Highlands Residential’s Magnolia Ridge Project missed out on federal tax credits for the second straight year.
Johnson City received the credits. Highland Residential Services viewed the Tri Cities as a potential competitor several months ago. Executive Director Chris Cassetty labeled the results for the past two years unlucky.
“We’ve just fallen a little short,” Cassetty said. “We actually last year and this year scored the maximum points we could score, but there are some tiebreakers that they go into, and we’ve basically lost on tiebreakers each of the last two years.”
Cassetty said the tiebreaker is the total amount of units, and that the Magonlia Ridge Project proposed 72 units compared to Johnson City’s 96 units. Cassetty said, unfortunately, increasing the number of units for Magnolia Ridge is not feasible.
“The problem is if we make our project any bigger, it doesn’t cash flow anymore,” Cassetty said. “It’s no longer a viable project, so we’ve made our project as big as we can make it.”
Highlands Residential previously used tax credits to fund Hickory Valley, a 48-unit affordable housing project. Cassetty said tax credits are crucial as they are one of the few funding mechanisms to build affordable housing.
“30-40 years ago, the federal government was providing just direct money to build low-income housing, affordable housing, and they don’t do that anymore,” Cassetty said. “So, this is one of the few ways absent of some smaller grants, that you can actually get money that you can use to build new units, to build additional units that don’t require a payback.”
The Magnolia Ridge project has been estimated to cost a sum $21 million. Cassetty said there are not enough small grants that could cover a good portion of the project cost.
Cassetty said the board is always looking at ways to improve its application. Cassetty said missing out on tax credits two years in a row is concerning.
“It is concerning, it’s frustrating,” Cassetty said. “It’s just part of the process, but the good thing there is THDA (Tennessee Housing Development Agency) does a really good job of looking at how their application process played out in the previous year, and even previous years before that, and they do make changes to their allocation process, to their application process. And there are some potential changes that THDa might make that would benefit us more. Maybe allow us to score a little better than some others, and so we are hopeful that will be the case, and we are determined to keep trying.”
