income tax obligation. Given the challenging nature of financing affordable housing projects, the state’s matching tax credits have created an additional source of funding that helps bridge budget gaps that could otherwise derail projects like Dalmark’s rehab of Brookridge Plaza.

“Having the state match for LIHTC projects is gigantically important,” explains Sperry. “These types of deals used to be quite difficult to get penciled out. The numbers just didn’t work in most cases. Now, with the state tax credit providing the same amount as the federal LIHTC allocation, it’s much easier to close financing on projects. Having the state match also means that more deals get done, which boosts the supply of affordable housing in Kansas that much more.”

In addition to 9% LIHTCs and Kansas Affordable Housing Tax Credits – with Alliant Capital and Sugar Creek Capital serving as the investors, respectively – the $7.56 million rehab of Brookridge Plaza is being financed with a $4.3 million loan from IFF, the fourth provided to the developer since 2012. Unlike the previous three loans, all of which provided Dalmark with predevelopment financing for affordable housing projects, the most recent for Brookridge Plaza is a construction to permanent loan that provided the final component of the project’s capital stack and enabled the revitalization of Brookridge Plaza to proceed.

“There aren’t a lot of options for construction and permanent financing for affordable housing in Kansas, and having access to that with IFF worked really well for Brookridge Plaza,” says Sperry. “Between the loan, the LIHTCs, and the state’s affordable housing tax credit match, this was a smooth deal that’s really going to benefit residents and the community.”

Learn more about IFF’s work to support community changemakers in Kansas