Fort Madison housing development construction should begin in April.

By NICHOLAS BERGIN

nbergin@thehawkeye.com

FORT MADISON -- Construction on a proposed 40-unit housing development likely will begin in April although in a different location than developers originally planned.

Brinshore Development of Northbrook, Ill., had optioned six acres in the 900 block of 48th Street on which to build The Bluff Apartments, a low- to moderate-income apartment complex. The developer plans to use more than $4 million in tax credits from the Iowa Finance Authority and U.S. Department of Housing and Urban Development.

But part of the property is within a flood plain, which caused HUD to reject the plans and caused Brinshore to find a new location for the apartments.

While the development company originally hoped to begin construction in January, the location snafu pushed that back to April, officials said.

Brinshore now plans to purchase about 10 acres from the Fort Madison Community Hospital on which to build the apartments.

The new property is northwest of the original planned location and west of 48th Street.

As part of that and future development, Fort Madison City Council is in the process of rezoning 75 acres owned by the hospital from R1 single family dwelling to R6 multi-family.

The city council has held a public meeting and approved two of the three readings necessary to rezone the property. The third reading will take place during the council's next meeting, which has been scheduled for noon March 15, at city hall, 811 Avenue E.

"The surrounding area is zoned R6. So this would be consistent with the surrounding zoning and it would allow the multi-family development," said Fort Madison attorney Richard Fehseke, who represents the hospital.

The hospital plans to develop the remaining 65 acres at a later date and has discussed with city officials building a road through the area to encourage development, Fehseke said.

Brinshore's purchase of the property from the hospital is contingent on the subdivision of the property and obtaining the multi-family zoning classification, Fehseke said. He did not disclose how much the land would sell for.

While drainage in the area has been an issue, developers plan to use berms to channel runoff southeast of the property to an existing drainage easement, Fehseke said.

If Brinshore's apartment complex proves successful, the company plans to build more on the 10 acres it purchased from the hospital, Fehseke said.

The IFA tax credits are part of more than $60 million in credits awarded by the IFA to create 768 units of housing in 15 Iowa communities.

The federal Low-Income Housing Tax Credit program allows developers who receive the credits to sell them to investors to generate equity for the housing development.

The tax credits provide a dollar-for-dollar reduction in the investor's federal tax liability on ordinary income.

The Internal Revenue Service annually allocates $2 per person in credits to each state based on population. According to the IFA, Iowa was eligible to distribute about $6.3 million in tax credits in 2008, but the actual awards exceed $63 million because the credits are committed annually for a 10-year period.