Daniel Werwath was ready to throw in the towel.
The chief operating officer of New Mexico Inter-Faith Housing had applied twice for federal tax credits to help finance a 65-unit affordable housing project on a city-owned parcel on Siler Road — and was turned down both times.
“The way we went into this year’s application was, ‘We’re aiming to do the best job we can on this application, and if it doesn’t get funded, we know that we need to let this project go and just look at the great things that have come out of the process,’ ” Werwath said Tuesday. “I knew we had put together the best-scoring, most well-prepared application we could do, so if we didn’t get funded, we knew it was time to move on.”
Werwath and other supporters of the project are, in fact, moving on — but not by shelving the proposal.
Werwath said the so-called Arts + Creativity Center, which proponents envision as a living and working space for artists and other creative types, received preliminary notice from the New Mexico Mortgage Finance Authority last week that the long-discussed — and sometimes controversial — project had been awarded $10.4 million.
“The big thing that changed this, honestly, was being able to make this a net-zero energy project,” he said, referring to a proposed solar system that will offset all the electrical use for the project.
“Because it lowers our operating cost long term, it lets us have a little bit bigger mortgage, and we got to reduce our subsidy [request], which maxed out our point score,” Werwath added. “In so many ways, this project is so much better than the first time we applied.”
Unlike the previous proposals, which included about a dozen market-rate rentals, every unit in the project will be affordable.
“Everything worked out perfectly,” Werwath said. “We’ve got the net-zero energy. We’ve got 100 percent affordable housing. We’re all just super excited about this.”
Groundbreaking for the project is set for February 2020. The goal is to start leasing units in January 2021 and for construction to wrap up that summer.
Tax credits, which can be sold to companies seeking to reduce their federal tax liability, are awarded under a program intended to help finance low-income housing.
“The state gets an allocation of tax credits. They allocate tax credits to projects, and we then get to sell those tax credits to an equity investor,” Werwath explained. “That’s the functional subsidy in the project.”
Werwath said Santa Fe, which continues to grapple with a lack of low-cost housing, has even more reason to celebrate.
“The Housing Authority also had a project awarded, so between us both, I think the city is lined up to get about $17 million in affordable housing subsidies coming into the community this year,” he said.
The proposed $17 million Arts + Creativity Center, which has multiple partners, including the city of Santa Fe, has commitments for almost all the financing, Werwath said. The city committed about $2.3 million in land, fee waivers and other taxpayer-funded contributions to the project.
“We have about $400,000 left to raise for the solar system but … it’s like $400,000 out of $17 million, so you can imagine, our thermometer is looking pretty full,” Werwath said.
The city’s support was instrumental, he added.
“These things are really partnerships, and this is a great model looking forward on how the city could support more affordable housing development going forward,” he said.
The project’s various funding sources will leave a “really small” $5 million mortgage, which will keep rents low, Werwath said. Rents will be based on income and set to income levels between 30 percent and 60 percent of the median income. For example, a single person at 30 percent of the median income, or about $14,000 a year, will pay $390 a month for a one-bedroom unit, including utilities.
“This is real affordable housing, and I’m like waiting for the backlash about this when people realize just how affordable housing this is,” Werwath said, laughing.
Follow Daniel J. Chacón on Twitter @danieljchacon.