Faith-Based Development and the Federal Low-Income Housing Tax Credit

How can faith-based organizations help devastated neighborhoods rebuild? By using federal and state tax credits. And by working with strong partners in the community.

Congregations looking for a model to replicate should talk to Rev. John Schmidtke, pastor of Bethlehem Lutheran Church in Hyde Park, a desolate St. Louis neighborhood.

Schmidtke and a host of partners came to a meeting March 22 to spread the word about their successful foray into new home construction in Hyde Park. The project would not have happened without tax credits.

In Hyde Park, in the beginning, the church was doing scattered-site house rehabs that didn’t seem to generate any lasting economic value. Schmidtke said residents told him, “We’re glad you’re here, and this is good, but you’re really not making a big impact.”

That realization and a desire for a better neighborhood for the area’s children led the church to organize Better Living Communities, a nonprofit housing corporation that would eventually start building a planned community: Salisbury Park.

Phase 1 of Salisbury Park was completed last fall. Phase 2 is under way. In all, Salisbury Park will have more than 100 new housing units, including single-family homes and renovated apartments.

In addition to tax credits, three primary components of these types of projects are:

• the underlying financial viability of the project;
• the experience and strength of the development team; and
• the return to investors.

Bethlehem and Better Living Communities are not in this venture alone. St. Louis Equity Fund and a host of other partners are working on this complicated—but doable—project.

Representatives of each of these groups spoke at the March 22 meeting about how the project came together and explained how tax credits work.

For more information about Salisbury Park and tax credits, see the resources posted on this page.