Family Values

Walton won rezoning approval for this multiuse project because it was willing to raze and clear a condemned apartment complex that stood on the land. Cost: $6 million to buy the property, plus another $660,000 in demolition expenses. It was a strategy which the company may need to use more often in the years ahead because of land shortages, Knight says.

For financing, Walton’s affordable housing communities have benefited both from tax-exempt bond programs issued by local governments, as well as from selling federal and state tax credits to equity partners. Recent tax-exempt bond programs have given developers like Walton the option of building 20 percent of units to rent at no more than 50 percent of median income; or 40 percent of units at 60 percent of median income.

Walton has chosen the 20 percent option in five of its communities.

On its most recent three communities, Walton also has taken advantage of federal and state low-income tax credits, administered through Georgia‘s Department of Community Relations. By selling these 4 percent tax credits to its financial partners—and combining that equity with the bond financing—Walton is able to designate 80 percent to 90 percent of a community’s apartments as affordable.

And in the senior-housing segment of Walton Village, the firm tapped into the 9 percent low-income tax credit program. “This gives you a lot more equity,” explains Keith Davidson, the Walton principal in charge of financing. “So you are able to drive the rents down further.” In Walton Village, for example, 70 percent of the senior units are affordable, with rents ranging from 30 percent of median to 60 percent of median. The rest are market-rate.

WALTON COMMUNITIES WORTH THE EFFORT While there may be less risk on project financing, Davidson concedes that regulations surrounding the tax-credit programs can be intimidating, especially the government’s tough compliance standards that require apartment owners to verify incomes annually on tax-credit units. “I have to turn away about half of the people who inquire about our apartments because they earn too much money,” notes Teague, the Ridenour property manager.

Quality maintenance and a high degree of resident support also are essential, say Walton managers, to ensure that these affordable communities projects stay viable both for the residents and for the equity partners, who are counting on a 10-year stream of tax credits.

While daunting, those concerns have not deterred Walton from increasingly focusing its resources on apartments that low- and moderate-income residents can afford. “Everything we do is going to have an affordable component,” notes Davidson. “But for a developer to do this long-term, you’ve got to have the special mission of serving families.”

That sense of a purpose beyond making a profit shows up again and again as you talk to the company’s managers, and it is evident from the time they spend getting to know residents and encouraging them, in turn, to know their neighbors better. “Many of us have fond memories of the places where we grew up,” says Ausburn. “Someday, we hope that the children living in our apartments now will feel the same way about our communities.”

Larry Maloney is a freelance writer in Ashland, Mass.