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Louisville Gets Less Affordable Housing Funding Than Other Parts of Kentucky

Affordable housing got a boost in this year's city spending plan.
Affordable housing got a boost in this year's city spending plan.

Louisville housing advocates are concerned that the city is being shortchanged in the state's distribution of federal Low-Income Housing Tax Credits, which are used to build or rehabilitate affordable rental housing.

The U.S. Department of Housing and Urban Development considers the credits the most important resource for creating affordable rental housing. They are distributed to local projects by the Kentucky Housing Corporation, a quasi-governmental agency created by the General Assembly in 1972.

Thirteen different projects in the Third District — which includes most of Louisville — have been funded in part by the credits since 2010, and about 600 affordable housing units have been created through those developments, according to KHC data provided to WFPL News under Kentucky open records law.

In each of the state's other five congressional districts, nearly double the number of projects have been funded, the data show. Congressional districts, which have roughly the same population, are the geographic metric used by the agency to track where the credits are disbursed.

In the Fourth District, which stretches from far eastern Jefferson County to Ashland, more than 30 projects have been funded in the past five years. That is the most of any congressional district in the state.

During that time, more than $16 million in development funds have been funneled to projects in the district, creating more than 1,500 units, according to the data.

The Kentucky Housing Corporation pledges to "provide an equitable distribution" of the credits across the state, according to its guiding documents, which are approved by Gov. Steve Beshear. But in Louisville, advocates and developers don't think they're getting a fair allocation.

"I don't think they're trying to be equitable," said Joe Gliessner, executive director of New Directions Housing Corporation, a Louisville-based nonprofit focused on developing affordable housing for poorer residents.

He said perhaps the starkest example of inequity can be found in the credits allocated in 2015.

The agency this year distributed about $10.2 million in tax credits across the state. Nearly a third went to projects in the Sixth Congressional District, which includes Frankfort, Lexington and surrounding counties. The Third District received just 6 percent of the total, the data show.

Roughly $624,000 in credits came to Jefferson County this year, though the money is earmarked as "set aside" funding for a project approved in a previous year: the federal Hope VI project to rehabilitate the Sheppard Square housing complex. None of the credits that came to Louisville in 2015 are for new development projects.

Rob Ellis, deputy executive director of the Kentucky Housing Corporation, called this year an "anomaly." He said there weren't many applications for new developments submitted from Louisville.

Since 2010, KHC has issued more than $61 million in Low-Income Housing Tax Credits to projects across the state's six congressional districts, according to the data provided to WFPL. About 15 percent of that — or just more than $9 million — has gone toward projects in the Third Congressional District, according to the data.

Tax Credit Funding | Create infographics

Developers submitted three applications for new projects in Louisville this year, the KHC data show. They would have created about 200 new and rehabilitated housing units. But none was selected.

Applications for projects in the state's five other congressional districts had more success.

For example, in the Second and Fourth districts, at least 50 percent of all applications were approved. In the First and Sixth districts, more than 60 percent of applications were approved. In the Fifth, KHC gave the green light to just one application.

One of the three Louisville projects rejected came from New Directions Housing Corporation. It sought about $840,000 in tax credits and aimed to create more than 100 affordable housing units, mostly in Louisville's historic Russell neighborhood, said David Fannin, director of real estate and development for New Directions.

Ellis, from KHC, said applying for tax credits is a competitive process. Each year, requests outweigh the supply by nearly four to one, he said. Each application is examined, scored by staff based on a set of determined criteria, reviewed by a KHC committee and then approved or rejected by the agency's executive director. The applications with the highest scores are awarded the credits, Ellis said.

But it doesn't have to be that way.

KHC has the right to award credits to applications that get lower scores "to ensure equitable allocation of resources in each congressional district throughout the state," according to its 2015 Qualified Application Plan, which is signed by Gov. Beshear and held as a guiding document for judging applications and awarding credits.

Gliessner, with New Directions, said he is "dumbfounded" by the most recent round of credit distribution. He said the lack of credits coming into Louisville not only hurts the city's ability to build more affordable housing, it also sends jobs and economic development to other areas of the state.

Cathy Hinko, executive director of the Metropolitan Housing Coalition, said fewer credits coming into Louisville "is an area of great concern." At present, there are nearly 18,000 people on a waiting list for housing assistance in the city.

Failing to provide more affordable housing could also fuel Louisville's pattern of racial segregation and ultimately violate federal fair housing laws, Hinko said, noting that about 43 percent of Kentucky's black population resides in Louisville.

Still, Hinko offered praise for KHC, which she said has taken progressive action for fair housing. The agency is also grappling with reduced federal funding for low-income housing credits.

Moving forward, Hinko said housing advocates will review how credits are distributed more closely. "Hopefully that alone will cure this," she said.

Joe Gliessner echoed that. He said New Directions has spent nearly $200,000 applying for the credits in recent years. The company is looking at other resources to fund affordable housing developments.

Gliessner said advocates would lobby lawmakers in Frankfort and may even turn to a recent U.S. Supreme Court decision regarding fair housing to ensure future distribution the tax credits is done equitably.

The Kentucky Housing Corporation's quasi-governmental status means it is not under the scrutiny of any specific government department, though it is governed by state law. Hinko said creating a new state agency to manage housing would provide more oversight. Most states have such a structure.

Ellis, from KHC, said the corporation merely accepts the applications, scores them and distributes the credits accordingly. He said KHC doesn't favor certain areas of the state based on preference.

"We don't dictate that," he said. "But over time, we've been very successful in making sure the program has helped to create affordable multifamily (units) throughout the state, in all six congressional districts."

Jacob Ryan is the managing editor of the Kentucky Center for Investigative reporting. He's an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.

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