Downtown Properties Moving from Fixed Income to Market Rate

*The Oaks is one of two properties whose residents will be impacted by rising rates (photo Courtney Cole).*

Two housing properties in downtown Excelsior Springs will soon begin transitioning from fixed-income or low-income rates to market rates impacting more than 50 residents. The Oaks Apartments and Downtown Villas were both constructed using Low-Income Housing Tax Credits (LIHTC). Those credits will soon be expiring allowing the owner of the properties to begin incremental rate increases. LIHTC is a federal tax credit for investors in affordable housing development. According to the Missouri Housing Development Commission (MHDC) website, the “credits can be used each year for 10 years and are allocated to the owner of an affordable housing development.”

The Oaks will begin its transition to market values in about a year and the Villas will begin transitioning in 2026. Moline Investment Management [MIM]| purchased both the Oaks and the Downtown Villas earlier this year as part of a larger, 640-unit portfolio of properties spread across the region, from Hannibal, MO down to Joplin. MIM describes itself as, “an affordable and market-rate housing specialist investment manager focused on the development, redevelopment, ownership, and operation of multifamily assets across the Midwest and Central U.S.”

*The Downtown Villas still look great after almost 10 years (photo S Jason Cole).*

MIM, CEO Charlie Moline said his goal is to keep rates affordable at both locations in Excelsior Springs and noted that rates won’t go up overnight. “We don’t want to displace a single tenant,” said Moline. He said rates will increase about 7% each year for four years, before leveling off. As an example, a 7% increase for four years on a $500 per month rent would raise the monthly rate to $612.52 by the end of those four years. Overall, he said MIM plans to keep rates at 65 to 70% of Area Median Income (AMI) and MIM has a track record of retaining 80% or more of the residents when taking over management of properties. “We like to use the additional income to reinvest in the properties, refreshing and making improvements for the residents,” he said.

Tammi Creason with DTHC Housing, spoke at the Excelsior Springs City Council meeting on September, 19 and explained that her company had recently purchased property near the intersection of 69 Hwy and Tracy Ave where they plan to construct 40 new fixed-income housing units, with the possibility of more in the future. Creason asked the council for a resolution of support from the council that would allow her company to apply for an affordable housing project in the state of Missouri. Creason said that she hopes the new addition will help add much-needed housing and also offer an alternative location for residents of the Oaks and Villas. The new development will consist mainly of two-bedroom duplex units. Creason said she anticipates rents for a “two bedroom, one car garage, single floor unit” to fall in the range of $600 per month. Creason said she would be submitting the application by the end of the week (Friday, Sept. 23) and they hoped to hear back from MDHC by no later than December. “If we were successful we would break ground in the spring,” said Creason.

DTHC shared the design of the proposed development at the City Council meeting on Sept. 19.

As the changes approach more information should be sent to residents. However, if you or someone you know has questions about the upcoming increases to rates at the Oaks or Downtown Villas you can reach out to the property managers of each of the units or contact Moline Investment Management directly.