Tax credits key to affordable housing project

An affordable housing project underway in Sun Valley would have likely died in the planning stages but for state and federal tax credits that helped bring the project to fruition.

Yoni Gruskin, managing partner for Denver-based Ulysses Development Group, told NNBW in an interview last week that his company received a tax credit of $3 million through the state’s Low-Income Housing Tax Credit program, and a $28.5 million tax credit from the Home Means Nevada initiative to advance The Ridge at Sun Valley.

“Without the resources the state contributed to this and a bevy of other affordable housing projects that are in the queue, none of this would have gotten done,” Gruskin said. “This project would still be a mud pit behind an elementary school.”

Located at First Avenue and Sun Valley Boulevard, the Ridge at Sun Valley will consist of 195 units spread across 11 three-story walkup buildings, including a clubhouse. There will be 37 one-bedroom units, 79 two-bedroom apartments and 71 three-bedroom residences.

Rents, which are established by the Department of Housing and Urban Development, are projected to be $992, $1,191 and $1,375, respectively, Gruskin said. The apartments are restricted to prospective residents making less than 60 percent of the median income for the area, he added.

“All rents we are able to charge are bound by those HUD income limits,” he said.

Communal amenities include a fully furnished clubhouse and kitchen, fitness and business centers, outdoor pool and seating areas, as well as a lot of green space, in an effort to create a family-oriented apartment community, Gruskin told NNBW.

UDG purchased the 10-acre site in 2021. With a paucity of developable land in the Truckee Meadows, the team at Ulysses Development Group cross-referenced county maps with areas that were a good fit for an affordable housing project to find the privately-owned site.

Gone are the slew of abandoned vehicles that littered the site — work crews spent two full weeks working with local authorities to remove vehicles and other trash before groundwork began, Gruskin told NNBW.

“It is a site that’s been vacant for a long time,” he said. “We are excited not only for the housing we are going to create, but for the transformation in that neighborhood.

“It was not easy to get a hold of the owner, but eventually we were able to connect — he’s an out-of-state landlord — and we made a deal,” Gruskin added.

Construction is expected to take approximately 24 months to complete. Gruskin said some units are expected to come online by the end of 2024, with project completion scheduled for the end of 2025. Pavilion Construction of Lake Oswego, Ore., is the general contractor on the project. Northern Nevada-based companies involved in The Ridge at Sun Valley include Frame Architecture, CFA Engineering and Praxis Consulting Group.

In addition to the difficulties of locking down financing, Gruskin said the UDG team had a number of additional obstacles to overcome to bring the project to fruition. Predevelopment of an affordable housing project, he said, can take up to two years as developers seek tax credits and other financial incentives that are crucial to making these types of projects pencil.

“This type of product (affordable multifamily housing) is difficult to build in more normal, benign times,” Gruskin said. “When we first began planning The Ridge at Sun Valley in the spring of 2021, short-term interest rates were at zero, and the benchmark long-term interest rate was below 1 percent. Fast-forward two years to the time we finally close on this project, and the Fed has increased short-term interest rates to nearly 5 percent, and the benchmark long-term rate is close to 4 percent. Construction prices in Northern Nevada increased by almost 40 percent.

“Altogether, this created a large gap in our numbers, and I don’t think is unique to our project — most affordable housing developers are working off the same plan. In these unique times we had to look to our partners at the state for resources in order to create these badly needed affordable housing units.”

One huge boon to the project, however, was the fact that the site already was entitled for multifamily use when it was acquired by Ulysses Development Group. Having entitlements in place helped speed up UDG’s development plans, Gruskin said.

“We didn't have to go through the entitlement process; we just had to work closely with county staff to get approval for our site plan,” he said. “With affordable housing projects, there are myriad challenges even in the best of times. When you start layering on other complications, like going through a rezoning, which costs time and money, it adds another level of uncertainty to the project.

“In this case, we also had to deal with a macroeconomic environment that is more challenging than developers have seen in a generation,” he added. “Those layers of uncertainty can crowd out our ability to carry the project, but having the entitlements in place removed one barrier in what was already a challenging environment.”