Iowana restoration faces funding vacancy
By TYLER ELLYSON — CNA staff reporter tellyson@crestonnews.com
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| The Iowana Hotel stands deserted today. Plans for the restoration project have been postponed. (Amy Hansen) |
The Iowana Hotel restoration project may have to take one step backward before it can take another step forward.
Because of a lack of investors, $4.4 million in low-income housing tax credits previously awarded to the project by the Iowa Finance Authority (IFA) will most likely be returned.
Vern Hanson, co-president of the project’s developer, MetroPlains LLC, was in Creston Wednesday to discuss options with city officials and interested parties.
Hanson said a weak, but rebounding, housing-tax-credit market over the past two years has investors looking at less risky, mainly metropolitan-area projects. This leaves the Iowana without a potential investor at a time when major deadlines near.
In order to keep this year’s low-income housing tax credits, 10 percent of the project’s approximate $5.4 million cost must be spent by Nov. 16 and completion has to occur by the end of 2010.
Still optimistic about the project’s future, both Hanson and Mayor Warren Woods believe returning the tax credits and reapplying next year is the best option if the 89-year-old hotel is ever going to be transformed into low-income senior housing.
“There’s just no way the project is going to be completed by December 2010, not having anybody investing in it at this point,” Hanson said.
Cost
Reapplying for housing tax credits next year will require an initial investment of $1,500, and an additional $53,500 for market and environmental studies and tax-credit reservation fees if the project is once again accepted by IFA.
Who would pay these costs has yet to be decided, but both the city of Creston at $63,760 and MetroPlains at more than $120,000 have already invested significant amounts into the slow-moving restoration.
“We’ll cross that bridge when we get to it,” said Hanson.
Woods said any investment by the city would be better than the alternatives of tearing the building down or waiting to find a potential buyer. MetroPlains vested interest comes from their agreement with the city to purchase the building for $1 after restoration is complete.
Hanson said while there is no guarantee low-income housing tax credits will be given to the project next year, he is confident in the chances, adding IFA officials have told him they want to see the Iowana restoration move forward.
It was previously thought that IFA would issue exchange funds through the American Reinvestment and Recovery Act for all returned low-income housing tax credits, but this may now also require an investor and the exact amount of funding available is unknown.
Additional funds
The project does have state historic tax credits and a $1 million Section 515 Loan through Rural Development that will carryover, but Hanson said it isn’t enough money to proceed with restoration.
“The historic tax credit works in conjunction with the housing tax credit, and if you don’t have the housing tax credit, there’s not much you can do with the historic tax credit,” Hanson explained. “The key point is having the housing tax credit in place.”
Another option considered would be to have individual investors or companies buy the housing tax credits at a total of $442,532 for 10 years. To do this, between 25 and 30 investors would each need to accept tax liability of at least $18,000 per year for those 10 years.
Hanson said this route used to be common, but is now “very, very difficult and unlikely.”
For now, work is stalled after design development until the tax-credit market recovers.
If potential investors surface in the coming months, and the aging Iowana holds up, the city and MetroPlains will be ready to restore one of Creston’s landmarks.
“MetroPlains is solidly behind this project,” said Hanson. “We believe in it. We’re not going away. We’re going to hang in there and keep at it until we find a way to make it work.”
