Ketchum just proved Calvin Coolidge right on the value of persistence. On its fifth attempt in nine years, the group behind the Bluebird Village affordable housing development just won the ability to raise $12.1 million in equity financing to build 56 affordable apartments in the heart of downtown Ketchum.
The financing that Ketchum has been pursuing for almost a decade is the federal 2021 Low Income Housing Tax Credit program administered by the Idaho Housing and Finance Association. The most recent efforts to obtain this financing tool led the Ketchum partnership behind the project to submit applications every year for the last three years.
“We’ve been waiting a long time and are anxious to get this project started,” said Ketchum Community Development Corporation executive director Charles Friedman. The official co-owners, partners and tax-credit applicants for the project are the nonprofit KCDC and Seattle-based firm of GMD Development LLC. The wider group supporting Bluebird Village includes the City of Ketchum and the Ketchum Urban Renewal Agency.
The award of the 9% tax credits will allow Ketchum to leverage financing for the proposed Bluebird Village development. The tax credit sale will deliver $1 million per year over the ten-year life of the financial instrument, allowing the 56-unit project to move forward at the current Ketchum City Hall site on East Avenue. The project will enable those earning between $16,000 and $60,900 per year to rent an affordable apartment walking distance from all of Ketchum’s downtown.
Besides the tax credits, additional financing to support the project will come from the City of Ketchum in-lieu housing fund, the Ketchum Urban Renewal Agency, tax-exempt bonds and solar tax credits. The tax credit equity and other project debt financing will leverage the local funding and contributions by nearly 3.5 times.
“Getting approval on tax credits for Ketchum has been challenging,” said GMD-owner Greg Dunfield. “Our perseverance has finally paid off. We have been working closely with IHFA and appreciate the work they’ve done to help Ketchum be more competitive in accessing federal housing funds.”
The project will be built on the site of Ketchum’s existing city hall and fire station building, which has reached the end of its useful life. The project will lease the site from the city, which is two blocks from Ketchum’s main thoroughfare.
Ketchum has spent almost a decade pursuing the highly-advantageous federal tax credit-based financing program, but with little success until now. Despite an extreme shortage of affordable long-term rentals, Ketchum has only received one other award of federal tax credits in the 30-year history of the program. That award was in 2009 for the 32-unit Northwood Place development. GMD was also part of that project.
In 2019, the IHFA-managed tax-credit program loosened its bias against higher-income areas and gave more weight to the cost of construction. This gave projects in places like Ketchum a better chance; however, last year’s application for Bluebird Village still failed. Unfortunately, the local area is also challenged in terms of construction costs.
“We’re always going to be penalized on a cost-per-unit basis because it’s more expensive to build here,” Ketchum Mayor Neil Bradshaw told the Idaho Business Review last year. “Construction businesses and people like plumbers can’t afford to live here. So they have to travel up from Bellevue or Twin Falls to work here, and you need to pay them for their time and travel. That makes everything cost more.”
“For the last several years, projects have gotten very close scores from IHFA, and only tie-breaker often was the construction cost per square foot, which Ketchum will never win at,” Dunfield told the Idaho Business Review. “We just missed the cut-off for the tax credit last year.”
Dunfield added: “I have to give IHFA a lot of credit for incorporating new selection criteria and using a more dynamic scoring process that include things like community contributions. If I had to hang my hat on any one thing that helped advance our application this year, it would be Ketchum’s community contribution, which is more than 20% of the project. I’ve done projects all over the northwest and that amount of contribution is just unheard of.”
Ketchum acknowledged the role of the community support behind the project in its announcement that this year’s application succeeded: “Without local support and funding for the development, this multiyear effort to obtain the competitive federal tax credit funding could not have been achieved.”
The initial concept of the Bluebird Village consists of an east and west building, each with three stories of housing over one floor of parking, storage, management, amenity, and commercial space. One-, two- and three-bedroom units will be designed to meet the needs of a variety of household sizes. Space for an outdoor community patio, and indoor exercise and community space will be incorporated into the design.
“Our service workers, nurses, firefighters, teachers and other Ketchum workers will now have the chance to live where they work,” said Mayor Neil Bradshaw. “The character of Ketchum is not just about buildings, it’s about the people who live here and contribute to everyday life. I look forward to the vibrancy Bluebird Village will create in the downtown.”
Bluebird will target incomes that are 30% to 50% of the area’ median income. The 2020 median income for a family of four in Blaine County is $78,400. Initial rents at Bluebird will range from $438 to $1,200 for one- to two-bedroom apartments and $990 to $1,510 for three-bedroom apartments, depending on income and on unit size. Rents will occasionally be modified based on future Blaine County median incomes.
All the affordable-designated apartments will be restricted to low-income occupants for a minimum of 44 years. Three of the units will be offered at market price with no household income restrictions. Long-term KCDC ownership of the property will ensure that affordability criteria will apply longer than the initial 44-year land-use regulatory agreement.