ClareCastle senior citizen housing project is recompleting application for better tax credits

CLARE – Developer for the Fourth Street Senior Housing project, known better as ClareCastle, is recompleting under a different tax credit assistance program of the Michigan State Housing Development Authority
If awarded, developer Phillip Seybert will garner better tax benefits for the project and amenities for the occupants at the four-story senior complex to be built on the corner of Beech and Fourth streets, a short walk from downtown Clare.
Seybert reapplied in May and expected to hear in June if the project qualified as it did in 2008 when the initial tax credit program announced it would provide up to $2.5 million in tax credits.
Once funding is secured, Seybert will advertise a formal bid for construction. He’d like to begin construction early August.
MSHDA provided $262,800 to complete an environmental study, demolish an empty industrial building on the site and prepare the site for new development.
Funding is through the Michigan Housing and Community Development Fund.The Clare project is a collaborative effort by the for-profit developer, Mid Michigan Community Action Agency, city of Clare and Clare County.
Clare County will lease 6,000 square feet of the first floor of the complex for a new senior center. The county is preparing to bring senior services under the wing of county government funded by a voter-approved millage. The Clare site will be one of several sites functioning as county activities centers for older adults.
The housing complex will serve residents age 55 and over who make 60 percent of the area’s median income. This is $22,648 for a single individual and $29,617 for a couple.
Seybert initially applied under a different low income housing tax credit program. But when MSHDA announced it would boost tax credits by 30 percent, Seybert reapplied.
Otherwise the new tax credits would go unused, he said.
Higher tax credits mean he has more money to put into amenities such as microwave/hood combination over the stove, dishwasher, washer and dryer in the apartments.
“We would have nicer pointings in the common area on the first floor,” he added.
Fourth Street Senior Housing is a limited partnership between Seybert and MMCAA that will own the complex. This entity will sell the tax credits to an investor who infuses money into the project. This investment will be combined with a mortgage to be paid through low monthly rents.
MMCAA owned and donated the land.
Seybert said the building site is the first project approved as a brownfield project by the brownfield authority. 
Stephen Lathom, MSHDA spokesman, could not speak specifically on the ClareCastle project except to say the application is being reviewed. A formal announcement of winning applicants may come by mid July.
A tax credit is preferred over a tax deduction because a tax bill decreases accordingly. Developers sell tax credits to companies who have large tax liabilities.
“A developer can take the credits in millions of dollars. Companies like Bank of America or J.P. Morgan Chase – companies with big profits – buy credits,” Lathom said.
Put simply, you have a coupon for a hamburger but won’t use it because you are a vegetarian. So you give it to your friend who pays you a portion in cash so you can buy a salad.
Lathom said only a few years ago eight to nine billion dollars of low income tax credits were sold. Sixty percent of that market was represented by Freddie Mac, Fannie Mae and Citibank.
Lathom said the market credits had dried up and production of affordable housing fell.
A new class of investors is buying credits, because when pricing of credits go down the profit to the investor goes up. Financial institutions and big insurance companies are still buying credits, Lathom said, but smaller regional banks are buying too.
“It’s how the Clare project is getting done. A smaller community bank is that area of the state is buying,” Lathom said.