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Key to Success: One Company’s Insight for Rural Development*




For some time now, construction costs and zoning regulations have posed threats to new developments. The former is especially true for rural areas with fewer resources and the latter seems to be more of a restraint on urban areas that tend to be overcrowded and more heavily controlled by local officials. In contrast to many urban areas, city councils in many rural towns want to see growth and expansion--especially with affordable housing. There is a general need for more affordable housing which is true for both urban and rural communities. To get a fuller picture of how construction costs and zoning regulations affect rural developments, we asked Shawn Smith of Belmont Development Company for his experience and insight.


Belmont Development Company’s primary focus is USDA Rural Development in several states including Oklahoma, Arkansas, Texas, Colorado, Kansas and Missouri. Since its inception in 2007, Belmont has fully completed 31 LIHTC developments--making up over 1600 rehabilitated and new construction affordable housing units. Shawn Smith himself has over 15 years of experience with financing affordable housing.


When asked about the challenges of rural projects as opposed to urban ones, Smith says that it’s the construction and/or rehabilitation itself. Smith says, “It’s a challenge to find subcontractors to do the work here [in remote areas].” A past project that proved to be particularly difficult in this regard was a rural development rehabilitation property under Section 515, the Garden Walk Apartments in South Fork, Colorado. This is an extremely rural town and it was costly to hire and transport a productive and efficient team necessary to complete the repairs and remodeling.


Belmont overcame this obstacle by using local resources and labor. They also relied on loyal subcontractors who were vital in getting this building rehabilitated. “Over the years, we’ve built strong relationships with many great and talented subcontractors who we can call up,” Smith says. Because of this, they were able to complete the rehabilitation after three long years of waiting for the proper funding and resources.


Belmont Development was able to complete this project with USDA Rural Development funding. Finding labor is one part of the equation and the other is financing the whole project. For this, Smith says, “We have to find creative solutions for financing with lower lending rates.” At the same time, “We look for favorable solutions that increase capital to cover construction costs.” He says that rural areas generally have lower rents and demand compared to urban areas, so “this creates a balancing act—we need the funding for a project to cover construction costs and such, but we also want to pursue a project with favorable profit.” This is where tax credits play a significant role since Smith and his team usually use them to fill in the gaps. As with the Garden Walk Apartments, this can take some time but it’s well-worth it in the end.


The small town of South Fork now has an updated affordable housing apartment complex for its low-income residents to feel safe in. The property is complete with refurbished sidewalks and parking lot, and new playgrounds, laundry facilities and more for its residents to enjoy. Garden Walk Apartments even received the 2017 USDA Colorado Multi-Family Housing Award. This award recognizes low-income rural housing complexes that cater to their residents’ needs and enhance the community overall.


Excellence takes time, but also stalling projects are zoning regulations. Although Smith says that these rarely ever put a stop to a project completely, it can take time for their company to adhere to these regulations. This takes time and effort before a project can even begin. Smith says, “Most state agencies want proper zoning in place before we can even apply for funding.” There may be times that a developer may think a certain property to be a great place for residential project, but the city may want to keep that area commercial. This can stop the project altogether.


Even once proper zoning regulations are met, they may not always meet the developers’ expectations for the project. Sometimes, the plans for a particular project must change to meet functional and aesthetic goals of the town. Smith explains, “When a project, especially multifamily housing, requires a certain number of units and/or stories, but the zoning regulations restrict this size, we must alter our plans differently and accordingly.” This could mean less units are built and, sometimes, more money is needed.


In establishing the proper zoning, developers find land that they believe will support new affordable housing and is in an effective location with respect to transportation, services and more. City employees are sometimes involved in locating land as well in order to uphold the town’s aesthetic, environmental and safety expectations which are usually why the zoning regulations are in place. Smith says that City employees will sometimes even steer developers to land that they already know would be fruitful for all to benefit. This way, developers can sometimes bypass opposition of any kind before beginning on a project.


In general, Smith says that rural communities don’t typically oppose rehabilitation projects. He says, “They’re usually not a problem since most city councils want to see more and better housing for their people.” On the other hand, there can be opposition from neighbors when it comes to new construction of affordable housing. Smith describes that “there’s a common misconception of affordable housing.” People fear it--believing it will attract more negativity to the neighborhood.


According to Smith, “If we get the sense that there may be some objections—usually from realtors or connections in town—we are proactive and hold a meeting open to all concerned citizens to let them know what our plans are.” They send out notices to make as many people aware of the meeting to get the best attendance. Smith says, “We usually take pictures of our previous projects to show them [at the meetings] that these communities are well built and aesthetically pleasing.”


Also important in gaining support and easing minds is to educate them on who the typical tenant is for such a development. This is important, according to Smith, because these communities do not often understand that several of the folks already living in their community qualify to live in LIHTC housing. This helps reassure them that new housing will in fact bring about positive additions and give their fellow citizens—friends even—a quality home.


In Smith’s experience, “we’re actually improving what’s currently there.” They provide decent homes, whether through rehabilitation or new construction and they make sure the property has quality tenants and stays well maintained. Affordable housing provides much-needed homes for low-income families with nowhere else to go. It attracts more people which attracts more developments and growth for the community to survive. Not only this but developments in general keep a community moving forward since they provide new jobs, spur economic growth and encourage even more investments. The cycle can keep turning from there with an initial push.


Thus, Smith says, “The reason for our success is getting the community behind the development, especially with soft funding—it all goes a long way when it comes to success.” It’s a team effort among the developers, city officials and community in order to complete projects and be successful. The key is to use all resources and be proactive when coming together for each community’s well-being.






The Task Force on the Affordable Housing Crisis




It’s no secret that affordable housing has been in danger for years now. Quite the contrary, it’s been a major topic of discussion, from every angle, for a long time. Many strides have been taken in this race to alleviate the stress on low-income residents; but just as we make progress, the finish line seems farther and farther away. We’re at a point now that the line blurs into the horizon even with so much surrounding the crisis that it seems we’ll never get to the end. Rising rents and construction costs, maturing mortgages and depreciating tax credits are just a few of the challenges that the affordable housing industry faces. But what happens to those in need, what happens to low-income households currently and how are their futures affected without options for decent and affordable homes?


These are the questions nine senators asked themselves and hope to solve by introducing the Task Force on the Impact of the Affordable Housing Crisis Act on July 18, 2018. This is a bipartisan bill to create a task force to battle the current crisis in the name of low-income families. According to the fact sheet released by the senators, the Task Force would “evaluate and quantify the impact of affordable housing on other government programs and provide recommendations to Congress on how to use affordable housing to improve the effectiveness of other Federal programs and improve life outcomes.”


An important idea here is life outcomes. This refers to low-income households’ situations beyond a safe, affordable home. In other words, the Task Force would assess the impact that having such a home has on other aspects of tenants’ lives. For instance, in the senators’ press release announcing the bill, National Low Income Housing Coalition (NLIHC) President and CEO Diane Yentel explains, “Housing affordability is a key driver of improved health, increased educational attainment and greater lifetime earnings, among many other things.”


Positive life outcomes begin with a safe, decent and affordable home. When people are able to more easily pay their rent, they can spend their income on other essentials such as food and healthcare. Additionally, they can further themselves and their education. This would then provide more opportunities for a more positive future. It comes down to this:  spending less of their income on rent and more of it for the betterment of their future in multiple aspects creates a greater, gainful cycle. Otherwise, without affordable housing options, low-income families tend to spend more of their incomes on rent and less on a brighter future which creates a cycle of perpetual disadvantage.


With this new Task Force though, leaders can make informed decisions based on studies of the impact of affordable housing on life outcomes and also on other government programs. This way, they can make feasible suggestions to help make the other programs successful. According to the aforementioned fact sheet, the Task Force would “make recommendations to Congress on how to use affordable housing to improve the effectiveness of other Federal programs and improve life outcomes for individuals living in the United States.”


Many are in support of this Task Force including Barbara Sard, Vice President for Housing Policy at the Center on Budget and Policy Priorities, and Diane Yentel of NLIHC. They have confidence that this group of reliable experts will help answer many of the questions regarding the severe lack of affordable housing options and how to solve them. Included in this Task Force would be academic researchers, experts in a related field or policy of the Task Force’s purpose or individuals with extensive experience with the government programs related to the purpose.


Overall, the bill gives us confidence in its purpose and structure. It offers promise that our nation’s leaders not only have acknowledged the issue of fewer affordable housing options than ever but have also devised an encouraging plan to resolve it. And, according to other leaders and industry experts in their corner, they have the means and plan for a much-needed resolution. The Task Force could just be the superhero our nation needed to save low-income families from the cycles of poverty—to offer some solace in that this cycle won’t continue to seem endless.






Show Me…How It Used to Look: The Deterioration of State Historic Tax Credits




With everything pointing to an ever-widening gap between this generation and the last, there are so many ways to help Missourians remember their history but apparently not everyone wants that. The state government does not seem to want to hold tight to those architectural symbols that meant so much to the generations before us. While the need for housing rises, it appears that it is just plain easier to build new than to preserve these structures with their centuries of memories. Pretty soon, we’ll be the “Show Me…How-It-Used-to-Look State.”


On July 9, 2018, the Missouri Senate cut the historic tax credit program by $50 million. Officials say the funds need to be allocated to other state programs but they have allocated $30 million in the state credit if the state exceeds the $90,000 cap set in place. This may be authorized for a certain qualified census tract. Those projects approved for HTCs and those that have applied for them under certain circumstances by October 31, 2018, are exempt from the cap.


In spite of this attempted silver lining, Missouri’s HTC program is in real danger of future cuts. This program is crucial in revitalizing many of the state’s areas—rural communities in particular. Revitalizing historic buildings not only provides jobs in these often underserved areas, but these buildings also maintain the towns’ unique characters by breathing air into these deteriorating buildings to keep them alive. In turn, the town is able to keep what makes them different as a town and community.


HTC can be used with commercial buildings, not residential, although they can be used for rental housing. This is advantageous since our nation needs more affordable housing units to sustain the growing needs of the people. This preservation method is a win from every angle. As construction costs are on the rise, preservation is more important now than ever as a more financially sound option.


According to NPS, “[HTC] is the nation’s most effective program to promote historic preservation and community revitalization through historic rehabilitation.” Altogether, since HTC’s inception in 1976, the program has leveraged $89.97 in rehabilitation investments. This has spurred economic development in various communities throughout the U.S. This has been particularly important for rural and low-income communities. This program creates much-needed jobs and housing—both market-rate and affordable units.


For Missouri, the state historic tax credit program has been responsible in revitalizing numerous historic properties and creating more opportunities. The Department of Economic Development shows that the credits issued in FY2010 alone accounted for $632,894,262 in redevelopment, 1,571 jobs excluding construction jobs and 1,817 new housing units. According to Historic Revitalization for Missouri, HTC has supported over $8 billion in private investment throughout Missouri. This has led to more than 2,700 projects in 72 communities, 72,000 construction jobs and over 22,000 permanent jobs.


Using HTC helps people come together to save their old buildings—and as a result their history. They are not just bricks and cement. These buildings represent each town’s unique history, a significant value to each community. With the state HTC, many communities have been able to thrive through rehabilitating these deteriorating buildings instead of destroying them completely. Now there are less credits available to continue the successful trend. The funds were already limited – Missouri’s FY19 cap has already been exhausted according to the Department of Economic Development.


The good news is that there are organizations out to help save Missouri’s HTC program. One such organization is Historic Revitalization for Missouri which is mentioned above. This non-profit organization is dedicated to revitalizing town squares, downtown commerce and neighborhoods. Their goal is to make heritage tourism the center of the economic development strategy of Missouri. The related positive impact of historic revitalization will improve towns throughout the state.


Another organization making efforts to preserve Missouri HTC is the Missouri Alliance of Historic Preservation. They are a non-profit organization aimed at supporting, promoting and coordinating historic preservation projects throughout Missouri. They also hold a yearly conference to further their mission.


One significant course of action is spreading the word about HTC like Missouri Preservation does. Education is key in spreading awareness of the program itself, along with how to apply these credits for the benefit of each community. Also important is educating others of the danger the HTC program is in of future cuts like the one that just passed the first week of July.


According to the new bill, approval for HTC awards is based on additional factors including the development's net fiscal benefit, size and quality. The law also shortens the commence-rehabilitation requirement to within nine months instead of two years of the date of approval for tax credits.


As of right now, Missouri must cope with the cuts but continue to advocate for more funding in the future. HTCs are significant in preserving this state's history so that it can remain the "Show Me" state. This way, Missouri can keep its history alive by preserving the roots that make it unique.






Safety Matters: Ins and Outs of Financing Rural CAHs




A major concern in the last couple of decades that rural communities face is the magnitude of local hospital closures. This is where Critical Access Hospitals (CAHs) came into play a grand entrance of the protagonist on stage. They often alleviate the issues so that rural towns may keep essential healthcare services nearby. By doing so, these small towns have a better chance of succeeding as a hospital provides necessary care, jobs and sense of peace from every angle.


According to Rural Health Information Hub, Congress created the CAH designation through the Balanced Budget Act of 1997. This was the solution to a large string of rural hospital closures in the late 1980s and early 1990s. CAH designation is aimed to reduce the financial vulnerability of rural hospitals and improve access to healthcare.


According to the American Hospital Association, CAHs represent more than two-thirds of all rural community hospitals. There are roughly 1,300 CAHs across the United States—most of which are concentrated throughout the Midwest and the northern part of the country. They are a vital part of rural communities as they help keep residents safe and help the towns grow. CAHs are usually one of the top few employers in rural areas. According to Chris Vukas, Director of Sunflower Development Group, “The benefits then multiply as the revenue is spent locally for housing, food and more.”


He says, “CAHs receive enhanced funding for Medicare patients and receive the same reimbursement from other carriers as large hospitals do.” He continues, “Even with the enhanced funding from Medicare, it usually takes tax subsidies to keep the hospitals solvent due to inefficiencies that exist in smaller settings.” Indeed, rural towns tend to have less access to necessary resources. Vukas emphasizes the significance of CAHs. “There are eighty-four CAHs in Kansas and most of them would not be here today without the enhance funding from Medicare.”


CAH’s can be financed through a variety of methods such as General Obligation Bonds, Revenue Bonds, USDA, contributions, sales tax, etc. The USDA, for instance, allocates annual budgets to local offices and they determine the most appropriate projects. USDA’s below market interest rates and 35-year repayment terms are extremely attractive compared to conventional financing.  This is partly why USDA loans are highly sought after which make them just as highly competitive. Because of this, most CAHs pursue other avenues as well. Vukas says, “Other options like the General Obligation or Revenue Bonds are usually less cumbersome but have higher rates and less attractive terms.” Thus, there are advantages and disadvantages but the good news is that there are options.


An issue, however, that rural communities often encounter is that they don’t always have the necessary means to sustain these CAHs because of the model itself. According to Vukas, funding for CAHs is uniquely difficult to secure because their models require 100% reimbursements. This often discourages investments in such projects. He says, The previous ‘repeal and replace later’ legislation creates a sense of anxiety within the lending community since CAHs are often collateralized by the cash they generate. CAHs are oftentimes quasi-governmental entities that can’t be mortgaged.”


While this does provide challenges, there is a positive side. “They also receive a portion of the local taxes in addition to normal insurance payments,” according to Vukas. He continues, “It’s a combination of local taxes and enhanced funding from Medicare that helps CAHs to maintain adequate cash flow.”


Vukas and his team have seen the challenges and rewards firsthand with rural CAHs. A recent project they were involved in was the expansion of the Rooks County Health Center in Plainville, Kansas. The $9.5 million project began in 2014 and completed Phase 1 of 2 early 2017. Phase 1 opened a new MRI/Nuclear Medicine addition, and Phase 2 will provide a new Rehabilitation Center where the community can receive state-of-the-art care.


Vukas says, “The hospital was able to raise over $1.5 million from individuals and foundations like the Dane G. Hansen Foundation but limited availability of grant funds and large donor bases in rural areas required alternative fundraising strategies.” Rooks County had been in the process of arranging financing and planning the project for the last four years.


“Their schedule,” he says, “was a little longer than most because USDA communicated to us that they had unallocated loan funds that would be expiring in a few months and allowed us to apply for them.” This would’ve been a good thing, but Rooks was not in a position at the time to start the project that quickly. Their project also involved two major phases that were going to be completed in sequential order; so, the process was lengthened further.


Once all the pieces of the puzzle for the plans were in place, the rest of the total funds needed was fulfilled through New Markets Tax Credits (NMTCs), USDA loans and federal grants. Because of this, the town was able to proceed with their improvements to their local CAH. This is especially motivating as more jobs were created but the people now also have access to the care they need. Access to sound healthcare and to CAHs are again crucial to the success of rural towns as this provides relief and peace of mind for their residents and their well-being.


While securing the funds themselves is often a difficult process, perhaps an even bigger issue with CAHs is the lack of education, according to Vukas. It’s true, many rural areas like Plainville do not have the proper knowledge of the different types of government funding available, let alone how to tackle the obstacle of applying for them.




This is especially so with NMTCs. Vukas says, “The State of Kansas ranks almost dead last in NMTC use and there aren’t many NMTC Advisors working in the rural landscape.” He goes on to say, “CAH administrators are savvy in fundraising and bond financing but structuring the NMTC transaction with other financing like USDA Community Facilities can take creativity.”




This is why education is a top priority for firms like Sunflower Development Group--even though traveling to these areas can be laborious. But education is vital in helping rural communities become more familiar with these types of resources in order to complete current pending projects but also future ones. Vukas himself has completed dozens of presentations on the topic in many rural areas all over Kansas, Oklahoma, Texas and Missouri. In his experience, clients need some convincing with multiple presentations to even consider NMTCs. One CEO even jokingly told Vukas, that “the NMTC structure felt like they were laundering money.” That’s how complex the structure can often be.




But once understood, sources like NMTC can really help in closing financing gaps for different projects in general and especially CAHs. Without them, many people would have to travel up to 100 miles to receive the most basic medical services. Although there are many challenges and risks when it comes to CAHs, not having them for our country’s people can be even riskier.




*Originally published in CARH News.


**All articles are original and written by Gill Group.






Events (2018)


  • Cash Gill will be attending the Missouri Real Estate Appraisers Commission meeting, August 15th in Jefferson City, MO.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Meeting, July 18th in Jefferson City, MO.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission meeting, June 26th – 27th in Jefferson City, MO.
  • Gill Group and National Title & Escrow attended NCSHA’s Housing Credit Connect Conference and Tradeshow, June 19th – 22nd in Chicago, IL.
    • Cash Gill spoke on a panel on Thursday, June 21st entitled “Maximizing Tax-Exempt Bond Resources”.
  • Gill Group attended Gill Group, Inc.’s and National Title & Escrow’s First Annual Client Appreciation trip, April 12th – 15th in Norfolk, AR.
  • Gill Group attended the Mississippi Annual Affordable Housing Conference, March 27th – 29th in Biloxi, MS.
  • Gill Group attended the National Housing & Rehabilitation Association’s Annual Meeting, February 21st – 25th in Palm Beach, FL.
    • Cash Gill spoke on a panel on Wednesday, February 21st entitled “Rent & Revenue Management Strategies” along with Robyn Eaton (Herman & Kittle Properties, Inc.), Doug Koch (Dauby O’Connor & Zaleski, LLC), Monica Sussman (Nixon Peabody LLP) and Jeff Woda (The Woda Group, Inc.).
  • Gill Group attended the Council for Affordable Rural Housing’s (CARH’s) Midyear Meeting, January 22nd – 24th in Napa, CA.
    • Cash Gill spoke on a panel on Tuesday, January 23rd entitled “Finding Equity in a Haystack” along with C.B. Alonso (Director of Multi-Family Housing/Preservation and Direct Loan Division with Rural Development), Don Beaty (The Summit Group), Campbell Brown (Greystone Affordable Development) and Karl Edmonson (Bellwether Enterprise).


 Events (2017)


·        In 2017, Gill Group attended and sponsored meetings and conferences across the entire United States.


  • Several members of Gill Group also spoke on panels at the largest events in in the country and published articles regarding appraisals, market studies, and other due diligence pieces needed for affordable housing transactions.
  • Cash Gill, of Gill Group, gave a training session to the staff at MFA (New Mexico’s HFA) to further their knowledge on appraisal and market study processes in Albuquerque, NM.


GROWTH (2017 - Highlights):


  • Gill Group added over dozens of staff members throughout our 15 national and regional offices including MAIs, General Certified Appraisers, PE Engineers and AIA Architects.
  • Gill Group’s subsidiary, National Title & Escrow (NTE), expanded their client base substantially and used their new underwriters (Fidelity National Title Insurance Company and Stewart Title Guaranty Company) to ensure that the clients were very satisfied and had all of their needs met.




Gill Group has published the following:


  • New York Real Estate Journal - How can low-income housing facilities translate into high profits?
  • New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
  • Tax Credit Advisor - Boston MSA Market Snapshot
  • Tax Credit Advisor - Seattle MSA Market Snapshot
  • Northeast Industrial Development Resource Guide - What Appraisers Know About Investing
  • Affordable Housing Finance – Urban and Rural Market Studies
  • Tax Credit Advisor – LIHTC Appraisals 101
  • Affordable Housing Finance – Five Ways to Optimize a Market Study
  • Tax Credit Advisor – Climb on Board the Omnibus
  • Affordable Housing Finance – It Has Everything to Do with Location


·         Affordable Housing Finance – To the Rescue: New Markets Tax Credits Saving Rural Communities 


·         CARH News – Key to Success: One Company’s Insight for Rural Development 


·         NLHA BULLETIN – What is Next for the Four Percent LIHTC?




Cash Gill, MAI has had the opportunity to speak on the following topics:


  • (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
  • (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
  • (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
  • (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
  • (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
  • (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
  • (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
  • (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
  • (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
  • (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
  • (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
  • (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.