The Whitefish Housing Authority is laying the groundwork to compete beginning this spring for low-income housing tax credits with the goal of creating affordable housing in Whitefish.

The housing authority is working with the nonprofit Homeword of Missoula to develop a proposal to apply for low-income housing tax credit, which is a federal income tax credit for owners of rental housing that meets certain low-income occupancy and rent limitation requirements.

Low-income housing tax credits are the largest source of new affordable housing in the United States. The Montana Board of Housing is the state agency which allocates the tax credit for housing in Montana.

Whitefish Housing Authority Executive Director Lori Collins said Homeword is a good fit to work with the city of Whitefish and housing authority because of its history obtaining such credits and developing affordable housing projects.

“Homeward is a nonprofit with the same goals we have,” she said.

Collins said the goal is to develop a housing complex of about 35 units with homeownership eventually turned over to the housing authority so it could remain affordable in perpetuity.

“We want these to be permanently affordable so we don’t keep having to reinvent the wheel,” she said.

Heather McMilin, housing development director of Homeword, explained that projects often apply for the credits and then sell them to investors to act as a financing source.

Homeword began its work in Missoula, but has developed projects all over the state including in Bozeman, Billings, Great Falls and Lewistown.

“Your housing need is desperate,” she said. “What we do is help develop the projects as a nonprofit in partnership and then we turn over the keys. The end game is to turn it over to the housing authority.”

Applying to the tax credit is a competitive process, McMilin noted, pointing out that credits are awarded based on population which means Montana receives one of the lowest amounts. Typically about five projects get funding while in recent years more than 20 have applied for the credits.

“There is a need for housing all over the state,” she said. “We will need to tell the story behind Whitefish — that your land costs have driven up housing, and business are having a hard time finding employees and they have to pay more for those employees because they are commuting.”

Before applying for the credits, the housing authority still needs to have some items in place including land identified for the possible project. It’s still looking for a site, Collins noted.

The housing authority will begin the process by submitting a letter of intent for the housing tax-credit application in May. Then if the housing board approves the letter, then a full application will be submitted in August.

A proposal for an affordable housing complex on Highway 93 South two years ago was unable to move forward after not receiving funding from federal tax credits. The state housing board denied an application from The Commonwealth Companies for funding to develop a 36-unit project near Les Schwab Tires.