Jackson Point, an 18-unit low-income housing facility in Jefferson County, is facing an uncertain future as its volunteer board prepares to dissolve and return control to the Iowa Finance Authority, the facility’s mortgage holder.
Lee Dimmitt, a Jefferson County Board of Supervisor and member of the Progressive Housing Corporation Board for Jackson Point, provided extensive details about the facility’s complicated history and the mounting challenges that have brought it to this critical juncture.
From County Home to Low-Income Housing
The story of Jackson Point begins years ago when the property on 240th Street served as a county home for special-needs residents. At that time, county government directly paid for the residents’ care, but the costs became prohibitively expensive, prompting officials to explore privatization options.
“After a while, there were some problems, and the decision was made that it would be better to move into town,” Dimmitt explained. The goal was to create a better facility while reducing the financial burden on county government.
To make the project financially viable, officials turned to the Low-Income Housing Tax Credit (LIHTC) program, a federal initiative designed to incentivize private investment in affordable housing. This complex financing structure brought together multiple entities, each playing a specific role.
The Complex Partnership Structure
The development of Jackson Point involved a carefully orchestrated partnership between several organizations. Progressive Housing Corporation and the developer reached out to the Iowa Finance Authority to structure the deal. They secured PNC Bank as the tax credit investor, which contributed approximately $1.3 million to the project. Burns & Burns LLC served as the developer, bringing expertise in constructing affordable housing.
The Iowa Finance Authority provided a $787,000 loan to help finance construction. Jackson Point Progressive Housing Corporation was established as the general partner and was deeded the land, which was then transferred to the Jackson Point Limited Partnership.
“Once everything was approved by the Iowa Finance Authority, the partnership was formed,” Dimmitt said. The facility was built as an 18-unit complex, initially housing mostly special-needs residents.
Changing Demographics and Federal Requirements
Through the years, changes in federal and state law significantly altered the resident population at Jackson Point. Many special-needs residents moved into what are called Residential Care Facilities (RCFs) as these options became available and, in some cases, required under new regulations.
As special-needs residents departed, management worked to fill units with other low-income residents who met the LIHTC qualification guidelines. Currently, a significant number of residents qualify for Section 8 housing assistance through Optimae LifeServices and Area 15 Multi-County Housing Agency, which pays a portion of their rent based on their income level.
Current Financial Crisis
The facility now faces a severe financial crisis that has proven insurmountable. Of the 18 total units, only 13 are currently occupied. Five units need various types of repairs and cannot be rented until those issues are addressed. To make matters worse, one resident was scheduled to move out at the end of November, which would leave just 12 rented units.
“With only 12 rented units, we’re generating around $6,200 to $6,300 a month,” Dimmitt said. “When you look at what needs to be paid, we can probably cover heat, water, and insurance, but there won’t be anything left for maintenance on the building. It’s just not feasible.”
The rent structure is strictly controlled by the Iowa Finance Authority, not by local management. Starting January 2025, rent for a one-bedroom apartment is set at $535 per month—the maximum rate the authority will allow for the coming year. The facility also has two two-bedroom apartments that rent for approximately $640 monthly, about $100 more than the one-bedroom units. Both two-bedroom units are currently occupied.
The monthly insurance premium alone is $1,881, and this insurance will expire at the end of November if the payment is not made. With such limited rental income, there’s simply no cushion for unexpected expenses or deferred maintenance.
The Search for Management
Facing these challenges, Dimmitt made extensive efforts to find a professional management entity willing to take over operations of Jackson Point. He contacted First Resources, Optimae LifeServices, Area 15 Housing, and Keyway Management, which had previously managed the property.
“I reached out to all of them in an effort to find somebody to manage the facility,” Dimmitt said. “I was not successful.”
The inability to secure professional management leaves the facility in an untenable position. The four-member Progressive Housing Corporation board consists entirely of volunteer citizens who have no financial liability and, as Dimmitt frankly admits, “no expertise in the area of managing the building.”
“We were simply there to oversee and make sure that the building remained in compliance with Iowa Finance Authority requirements and that the tenants being rented to meet the qualifications laid out by the Iowa Finance Authority,” he explained.
Legal and Liability Concerns
The volunteer board faces significant legal and liability concerns that have contributed to their decision to resign. Board members discovered they lack the legal authority to access the facility’s checking account, pay utility bills, or make operational decisions about the building.
“We can’t access the checking account, we can’t access the water bills, and I’m not sure that we want to be able to do that anyway,” Dimmitt said, expressing concern about the personal liability implications.
“Sean Morrissey and I have serious concerns for ourselves as well as the other board members,” Dimmitt said. “I’m not going to assume personal liability and financial responsibility for the facility and for the welfare of those residents.”
Why This Model Failed
Reflecting on the entire Jackson Point experience, Dimmitt believes the project was fundamentally flawed from its inception, though he acknowledges this assessment comes with the benefit of hindsight.
“It was an ill-fated concept from the beginning—too few units, that’s the first thing,” he said. “Not enough units to offset losses where you’ve got maintenance issues.”
He illustrated the problem with a comparison: “If you have a 91-unit facility and you lose five units; you’re still going to be able to make it with the other 86 units. When you have 18 units and five are down, that’s a different kettle of fish.”
The structure itself—involving a tax investor, a developer, and what Dimmitt calls a “shell corporation” in the Progressive Housing Corporation—works well only “as long as you don’t have to put anything into the facility. But the older it gets, the more things have to be repaired, the more costly it becomes. Rents don’t keep up with those costs.”
The impact of COVID-19 exacerbated an already difficult situation. “Especially since COVID, the cost of everything has increased exponentially,” Dimmitt noted. “Low rents, high maintenance costs—it became increasingly difficult for Keyway Management to lease the spaces, and therefore they were losing money.”
Another structural problem emerged as the various partners fulfilled their obligations and departed. PNC Bank withdrew after receiving their tax credits, and Keyway Management pulled out after sustaining losses.
“Once the tax credit investor gets all of the tax credit benefits, there’s no reason for them to stay,” Dimmitt explained. “When there’s only one entity, you don’t have a partnership. That’s how we’ve arrived at this point.”
He believes the requirement for private ownership led to creating a shell company that gave “the appearance of having private ownership” but didn’t provide the actual operational capacity needed. “The management company is in business to make a profit. If they can’t make a profit, they’re not going to continue to do it.”
The Loan and Future Forgiveness
The outstanding loan balance with the Iowa Finance Authority has grown to over $869,000. However, there is a potential silver lining on the distant horizon. In November 2027, there’s a high probability that this loan balance could be forgiven once the 20-year LIHTC compliance window is met.
“At that point in time, the 20-year window will have been met, and it would no longer be required to remain a LIHTC facility,” Dimmitt said. This would mean the property could be rented to anyone regardless of income level, potentially at different rent rates.
However, reaching November 2027 requires the facility to remain operational and compliant for approximately two more years—a prospect that appears increasingly unlikely given the current circumstances.
What Happens to Current Residents
The situation raises serious concerns about the current residents, many of whom are vulnerable individuals with limited housing options. Dimmitt acknowledges this concern but feels the board has exhausted all available options.
“I’m very sympathetic to the residents. I don’t think they should have to leave, but I don’t know what the options are,” he said.
Optimae LifeServices maintains an office at Jackson Point and has an ongoing presence there, working with residents to ensure their needs are met. Staff help residents with finances and other support services.
Many residents receive Section 8 housing assistance, paying a percentage of their income while Optimae covers the remainder of the rent through the program. These residents would need to find other Section 8-approved housing in the area.
County Declines Involvement
The Jefferson County Board of Supervisors had the opportunity to assume ownership and responsibility for Jackson Point but declined to do so. Because Dimmitt serves on both the county board and the Jackson Point board, he recused himself from the vote due to conflict of interest.
“The decision was up to Joe [Ledger] and Susie [Drish], and they opted not to move forward,” Dimmitt said.
Dimmitt expressed understanding of the county’s position. “I can’t say as I blame them,” he said. “Clearly, the county is not going to accept ownership and responsibility for the building.”
The Board’s Resignation
The Jackson Point Progressive Housing Corporation board plans to formally dissolve by resigning their volunteer positions. This action will effectively return control of the facility to the Iowa Finance Authority, which holds the mortgage and has the legal authority to determine the property’s future.
The county attorney’s office will be in communication with Tim Morlan at the Iowa Finance Authority to explain the situation and coordinate the transition.
“I don’t know what Iowa Finance Authority is going to do—I know they’re not going to be happy,” Dimmitt acknowledged. “But I have spent a long, long time on this trying to pull all of this together. All I can do is ask, beg, borrow, and steal, and none of those trees have borne fruit at all.”
The Iowa Finance Authority will need to decide whether to maintain and operate the facility, find new management, or close it entirely.
Successful LIHTC Models in the Area
Despite Jackson Point’s struggles, Dimmitt pointed to several successful LIHTC projects in the region that demonstrate the model can work under the right circumstances.
Wagon Wheel, a senior housing facility in Fairfield, operates successfully as an LIHTC property with significantly more units and professional management. “Wagon Wheel is going very well,” Dimmitt said. The City of Fairfield invested before construction began to help make the project viable.
Louden Apartments, located behind Taco John’s in Fairfield, is another LIHTC operation with private investors and private ownership.
The key difference, he notes, is that these successful projects have substantially more units, private ownership with financial stake in the outcome, and professional management companies that can absorb temporary losses across a larger portfolio.
“It can be done,” Dimmitt said, “but those are all private ownership with a lot more units.”
Lessons Learned
Looking back on the entire experience, Dimmitt believes the project should never have been structured the way it was, though he’s careful not to blame the individuals who made the original decisions.
“I wasn’t there then. I don’t know that I would have been smart enough to know that going in,” he said. “I would have trusted the powers that be that have done this before, which is exactly what happened. They said, ‘Yeah, you know, we’ve done this many times.’ And they have, but a lot of the circumstances were different.”
The fundamental issues—too few units to sustain operations, a volunteer board without authority or expertise, a shell corporation structure without real ownership accountability, and the inevitable departure of profit-motivated partners—created a perfect storm that has led to the current crisis.
“Everybody’s got 20/20 hindsight,” Dimmitt said. “But it required, I believe, actual private ownership. Creating a shell company that gives it the appearance of having private ownership doesn’t get it done.”
Moving Forward
The Iowa Finance Authority could attempt to find new management, invest in repairs to bring the five vacant units back online, or make the difficult decision to close the facility and relocate residents. Financial realities suggest that without significant investment or a dramatic restructuring, the facility’s long-term viability remains questionable.
For Dimmitt, who has devoted considerable time and effort to trying to save Jackson Point, the outcome is disappointing but perhaps inevitable given the structural problems.
“I’ve done all I can do,” he said simply.
The situation serves as a cautionary tale about the challenges of affordable housing development, the importance of scale and proper capitalization, and the limitations of volunteer governance structures for complex real estate operations.
As Jefferson County awaits word from the Iowa Finance Authority on Jackson Point’s fate, residents, community members, and housing advocates will be watching closely to see what becomes of this well-intentioned but ultimately troubled affordable housing experiment.
