Affordable housing developer Harold Foley’s latest project is not in anybody’s backyard.

The $16 million, 40-unit Brookside Commons affordable housing development is going up on 16 acres next to the Target store on Route 85 in Waterford. The commercial strip stands in stark contrast to the neighborhood around the former Cohanzie Elementary School where, several years ago, Foley made a failed bid to construct four new apartment buildings while saving the historic school from demolition.

The Georgia-based developer has leveraged 20 years of experience in multiple states to emerge as a success story in obtaining federal tax credits to help solve the affordable housing shortage in Connecticut.

The National Low Income Housing Coalition puts the gap at 85,403 units: That’s how many more low-income households there are than places for them to comfortably live.

Foley, owner of HF3 Group LLC, said he’s built about 25 affordable housing developments in Louisiana, Mississippi, Tennessee and now in this state. His Connecticut projects include two in Waterbury as well as East Lyme’s Rocky Neck Village.

Foley said community opposition remains one of the largest impediments to affordable housing projects, whether in the South or North.

In a phone interview with The Day, Foley said he abandoned plans for the Cohanzie development due to what he described as “a tremendous amount” of not-in-my-backyard resistance, or NIMBYism.

Foley’s plan for the site, vacant since the elementary school closed in 2008, included 35 apartments marketed at reduced rates to a mix of seniors, veterans and families making less than $58,000 a year. The nine remaining units would have been rented at the full market rate of $1,200 to $1,400.

An apartment is considered affordable by state standards when low- and moderate-income tenants don’t spend more than 30% of their income on rent and associated expenses.

While offering rents lower-income earners can afford is not a money maker on its face, federal and state programs seek to make the proposition more enticing through the use of tax credits. A developer who is awarded the tax credits from the government can then turn around and sell them to investors for the funding needed to make the project financially feasible.

Foley said the majority of Cohanzie neighbors who opposed the project were concerned about putting apartments in a neighborhood of single-family homes.

But there’s more to it, he added: “I think there are underpinnings, if you will, that pertain to neighborhoods not wanting to have families or individuals that do not earn enough money, if you will, to stay in the more traditional apartment complexes.”

About a hundred residents came out in 2019 to implore members of the Waterford Planning and Zoning Commission to reject the developer’s plan for the Cohanzie School site.

The lone person to speak in favor of Foley’s application was met with jeers and cries of “go home” from attendees. One woman openly wept at the idea of losing the small-community feel that she described as characteristic of Waterford. Others said they were concerned about the strain renters would put on traffic, public safety and the school system.

The commission struck down the application in a 4-1 vote because the development didn’t fit with the surrounding environment. Cohanzie School remains vacant.

A public problem in private hands

The federal Low-Income Housing Tax Credit (LIHTC) program was established under the Tax Reform Act of 1986 to engage private interests in solving the affordable housing problem after public efforts failed.

The program is administered in this state by the Connecticut Housing Finance Authority (CHFA).

Since then, a movement has emerged to address housing segregation with tax credits. Led here by the Open Communities Alliance and Connecticut Fair Housing Center, advocates are working to direct more financing for affordable housing to suburban areas so lower income earners have options outside cities.

The scoring process used by CHFA to administer the federal tax credits awards points in several categories to prioritize sustainable developments that serve more lower-income people in places with the most “opportunity” for them to thrive.

A new map laying out the “opportunity” landscape of the state was unveiled last year. The authority’s aim is to support development in areas that are desirable to live in but which do not currently have many affordable options.

Both the Brookside Commons and Cohanzie sites are in the section of Waterford identified as a “high” opportunity area by the funding authority. The second highest ranking on the opportunity scale, it represents some combination of school quality, proximity to community colleges, job availability and access to public transportation.

The scale spans “very low” to “very high” areas of opportunity, with the most concentrated areas of highest opportunity occurring in wealthy enclaves of Fairfield and Hartford counties.

Waterford, along with Bozrah, Franklin, Old Lyme, Stonington and portions of East Lyme and Groton, are the only other high priority areas in a region critics argue has been overlooked by the funding authority.

Based on the map, New London and Norwich provide the least opportunity to help spread affordable housing options more equitably across a broader section of the state.

Nandini Natarajan, CEO of CHFA, said in a phone interview this past week that the scoring system for low-income housing tax credits allows more people to live where they choose.

She has said her agency typically finances about 1,300 housing units per year.

“We’re not necessarily dictating where people need to live,” she said. “We’re not saying you have to live in Old Lyme versus New London.”

She reiterated “opportunity rich” towns have crucial resources like good schools and job availability.

“That could be a good thing for some families,” she said. “Maybe other families don’t want to avail themselves of it because they like where they live. And that’s okay. I don’t think we’re dictating that. I think we’re providing opportunity, is how we look at it.”

‘Steering the money’

New London Mayor Michael Passero is a vocal critic of the LIHTC scoring process he said makes it difficult for developers to secure tax credit financing in the small city. In an interview with The Day earlier this year, he pointed to the proposed redevelopment of the vacant Edgerton School that was repeatedly rejected for tax credit financing.

The 124-unit Edgerton proposal was conceived to provide living quarters for some, if not all, of the residents who were displaced from the Thames River Apartments when the federally-subsidized high-rise complex was authorized for demolition in 2018. While the federal government had gotten out of the housing business with a 1998 law effectively halting new public construction, residents were provided with housing vouchers they could use on any qualifying rental, including affordable housing developments like The Edgerton.

The Edgerton developers tried for three consecutive years to get low-income tax credits but fell short of receiving enough points.

Passero said one of his roles as mayor is to try to get the state to understand “that people who require subsidized housing need to live in the urban centers because that’s where the services are, that’s where the transportation is.” That means reconsidering the points system, according to Passero.

“I mean, you can push the subsidized housing out into the suburbs, but I don’t know if that necessarily helps the families,” he said. “I still think there’s a need to build more housing and density in a city like New London. We support that here. My administration supports that. It just doesn't seem like state policy or federal policy is on our side right now.”

Passero said the scoring system has gotten “incrementally worse” for the city from the days of Gov. Dannel P. Malloy to Gov. Ned Lamont’s current administration.

“Lamont, I think, is really steering the money to other communities,” he said. “I see a lot of building in Waterford.”

Natarajan, appointed to her post in 2019, described the LIHTC program as “very competitive.”

She put the amount requested by developers in a given cycle at two to three times the available tax credits.

She responded to concerns from those like Passero by emphasizing there are other funding mechanisms through state agencies that can help finance projects. But she acknowledged LIHTC financing is the most sought after.

The scoring system is a way to put state housing priorities into practice, according to the CEO – and that’s “never going to please everybody.”

“There’s a certain encapsulation of the housing policy goals, and if you don’t meet it it’s not going to be a happy situation for you, unfortunately,” she said. “I don’t know what to say except come and talk to us about what you’re looking to do and we’ll work with you.”

Opportunity rich

For Foley’s Brookside Commons development in Waterford, CHFA documents show 80% of the 40 one- and two-bedroom units will be set aside as affordable. The largest chunk, at 16 units, is reserved for households that make from 25% to 50% of the area’s $102,700 median income. Eight units are reserved for those who make up to 80% of the median and another eight for those who can pay the full market rate. The units are deed restricted to remain affordable for 50 years.

Eight units are reserved for homeless families being served by regional social services providers. The proposal includes an on-site coordinator to provide support services to help the families, who must make less than 25% of the median income, remain stable in their new homes.

A family of four making $28,150 annually would pay $633 a month in rent for a two-bedroom apartment, based on state-mandated income limits for tax credit properties.

A family of four that makes $67,560 — or 60% of the area median income — would pay $1,521 per month for the same sized unit.

Reserving units for families experiencing homelessness and offering support services gave Foley the maximum number of points in categories that show the state’s preference for providing housing options for the lowest-income households.

Foley used “challenging” to describe a LIHTC application process that changes every two years.

“There are myriad various characteristics that one has to incorporate into their development in order to prevail in obtaining the tax credits,” he said. “All of these boxes have to be checked.”

Foley scored 74 points out of a possible 106 points for his Brookside Commons development in Waterford, according to the points calculation worksheet provided by CHFA. That includes six points for developments located in towns with less than 10% of their housing stock designated as affordable and eight points for being in a community of well performing schools with access to higher education and jobs.

The Brookside Commons development garnered unanimous approval this year from the CHFA Board of Directors for more than $9 million in loans and $900,180 in federal tax credit financing. The project was approved separately for $500,000 in tax credits from CHFA’s own state tax credit contribution program.

Foley said the job influx contributed significantly to his decision to build a mix of low income, moderate income and workforce housing in this part of the state.

“Southeast Connecticut was prioritized for affordable housing development because of the many well-paying employment opportunities that were emerging. That’s what drew us to Waterford and it drew us to East Lyme as well,” he said.

Foley recounted getting into tax credit development in Jackson, Miss., in 2003. He said the need remains for affordable housing for people of all incomes.

“Everyone’s not privileged to make $250,000 a year,” he said. “There are many residents that earn less than $60,000, $50,000, $40,000 annually. And those citizens and families deserve the same type of quality housing as their more affluent counterparts.”

e.regan@theday.com