Dec. 7—The Norman City Council on Tuesday discussed using federal funds earmarked for affordable housing on a tax credit program to drive down rent prices.
The council, during a study session, considered a partnership with a housing developer to construct at least 50 duplex or apartment units with a cap on the amount tenants can be charged.
According to a presentation of the Affordable Housing Tax Credit Act, developers can receive a 10-year tax cut if they construct or rehabilitate affordable rental properties for low-income families.
A possible scenario for convincing a developer to come on board includes the city purchasing the property, leasing it at no cost and connecting underground infrastructure to sweeten the deal, Mayor Larry Heikkila suggested.
"It would seem to me the easiest thing to do would be ground-lease it zero for them, we own the property, but they build on it," he said. "We put in utilities and put in access. We do the other things we can do as a partner, as a true partner,
Ward 2 councilor Lauren Schueler suggested her colleagues consider using American Rescue Plan Act (APRA) funds set aside for affordable housing initiatives to leverage a tax cut program for developers.
Since 2021, the council has banked $4.5 million in APRA money for affordable housing development but has yet to allocate the funds.
"That seems to be the pot of money at our disposal, that we have at our discretion," Schueler pointed out. She asked staff if it was feasible to use the federal money for such a project.
City Manager Darrel Pyle said it was an opportunity to leverage the program with ARPA dollars to create a revenue stream to repeat the investment in affordable housing "again and again."
Darrell Beavers, housing development director for Oklahoma Housing Finance Agency, told the council the program requires supervision to ensure rent is not being overcharged.
After Congress adopted the Affordable Housing Tax Credit Act in 1986, the state adopted one to enhance the federal program in 2014, Beavers said.
Developers can turn the tax credit into equity.
"It allows them to have less debt on the property," he said. "With less debt, they're able to hold the rents down and that's how we help people with lower incomes in the state."
Beavers said some developers shy away from the program because of their lack of experience navigating the rules. Developers without experienced staff or an experienced partner cannot qualify for the tax credit program.
"It's not about knowing how to build apartments," he said. "It's about knowing the program because the program is very complicated."
Those complications don't exclude a developer who is new to the process as long as the builder gains the necessary experience, Beavers said.
"He can partner with a developer who does have the experience or he can surround himself with architects, engineers, contractors, etc., who have had experience with at least five developments," he said.
The units would not be available to college students, Beavers said. He also noted that the rent program remains in place for 30 years and stays with the property if it sells.
Heikkila said the need for these units extends to businesses that can't keep employees on staff due to the lack of affordable housing.
"A lot of the complaint I get from employers in the city of Norman is we can't afford to have enough people work here because the rents are too high," he said. "They have to drive here from Moore and Noble. Well, let's help the businesses keep up ... and have places that are decent to live."