Columbus, Ohio’s exploding population growth and strong economy are reflected in a red-hot housing market. Each weekend, open house signs dominate intersection corners. It is hard to miss big splashy billboards announcing new market-rate apartment complexes along our major I-70 and I-71 corridors. Last spring, Realtor.com named Columbus as the fourth-hottest housing market in the country.
The bad news is our housing supply is not keeping up with demand. In fact, the Building Industry Association of Central Ohio notes that by 2050, when we’ll have a predicted 500,000 new jobs and 1 million new residents, a general housing shortfall of 43 percent will occur if we continue on our current building rate of 8,000 new units per year. We need 14,000 units for all incomes per year to keep up.
Joseph McCabe, Woda Cooper Cos.
Affordable housing gap
An affordable housing crisis runs even deeper. Columbus’ booming housing market widens the gap for residents seeking affordable, safe and decent homes. Low- and moderate-income working families desperately need greater access to affordable housing near our city’s job centers. Service jobs abound in and around the city core, but most of our urban neighborhoods are quickly gentrifying, and rents have spiked due to their appeal to higher earners.
Columbus annex areas and outer loop neighborhoods, where workforce jobs are also plentiful but public transit is less available, also lack affordable housing.
Seniors need greater access to affordable housing as well, especially those trying to locate affordable housing with amenities geared toward aging residents and connected to supportive services, and in close proximity to part-time jobs that may be necessary to help make ends meet.
Tax credits for development
Much of affordable rental housing developed in Columbus and elsewhere is made possible through Low-Income Housing Tax Credits (LIHTC), a competitive public policy program enacted under the Tax Reform Act of 1986. Section 42 of the Internal Revenue Code regulates and encourages developers to build affordable housing to meet the needs of the community.
The Ohio Housing Finance Agency (OHFA) is our state’s agency charged with identifying affordable housing priorities and then annually allocating LIHTCs. Developers compete to obtain the credits through a formal qualified application program, then work with banks and investors to exchange the credits for equity that dramatically offsets construction or rehabilitation costs. The resulting developments are subject to strict leasing guidelines and compliances to ensure they are well managed and maintained.
As a condition for receiving
LIHTCs, owners must keep the units affordable for a specified number of years with rents calculated based on area median income (AMI) published annually by the U.S. Department of Housing and Urban Development (HUD). LIHTC developments typically target a mix of income ranges from 30 to 80 percent AMI, or $16,050 up to $42,800 for a single-person household in Columbus.
The Consolidated Appropriations Act, 2018, also known as the omnibus spending bill, made a major change to LIHTCs. In addition to increasing the amount of LIHTC volume allocated over the next four years, Congress created a new occupancy set-aside option known as income averaging. Simplified, income averages across all units in a particular LIHTC development cannot exceed 60 percent of AMI.
Just like market-rate
As an affordable housing developer, our goal is to build affordable communities that look and operate as good or better than market-rate housing.
The affordable properties we develop (our portfolio has more than 300 properties and 12,000 units spread across 14 states) include open-concept living spaces with modern, high-quality finishes, well-equipped kitchens with dishwashers and most units have washer-dryer hookups. They have community rooms with kitchens, computer centers, dog runs, playgrounds, grandchild rooms, craft rooms and onsite management offices.
Nearly all of our new properties receive sustainability certification from the U.S. Green Building Council, Enterprise Green Communities or EarthCraft certifying organizations. In 2018, we opened the first multifamily property in Ohio to be built to Passive House Institute US standards for extreme energy savings.
The commitment to green building ensures low monthly utility costs and allows residents to reserve more of their monthly budget on food, clothing, healthcare and other necessary items.
Last year, OHFA allocated $280 million in LIHTC to create 37 affordable developments across Ohio. We obtained credits to build new multifamily communities geared toward workforce households in two diverse neighborhoods:
• In the Hilltop, the $12.8 million Wheatland Crossing II is the second phase in a campus-like setting near one of the city’s most expansive free health clinics, a dental clinic and several neighborhood public and social service outlets. This development will place new housing along a major arterial corridor with less than a 20-minute transit ride to downtown jobs.
• The $13.8 million Wendler Commons will be built on the outer Northeast Side, near Easton Town Center shopping center and close to suburban New Albany, where the median house value is $485,100. This outer loop and annexed area is adjacent to major job centers, including Limited Brands headquarters and logistics centers, with over 10,000 employees across three shifts. Coming soon is a $500 million expansion of Easton Town Center and hundreds of new luxury apartments.
Future workforce developments in our pipeline are on the Far West Side and the Southside’s Merion Village.
Collaborate with nonprofits
Last December, Columbus Mayor Andrew Ginther was the guest of honor at the ribbon-cutting ceremony of Fairwood Commons, the Passive House senior community we built on the Near East Side. During his brief remarks, Mayor Ginther called the 54-unit complex a great example of “The Columbus Way,” a phrase used by Harvard Business Review to describe the positive impacts when government, business and civic groups work together to better a community.
His comments seemed fitting: Fairwood Commons was the result of a four-year collaborative process, with special meetings soliciting input on the design and regarding various elements of the project. It was required to go through a regimented administrative and public comment process to obtain nearly a dozen variances, including approval at Columbus City Council.
We have collaborated with nonprofits East Columbus Development Co. and LifeCare Alliance Inc. for planning and coordination of supportive services. An onsite wellness center was designed with office and classroom space for health screenings, referrals and educational sessions.
Financing the development reflected the community’s strong support. The project was eligible for a 15-year tax abatement for 100 percent of the project’s increased value, plus a $250,000 HOME loan from the city of Columbus.
OHFA allocated $8.9 million (over 10 years) for tax credits purchased by syndicator Ohio Capital Corp. for Housing. OHFA also contributed two low-interest permanent loans. The Affordable Housing Trust for Columbus and Franklin County provided a bridge loan and private lender Huntington National Bank supplied the construction loan.
In late 2018, Woda Cooper broke ground in the Driving Park neighborhood on The Livingston, another 45-unit, age-restricted 55+ affordable housing community, this time within less than a half-mile of Nationwide Children’s Hospital.
We are co-developing the project with nonprofit The Gertrude Wood Community Foundation. They’ll provide supportive services to enhance residents’ daily lives and social interactions. For example, through the foundation’s Just Between Us Mentoring Program, residents will be paired with youth that could benefit from positive relationship development and inter-generational bonding.
From our vantage point, enlisting “The Columbus Way” of collaboration will be key in expanding affordable housing and ensuring that moderate- and lower-income seniors and workforce families thrive in our booming city.
— By Joseph McCabe, Vice President of Development, Woda Cooper Cos. Inc. This article originally appeared in the April 2019 issue of Heartland Real Estate Business magazine.