Two South Bend developments awarded millions in low-income housing tax credits

Published: Jan. 27, 2023 at 5:23 PM EST
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SOUTH BEND, Ind. (WNDU) -New developments for developments.

Two firms building in South Bend will be able to save a lot of money after earning low-income housing tax credits for their future projects.

These incentives only go to projects that promise to build affordable housing units, which is the plan for the two developments that earned the award here in South Bend.

Combined, they’ll add 114 low-income housing units on the back of nearly $2.4 million in tax credits.

Real America Developments out of Indianapolis are looking to build Diamond View Apartments right next to Four Winds Field in downtown South Bend with a pair of four-story apartment buildings containing 60 units each.

One of them will lease apartments at market rate, but the other will be completely dedicated to low-income housing.

“The development needs to provide a certain percentage, typically at least half but generally what we see is much more than half—sometimes 100% of the units that are at an income-qualified level,” said South Bend Director of Community Investment Caleb Bauer.

Half of those units will be reserved for residents making less than 60% of our area’s annual median income, 12 will be for those under 50% of our AMI, and 18 for those making less than 30%.

The South Bend Heritage foundation has plans to build SB Thrive with 54 total units on a plat just west of the Town and Country Shopping center that will take the form of townhomes and duplexes to mainly support housing needs for Youth South Bend clients.

10 of those units are set aside for folks under that 60% AMI mark, 20 for those falling below 50%, and the remaining 24 are reserved for those under the 30% mark.

For reference, a one-person household earning 60% of our area’s average median income brings in $32,760.

At 50%, that figure sits at $27,300.

30% of our area’s AMI earns just $16,400 per year.

“There are different thresholds if you have a multi-person family there, but what that really translates to is IHCDA is helping the developer cover those costs so they can preserve that affordable rent into the future for the lifetime of that development,” Bauer said.

Both projects, with price tags hovering around $14.5 million, each earned tax credits valuing roughly $1.2 million, but it’s not the same as getting straight cash.

Once earned, these credits can be sold to investors for money to get their projects started.

Those investors are essentially buying a tax break that can save them some money down the line when it’s time to file with the state.

“Through that roundabout, kind of circuitous process, it can help generate the upfront capital the developer needs to cover the cost of construction for the development,” Bauer said.

He says these credits can help cover roughly 60% of construction costs on a low-income housing development.