Deed restrictions added to affordable housing loans for Dayton apartments

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YERINGTON - A deed restriction will prohibit owners of an affordable housing project in Dayton from applying for future property tax exemptions.

Acting as lead agency for the Western Nevada HOME Consortium, Lyon County commissioners approved a low-interest loan agreement with developers of the planned Silver Sage apartment complex on Dayton Valley Road. The U.S. Department of Housing and Urban Development HOME funds will be used for acquisition of property and construction of low-rent apartments.

State law allow owners of multi-family rental units using HOME funds and meeting HUD low-income housing requirements to receive property tax exemptions if requested. Lyon County has been one of several city and county agencies expressing opposition to tax exempt housing and have denied such applications in the past.

In spite of a letter from the project developers promising to not pursue tax exempt status, commissioners wanted assurance that, if the loans were approved, the property would not be exempt at any time in the future.

Mary Lou Bentley, executive director of Western Nevada Development District and Consortium Administrator, said the consortium has made it clear they would not support tax exempt projects.

"The letter from the project developers said if they get HOME funds they will not pursue a tax exemption. I consider this as a commitment to the county," Bentley said. "The money will not be released until the project is completed. A deed restriction would go with the property if it is sold."

Bentley explained that an agreement was approved by the consortium board in 1998 and the developers had completed a lengthy process of applying for and receiving needed tax credits. The present issue before the board was a request to change the terms of the previously agreed to HUD loan.

"The project is ready to go and a denial at this time could result in a very unhappy private developer. If the board has concerns with a project they should make the consortium board and developers aware of them before reaching this point in the process," Bentley suggested.

The deed restriction was added as a condition for both the $160,000 loan to Silver Sage Manor Inc., a Nevada based non-profit corporation, to assist with the purchase of land; and $135,800 to River Valley Limited Partnership for assistance with the construction and gap financing of the project.

The project must have 11 two-bedroom units as HOME assisted units. Three of these units will serve very low-income families (50 percent of area median income) and eight will serve low income families (60 percent of area median income). It must be completed by Oct. 31.

The Western Nevada HOME Consortium consists of Lovelock, Yerington, Fallon, Carson City and Lyon, Storey, Douglas, Churchill and Pershing counties.