DES MOINES, Iowa (AP) — A state tax credit program that has boosted apartment development in Iowa has reached its cap, which could stall new projects.
According to a report in the Des Moines Register, the program has already hit an annual $3 million cap for 2014. Under the program, developers can sell tax credits to help pay for projects.
Demand for the credits, designed for market-rate housing, has outpaced capacity due to major apartment development. In the past few years, developers have applied to sell more than $11 million in credits for 18 projects around the state.
A spokeswoman for the Iowa Economic Development Authority, which runs the program, said this hadn't been a problem in the past.
"We haven't seen this much demand in earlier years," said Tina Hoffman. "It hadn't been previously problematic."
Officials said the Iowa Legislature may take up this issue next year.
Apartment development is booming in Des Moines. Downtown, about 500 units are under construction, another 500 are set to break ground and 500 more are in the planning process. Vacancy rates in the metro area have hit an 18-year low.
One project that may be affected is the overhaul of the Hotel Randolph in downtown Des Moines. The developer, Sherman and Associates, had applied to sell $770,000 in credits to convert the building into apartments. Without the tax credit authority, the financing may be in jeopardy, said Jackie Nickolaus, vice president of development with the Minneapolis-based firm.
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