The site of a proposed four-story building containing 42 affordable residential units at West College Terrace and West Patrick Street in Frederick.
Frederick County’s affordable housing shortage could see some relief under three projects slated to bring 175 new units to the area.
Whether and how soon those proposals come to fruition depends on the verdict of the Maryland Department of Housing and Community Development in its 2018 funding of Low-Income Housing Tax Credits. And with a record number of applicants vying for limited credits, plus selection criteria that prioritize Baltimore-area projects, the odds appear stacked against Frederick.
Awaiting the allocations, though, Frederick affordable housing leaders expressed optimism that local government support and a strong track record of success will sway the odds — and the funding — in its favor.
Tax credits have historically served as a primary tool to finance affordable housing projects, using backing from private investors to reduce the project costs for developers, which in turn, lets them reduce rent prices for future tenants.
Maryland’s housing department, which acts as the state credit agency for the Internal Revenue Service program, evaluates applications from projects statewide each year against a set of scoring criteria, distributing Maryland’s share of tax credits to the top-scoring projects.
The already stringent and competitive application process will be even more so this year, with a record 44 applications seeking $61.96 million in tax credits, according to information published by the state housing department Friday. The state usually receives the equivalent of $15 million in tax credits annually.
John Maneval, deputy director of the state’s Community Development Administration, described the number of applications as “more than expected.” He added that the requests from Baltimore-area projects surpassed prior years.
The state’s scoring criteria, known as its Qualified Allocation Plan (QAP), were revised this year to give preference to projects in the Baltimore area as mandated in a settlement that resolves an anti-discrimination complaint filed by a Baltimore housing advocacy group. The revisions offer up to six points out of a 199-point total for projects in the Baltimore region, which includes Anne Arundel, Baltimore, Carroll, Harford and Howard counties and the city of Baltimore.
Even with a six-point advantage, Maneval emphasized the state’s commitment to fund the best projects statewide. And according to Frederick leaders, local proposals stand a good chance of being among those awardees.
“If you take a look at what [Frederick County] does in its participation and weight that against the participation of other counties … we rank high,” said Milton Bailey, the county’s housing and community development department director.
Bailey highlighted the funding and tax and fee waivers the county has offered in the past, which would be available to these three projects seeking tax credits, providing the proposals pan out. Written support from County Executive Jan Gardner, who sent a letter to Maryland Secretary of Housing and Community Development Kenneth Holt, might also help in securing some of the discretionary bonus points Holt can award to tax credit applicants, Bailey said.
That two of the three Frederick County projects have also secured some of the requisite municipal approvals associated with the plans also gives them an advantage over the competition, according to Bruce Zavos, president of Zavos Architecture and Design, a firm that has worked on several of the LIHTC-funded projects in Frederick. Zavos is also chairman of the county Affordable Housing Council.
The third local proposal vying for tax credits still has several hurdles to clear with the city of Frederick, including the blessing of the Historic Preservation Commission to demolish a potentially historic house on the Linden Avenue property proposed for the new development, as well as a rezoning. Despite these obstacles, Dave Willmarth, a director for project developer Herman and Kittle Properties, said he did not think these requirements would prevent the company from closing the deal.