A Manchester development team has started work on almost 200 more apartments for the Southside neighborhood.
Fountainhead Properties, operated by developers Tom Papa and Rick Gregory, has begun demolition and construction on its 197-unit Miller Manufacturing apartment conversion. The company closed on financing for the $30 million project last week, Papa said.
“It’s in full swing,” he said. “They are jackhammering up concrete and putting pipes in and taking the roof off.”
The Miller Manufacturing project takes up two city blocks bounded by Fifth, Sixth, Everett and Decatur streets. Papa expects construction on the 180,000-square-foot project to take about 12 months.
Miller Manufacturing is a low-income housing tax credit project, but Papa said the “low-income” label is a misnomer. The project is income controlled, meaning Fountainhead will agree to rent a certain percentage of the units to tenants whose income does not exceed certain federal benchmarks.
“This is not Section 8,” he said. “We will lease to people that make approximately $30,000 dollars a year.”
The federal low-income tax credit program allows construction lenders – Bank of America, in Fountainhead’s case – to issue tax-free bonds. Those bonds allow the bank to lend money at a lower interest rate.
The program requires developers to adhere to rent or income restrictions for up to 30 years. Tax credit benefits are returned to developers over a 10-year period.
In addition to low-income tax credits, the Miller project is eligible for historic tax credits, which return up to 45 percent of construction costs to developers. It’s money that Fountainhead puts back into its apartments, Papa said.
“This tax-credit program – you can either put the money in your pocket or you can reinvest it in the project,” Papa said. “We have chosen to reinvest it in the project, because we’ll be here for a long time.”