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HomeMy WebLinkAboutThe Housing Company American Rescue Plan Act Funds C��fIEN MEMO TO CITY COUNCIL Request to Include Topic on the City Council Agenda From: Emily Kane, Deputy City Attorney Meeting Date: May 23, 2023 Presenter: Dan Torres, Economic Development Estimated Time: 2 minutes Administrator Topic: Agreement between City of Meridian and The Housing Company for use of American Rescue Plan Act Funds Recommended Council Action: Approve the agreement and authorize the Mayor's signature. Background: At its meeting on July 19, 2022, City Council made a commitment to dedicate up to $400,000 of the City's Coronavirus State and Local Fiscal Recovery Fund ("SLFRF") funds, awarded to the City pursuant to the American Rescue Plan Act ("ARPA"),to The Housing Company ("THC"), for use toward the construction of the Wood Rose Apartments, an affordable housing project to be built at 1160 W. Ustick Road. Specifically, Council agreed to provide ARPA funds to make up any shortfall between funds THC would realize through the sale of housing tax credits obtained through the Low Income Housing Tax Credit ("LIHTC") program. This commitment was memorialized by a letter sent from Community Development Director Bruce Freckleton to Erin Anderson, Director of THC, on August 4, 2022. THC applied for, and received, LIHTC approval. According to Ms.Anderson, the projected gap between funds THC will realize through sale of the LIHTC tax credits and the cost of constructing the Wood Rose Apartments is greater than $400,000. Pursuant to the City's commitment, $400,000 of SURF funds will therefore be provided to THC for the construction of the project. This agreement memorializes and establishes terms and conditions of the City's provision of these funds toward construction costs of Wood Rose Apartments. AGREEMENT BETWEEN CITY OF MERIDIAN AND THE HOUSING COMPANY FOR USE OF AMERICAN RESCUE PLAN ACT FUNDS This AGREEMENT BETWEEN CITY OF MERIDIAN AND THE HOUSING COMPANY FOR USE OF AMERICAN RESCUE PLAN ACT FUNDS ("Agreement") is entered into this 23rd day of May, 2023 ("Effective Date")by and between the City of Meridian, a municipal corporation organized under the laws of the state of Idaho ("City"), and The Housing Company, a nonprofit corporation organized under the laws of the state of Idaho ("THC") (collectively, "Parties"). WHEREAS, in response to the public health and economic crises caused by the COVID-19 pandemic, in March 2021, Congress passed the American Rescue Plan Act of 2021 ("ARPA") which, among other things, established the Coronavirus State and Local Fiscal Recovery Fund ("SLFRF")to provide local governments with the resources needed to respond to the economic effects of the pandemic and build a stronger, more equitable economy during the recovery; WHEREAS,pursuant to ARPA, the City of Meridian has received SLFRF funding from the United States Department of Treasury ("Treasury")under Federal Award Identification Number (FAIN) SLFRP5436; WHEREAS, THC's purpose includes providing and managing apartment communities which offer affordable rents and desirable living conditions; WHEREAS, at its meeting on July 19, 2022, the City Council of the City of Meridian committed to dedicating SLFRF funds ("Funds")to THC for the development and operation of affordable housing in Meridian, i.e., for government services, as authorized by 31 CFR section 35.6(d); WHEREAS, THC has committed to use such funds to supplement funding for permitting, development and/or construction of the Wood Rose Apartments, an affordable housing project to be constructed at 1160 W. Ustick Road, in Meridian ("Project"), by Wood Rose Apartments LP, a limited partnership organized under the laws of the state of Idaho; and WHEREAS,pursuant to 2 CFR § 200.400(c), given City's unique combination of staff, facilities, and experience, shall use all sound organization and management techniques, as set forth in this Agreement or in City policy or procedure, as may be necessary to assure proper and efficient administration of the Funds; and WHEREAS, the City has determined that it will fund the award using SLFRF funds obligated through Expenditure Category 6.1 —Revenue Replacement—Provision of Government Services; NOW, THEREFORE, in consideration of the mutual covenants of the parties, the Parties agree as follows: I. THC'S RESPONSIBILITIES; SERVICES ADMINISTRATION. A. Activities. THC shall use the Funds, in the amount of four hundred thousand dollars ($400,000.00), toward the permitting, development, and/or construction of Project, as set AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 1 OF 7 forth in Exhibit A, pursuant to the Development Agreement entered into by the Parties on November 9, 2022 (recorded with the Ada County Recorder as instrument no. 2022- 092438), and conditional use permit no. H-2022-0086 granted by City on February 2, 2023. THC shall use the Funds only for costs directly related to the permitting, development, and/or construction of Project. THC shall not use the Funds for salaries, staffing, or any other administrative expenses. THC's use of the Funds shall be consistent with any and all terms and conditions of this Agreement, ARPA, and rules and guidance issued by Treasury regarding SLFRF funds. B. Time of performance. Unless otherwise agreed to by the City, THC shall expend the Funds on the Project by September 30, 2024. The term of this Agreement and the provisions herein shall apply during this term, and for any additional time period during which THC remains in control of Funds. THC shall return to City all Funds unused as of November 1, 2024 within thirty (30) days. C. Closeout. By January 31, 2025, THC shall submit a final report to City. The final report shall include: 1. Written narrative describing the use of the Funds toward the permitting, development, and/or construction of Project. 2. Detailed final budget, showing date(s) and use(s) of the Funds, and receipt(s). 3. Check payable to City of Meridian for any unused Funds. D. Term. Notwithstanding Closeout as set forth above, THC's obligations to City under this Agreement shall not end until full and final completion of the construction of Project. E. Payment. Funds will be available following execution of this Agreement and City's receipt of THC's completed W-9 form. To obtain Funds, THC shall submit a detailed invoice to the Grant Administrator documenting the expenditures to be funded by the City's award. The Grant Administrator will forward to the City Finance Department authorization for the City to remit a check to THC in the amount of four hundred thousand dollars ($400,000.00). F. Performance monitoring. City's Grant Administrator shall monitor THC's expenditure of the Funds to ensure that THC is spending such funds for costs directly related to the permitting, development, and/or construction of Project. Performance monitoring may include quarterly reviews of financial and performance reports, as well as site visits, as appropriate. City may make unannounced visits to THC's location in order to review financial and performance reports and/or verify compliance with all program requirements. IL THC's ADMINISTRATIVE REQUIREMENTS A. General Compliance. THC agrees to comply with all applicable laws and policies in the course of using the Funds, including, without limitation: 1. 31 CFR Part 35 (pursuant to 2 CFR § 200.300(b); 2. City of Meridian Procurement Policy; and 3. 2 CFR §§ 200.403(a), (c), (d), (g), and(h). B. Supplementation of other funds. THC shall utilize funds available under this Agreement to supplement, rather than supplant, funds otherwise available. AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 2 OF 7 C. Audits and inspections. Pursuant to 2 CFR § 200.337, all THC records with respect to any matters covered by this Agreement shall be made available to City at any time during normal business hours, as often as deemed necessary, to audit, examine, and make copies of all relevant records in order to ascertain compliance with applicable laws, regulations, policies, and provisions stated herein. Any deficiencies noted must be fully repaired by THC within thirty (30) days after receipt of such report by THC. Repair shall include THC's repayment to City of any funds used in any manner or for any purpose not contemplated by this Agreement. D. Records retention. Pursuant to 2 CFR § 200.334, THC shall retain all records pertinent to the expenditures incurred under this Agreement for a period of five (5)years after the provision of Services funded under this Agreement. If, prior to the expiration of the five- year period, any litigation, claims, audits, negotiations or other actions begin that involve any of the records cited, such records shall be retained until completion of the actions and resolutions of all issues. E. Insurance coverages and limits of liability. THC shall obtain, maintain throughout the term of this Agreement, and provide to City proof of insurance coverage in the following amounts: 1. Workers' compensation. Workers' compensation insurance coverage, in the amount required by Idaho law, for all employees involved in the performance of this Agreement. If any work is subcontracted, THC shall require its subcontractors to provide proof of workers' compensation insurance coverage. 2. Commercial insurance. Commercial general liability insurance, with the following minimum limits of liability: General aggregate: $2,000,000 Product/completed operations aggregate:$2,000,000 Personal & advertising injury liability: $1,000,000 Per occurrence: $1,000,000 3. Additional insured. THC shall include City as an additional insured party to all of the insurance coverage listed above. 4. No limitation of liability. Insurance coverage and limits of liability as specified herein are minimum coverage and liability requirements only. Nothing in this Agreement's requirements for minimum insurance coverage shall be interpreted to limit or release the liability of THC or any of THC's insurers. THC's insurance policy shall not contain any provisions, exclusion, or endorsement that limits, bars, or effectively precludes City from coverage or asserting a claim under THC's insurance policy on the basis that the coverage or claim is brought by an insured or additional insured against an insured or additional insured under the policy. 5. Documentation to be furnished. At any time upon City's request, THC shall also cause to be timely furnished to City a copy of declarations pages, schedules of forms and endorsements, and/or a complete and certified copy of the requested policy. AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 3 OF 7 6. Notice of cancellation or modification; renewal. THC's certificates of insurance shall be signed by an authorized representative of the issuing insurance carrier and shall state that the issuing company shall provide the Parties a minimum of thirty (30) days' written notice prior to canceling or reducing any of the policies or limits required by this Agreement. Renewal certificates must be provided to the Parties a minimum of five (5) days prior to the effective date of the renewal. III.GENERAL PROVISIONS. A. Termination. 1. Termination. a. Grounds for termination. City may terminate this Agreement, in whole or in part, for cause, which cause may include, but shall not be limited to, the following: 1) Failure to materially comply with any of the rules, regulations or provisions referred to herein, or such statutes, regulations, executive orders, and Treasury guidelines, policies or directives as may become applicable at any time; 2) Failure to fulfill in a timely and proper manner its obligations under this Agreement; 3) Failure to comply with any term or condition of the Development Agreement entered into by the Parties on November 9, 2022 (recorded with the Ada County Recorder as instrument no. 2022-092438); 4) Failure to comply with any term or condition of conditional use permit no. H- 2022-0086 granted by City on February 2, 2023; 5) Ineffective or improper use of funds provided under this Agreement; or 6) Submission of reports that are incorrect or incomplete in any material respect. b. Process of termination. Termination shall be effectuated by providing written notice of intent to terminate, stating the basis of termination. THC shall have fourteen(14) days to cure the deficiency or non-compliance. If the deficiency or non-compliance is not cured within this time period, this Agreement shall be terminated upon City's mailing of notice of termination. Notwithstanding the foregoing, the City hereby agrees that THC's limited partner shall have the right, but not the obligation, to cure any defaults of THC hereunder, and the City hereby agrees to accept cures tendered by THC's limited partner on behalf of THC, as applicable, within the applicable cure periods set forth herein. c. Effects of termination. Following termination, City shall invoice THC for repayment of all Funds provided under this Agreement, which THC shall remit to City within thirty(30) days of such invoice. In addition to any other remedies as provided by law, City may declare THC ineligible for any further participation in City grant programming. B. No agency; independent contractor. It is understood and agreed the THC is not, and shall not be considered, an agent of City in any manner or for any purpose whatsoever in THC's use of the Funds. In all matters pertaining to this Agreement, THC shall be acting as an AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 4 OF 7 independent contractor, and neither THC nor any volunteer, employee, invitee, or agent of THC shall be deemed an employee of City. THC shall have no authority or responsibility to exercise any rights or power vested in City. C. Acknowledgment of risk. THC acknowledges that activity undertaken in conjunction with this Agreement presents risks, some of which are unknown, and THC agrees to assume all such risks. D. Indemnification; waiver. THC shall indemnify, save and hold harmless, release and forever discharge City and its agents and employees from and for any and all losses, claims, actions,judgments for damages, or injury to persons or property and losses and expenses caused or incurred by THC or City in the course of any activity associated with this Agreement not caused by or arising out of the tortious conduct of City, regardless of the manner by which such claim may be brought. E. Notices. Day-to-day communications between THC and the Grant Administrator shall occur by email or phone, as appropriate. All other notices to be provided under this Agreement shall be in writing and addressed as follows: If to THC: If to City: The Housing Company City Clerk, City of Meridian P.O. Box 6943 33 East Broadway Avenue Boise, Idaho 83707-0943 Meridian, Idaho 83642 With copies to: Red Stone Equity Partners, LLC Attn: General Counsel & President 90 Park Avenue, 28th Floor New York,NY 10016 and Applegate & Thorne-Thomsen, P.C. Attn: Bennett P. Applegate 425 S. Financial Place, Suite 1900 Chicago, IL 60605 Notices shall be either personally delivered or sent by U.S. mail, postage prepaid. Notice shall be deemed to have been given upon deposit in the U.S. mail, or upon personal delivery to the party above specified. F. No waiver. City's waiver on one or more occasion of any breach or default of any term, covenant or condition of this Agreement shall not be construed as a waiver of any subsequent breach or default of the same or a different term, covenant or condition, nor shall such waiver operate to prejudice, waive, or affect any right or remedy City may have under this Agreement with respect to such subsequent default or breach by THC. G. Nondiscrimination. Both Parties warrant and agree that there shall be no discrimination against any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry, in the granting or expenditure of Funds or any activity AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 5 OF 7 associated with Services. H. Applicable law; non-appropriation. This Agreement shall be governed by and construed in accordance with the laws of the State of Idaho, including, without limitation, Article VIII, Section 3, of the Idaho Constitution and the Idaho Public Records Act, as well as 2 CFR section 200.338. Notwithstanding anything in this agreement to the contrary, City's obligations under this Agreement are subject to and dependent upon appropriations being made by Meridian City Council for such purpose. Throughout the course of this Agreement, THC and each and all of THC's employees, guests, invitees, contractors, and agents shall comply with any and all applicable federal, state, and local laws. L Severability. If any provision of this Agreement is found by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the remainder of this Agreement shall not be affected. J. Amendments. The parties hereto may amend this Agreement at any time provided that such amendments make specific reference to this Agreement, and are executed in writing, signed by a duly authorized representative of each party, and approved by City's governing body. K. Exhibits. All exhibits to this Agreement are incorporated by reference and made a part of hereof as if the exhibits were set forth in their entirety herein. L. Entire agreement. This Agreement contains the entire agreement of the parties and supersedes any and all other agreements, agreements, or understandings, oral or written, whether previous to the execution hereof or contemporaneous herewith. No verbal or written inducements to execute this Agreement have been made to THC. In entering into this Agreement, THC relies upon no statement, fact, promise or representation, whether express or implied, written or oral, not specifically set forth herein in writing. M. Successors and assigns. All of the terms, provisions, covenants and conditions of this Agreement shall inure to the benefit of, and shall be binding upon, each party and their successors, assigns, legal representatives, heirs, executors, and administrators. N. Advice of attorney. Each party warrants and represents that in executing this Agreement, it has received independent legal advice from its attorneys or the opportunity to seek such advice. O. Approval required. This Agreement shall not become effective or binding until approved by the respective governing bodies of both City and THC. P. Counterparts. This Agreement may be executed in counterparts, each taken together with the other counterparts shall constitute one instrument, binding and enforceable against each signatory to any counterpart instrument. AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 6 OF 7 IN WITNESS WHEREOF,the parties hereto have executed this Agreement on the Effective Date first written above. THC: Erin Anderson, Director The Housing Company CITY OF MERIDIAN: Attest: Robert E. Simison, Mayor 5-23-2023 Chris Johnson, City Clerk 5-23-2023 AGREEMENT WITH THE HOUSING COMPANY FOR USE OF ARPA FUNDS PAGE 7 OF 7 Exhibit A Vol The Housing Company Wood Rose Apartments Proposal for City of Meridian Financial Participation Th He ousingCompany Brought to you by Idaho Housing and Finance Association '4q� The Housing Company, an Idaho nonprofit corporation Our Purpose: The Housing Company is a nonprofit organized in 1990 with the mission to address the concern of an inadequate supply of affordable, decent rental housing within the state of Idaho and recently surrounding states. We play an active role in bringing affordable housing resources to areas of the state not being adequately served. Through local public/private partnerships we have been able to bring creative housing solutions to areas struggling with insufficient housing. Our goal is to partner with local government and other interested parties to solve local housing needs. We have developed more than 800 units in two dozen affordable rental communities. The Housing Company provides professional property management services for affordable apartment communities serving low-income families, seniors, and the disabled. We own our properties in the long term and take pride in building an asset for the community that will stand the test of time. We are able to put together complex financing in order to make these housing communities a reality. Our nearest developments are Moon Valley Apartments in Star, Nampa Duplexes, and Hazel Park in Caldwell. We also have Canyon Terrace in Nampa and Sunset Landing in Caldwell under construction. Th He ousingCompany Brought to you by Idaho Housing and Finance,A ociation • - ' - • • . County, Mid 30% of Area Median Income 4-Person Household $25,260 Idaho Minimum Wage ($7.25/hr) $15v080 40% of Area Median Income 4-Person Household $33,680 60% of Area Median Income 4-Person Household $50,520 4-Person Area Median Income $87,500 "Source. 2022 HUD income limits for tax credit projects (Section 42) 3 Economic Reasons to Invest Housing types and prices that reflect local needs and incomes What is `affordable' relative to Household Income (HHI)? < 30% of H H 1 = affordable > 30% of HHI = housing cost burdened > 50% of HHI = severely housing cost burdened Impact of speculation, inflation on government finance Foregone spending = money lost to housing cost burden. Idaho lost $670M to foregone spending in 2018 & $971M in 2020 *Source National Housing Act of 1937 / **Source Shi t Research Labs Many local restaurants are closing and one reason is being unable to staff the restaurant because housing costs are too high. 4 EXTREMELY LOW INCOME AFFORDABLE AND HOUSING COST BURDEN BY RENTER HOUSEHOLDS AVAILABLE HOMES PER 100 INCOME GROUP RENTER HOUSEHOLDS ■ Cost Burdened Severely Cost Burdened 9% 0% 86% 3% 34% 73% 24% — G4%o 29% 38% In Labor Force Disabled 234E Senior School ■ Single Caregiver E Other 8% 3 1% Extremely Low Very Low Low Income Middle Income *Source. NLIHC Out of Reach report. P 0- 0- o�p Income Income nlihc.org/housing-needs-by- P` �� P"° %AMI: 1-30% 30-50% 1 50-80% 1 80-120% state/idaho 5 Potential ■ Singlerofile Single Four Mother, Two Three Person Person / Sons Household Age(s ) Sixties Twenti es Forties Th i rti es Student w/ Customer Part Time Job Warehouse Job Service as Cashier laborer Cook ncome 35,400 38,000 45,480 50,520 Bedrooms Des i red 1 2 3 3 Monthly Rent Paid by Resident 895 935 11159 11234 6 Site Plan for Wood Rose Apartments- • r L11 52 AFVI!YLNF WIB 11_RAIUG' L:S A]]m0]'. lid[£-C;AMiG F1C6 R- 1!•3�6 Si{YLISMS'F[OI r 1l��19a tf! !,I_A11a IR12S�S7. _ ➢P;N IRILCA4 A.D&A DP!w ffirk Md. r0i I•IN 13}Il 7 Q G' . r / { .W' C13,N7 t1:l:SF rncanu o•oln zAa.,ti �ONS _c I i .www MroK Tt LL �.. __=' - w MOM 7 Moon Valley, Star ID TheMusingCorrWny x - - -'1k Market Research Effective Market Area: Chinden to North, Hwy 55 to East, Victory Road to South, and McDermott Road to West Meridian Idaho Temple Go ll IQ_ course Eagle® IS Fred Meyer Rockharbor ChurchQ _ w z = Q k Mounlam West +se YMCA and Rocky School© Boise Cit %qualic Center z Walmart SupercenlerQ Hentage Middle School0 Centen el High School Ma Mann Rd WMrMaan as E Ra ituurRO ool un ad w I.aw an Settlers Parkrr r Rd ) 4 © € ft Tully Park a 3 a The Village at Men mQ Q Fuller Park© Walm Supeicenter 3 9 Air Meridian High School ine w PI,•.. Meridian cP,rc•.. Urban andAdv Iture Plark wr.,aen as wF,.a,Pa Salver HeaIN 24/7 QMeddlan Speedway )Buffalo Wild Ten Mile Urgent Care C (Id d,en sin 0 o rD Museum or ltlaho QCinemark Roaring Springs ® MaleshcC emas W silead,a ad Q E nvnlaM Pa 0 K Ten M.le Palk and lbde o E MERIDIAN, IDAHO 9 Market Research DISTRIBUTION OF MODERN APARTMENT UNITS AND VACANCIES MERIDIAN,IDAHO SITE EFFECTIVE MARKET AREA MAY 2022 MARKET RATE UNITS UNIT TYPE UNITS VACANCIES NUMBER PERCENT NUMBER PERCENT STUDIO 78 1.4% 0 0.0% ONE-BEDROOM 1,591 28.2% 28 1.8% TWO-BEDROOM 3,216 57.0% 69 2.1% THREE-BEDROOM 699 12.4% 25 3.6% FOUR-BEDROOM+ 58 1.0% 0 0.0% TOTAL 5,642 100.0% 122 2.2% SUBSIDIZED UNIT TYPE UNITS VACANCIES NUMBER PERCENT NUMBER PERCENT ONE-BEDROOM 20 40.0% 0 0.0% TWO-BEDROOM 20 40.0% 0 0.0% THREE-BEDROOM 10 20.0% 0 0.0% TOTAL 50 100.0% 0 0.0% 10 Market Research Capture Rate - All Income-Qualified Households In 2023, there will be an estimated 2,938 renter households within the Site EMA with incomes between $14,220 and $50,520. Following is an analysis of housing costs as a percent of household income by the number of renter qualified households in the Site EMA: INCOME- PERCENT OF APPROPRIATE INCOME TO GROSS RENTER UNITS CAPTURE HOUSING COST INCOME RANGE HOUSEHOLDS PROPOSED RATE 40% $14,220 - $50,520 2,938 45" 1.5% 'Includes only Tax Credit and Home Units There are 2,938 income-appropriate households in the Effective Market Area that would qualify for Wood Rose Apartments. The Idaho Low Income Housing Tax Credit Allocation Plan Tax Credit rules b y State: Qualified Allocation Plan (QAP) • The plan sets forth the criteria which will be used to determine how developments will qualify for the credit • It provides Mandatory and Threshold requirements — Competitive Scoring criteria, Set-Asides, Allocation timelines, and further protocol and requirements. - preferences must be given to developments which • serve the lowest income tenants • agree to remain in the program for the longest period of time • are located in a qualified census tract which contribute to a concerted community revitalization plan 12 r rTax CreditScoring Part 1 SeICC60M Criteria Points Point: Self Section 42(m)(1)(C) Availab Score 'Certain selection criteria rust be used. The selectiob criteria set forth is a qualified allocation plan ne--t include - F'rejcct Location Ul Located within the:toted distances from good:,services•or a rnajor employer: rvlax 5 Ull Area:of Opportunity 2 2 Sr14 Located in a city that ha:not received an allocation of credit in past S calendar years 3 3 U12 RcMb that include:the use of existing housing as part of a community rcvit462a60n plan. 1 0 Hc•v_mg r9eeds Characteristics Ul i '•LIHTC"rental vacancy of 3.00%or Iess E• E• proicct Characteristics U2 Development:which offer:elected amcntics r•:1ax 5 1r4 Development:with mix of rent-restricted and market unit: 2 2 #3 Contribution:•donation;,local government assistance in an amount equal to listed percentages of Max 10 6 WS Cost Containment Max 8 5 #20 Adjacent bX&3%developments developed by same team targeted to 80%AMI or less 3 0 Sponsor Characteristics fry Sponsors)and Dcvcloper(s)we residents of Idaho _ 2 1110 Program sponsors who have a history of satisfactory LIHTC compliance ratings of their$42 1`• 15 U21 Sponsors)and Developer(-,)have not received and allocation of competitive LIHTCs in Idaho i U22 Sponsor(-,)and Developer(-,)have completed projects from LIHTC award through PIS r•:1;•:E• t. Tenant ppooppulntionm with sRceial housing needs. A6 Waitlist preference to households that contain one or more members with a handicap 1 1 U? Housing for older persons 3 0 1t18 Pcrmancnt Supportive Housing("PSH") 3 3 U13 Waitlist preference to persons with HUD Veterans Affairs Supportive Housing("VASH")vouchers 2 2 13 r rTax CreditScoring Part 2 Public Houfin„Wajt*ng Lifts 83 Dcvclopmcnt,which give prcfcrcncc to per,ons on Public Housing Authority waiting lift:. 1 1 Tennmt popub6on.-of individual-with children U8 Family developments that contain three-bedroom or larger unit:for household,. Max 3 3 Proicctf intended for c,ntual tenant c::ncrfhio tt13 Dcvclopmcnt:intended for eventual tenant ownership after the 15-year compliance period ha:ended. 1 0 The Hiftorie Nature of the Project U16 Dcvclopmcnt:which utilise Historic Rehabilitation Tax Credit as a funding source. 1 i Preference Points Section 42(1)(0)(ii) 'WLic► also gives prcfcrcncc in allocating Lousing credit dollar amounts among -0cced proiect to - Proicctf,crying the Ioweft incotr c t_nants 82 40%AMI unit- r. r• 83 45%AMI units 8d 50%ANTI units Pro*cctf oblig�,tcd to,ervc qualified tenant,for the long�A, period, Ul 40 year cxtcndcd use Proicctf which ore located in Qualified eenfuf tract,and the of•::hick•_antriE•ut�-to US-OCT and Revitalisation 1 TOTAL SELF SCORE F93 14 Points for Local • MEW- • In listening to the IHFA presentation made a few weeks ago, I noticed that the example projects were from several years ago and not a current representation of the funding challenges/increased gap we face for an affordable housing project. • There have been changes to the States Qualified Allocation Plan which raised the bar in terms of how much local contribution is needed to generate the maximum number of points from 2.5%of total development costs to a sliding scale where there is a sliding scale for points up to 10% of total development costs. • Due to the highly competitive nature of the 9%Credit, it is important that we strive for as many points as possible, or risk not being selected in which case the project has to wait another year to apply. • Scoring excerpt from the 2022 Idaho Low Income Housing Tax Credit Qualified Allocation Plan: 9. Devebpmens which receive non-reiaed prrva:e parry contribmns, charrable cash donaXns, locai governmen:assistance, or federal government assurance through to FHLB AHP or CDBG programs, in a cumuLmve amount wMin of the Wang percent ranges of Total Developmen:Cos'. %of Total Devebpmera Cos Points 2.00%do 3.99% 2 Q Choose 4.00%to 5.99% 4 p Choose 6.00%to 7.99% 6 p Choose 8.00%to 9.99% 8 Choose Grealer than 10.00% 10 Q Choose Q N/A Total Development Cost in this category does not include Developer/Consultant Fees or Development Reserves. 15 Credit9% Tax Rent andIncome Unit No. of Square Gross Rent/ Utility Monthly Annual Description Units Footage Unit Allow. Rent Rent i L i 1 Bdrm 1 737 $ 474 _ $ $67 407 $ _ 4,884 1 Bdrm 1 �_ 737 $ 706 _ $ $53 653 $ _ 7,836 1 Bdrm 1 737 $ 632 _ $ $53 579 $ _ 6,948 1 Bdrm 3 r 600 $ 948 $ $53 895 $ _ 32,220 1 Bdrm 1 684 $ 801 $ $53 748 $ 8,976 1 Bdrm 1 684 $ 1000 $ $0 1,000 $ 12,000 2 Bdrm 1 851 $ 568 $ $67 501 $ _ 6,012 2 Bdrm 1 851 $ 758 $ $67 691 $ _ 8,292 2 Bdrm 3 851 $ 852 $ $67 785 $ _ 28,260 2 Bdrm 1 873 $ 847 $ $67 780 $ _ 9,360 2 Bdrm 1 873 $ 1002 $ $67 935 $ 11,220 2 Bdrm 20 873 $ 1137 $ $67 1,070 $ _ 256,800 2 Bdrm 4 912 $ 1300 $ $67 1,233 $ 59,184 3 Bdrm 1 1119 $ 1239 $ $80 1,159 $ _ 13,908 3 Bdrm 10 1000 $ 1314 $ $80 1,234 $ _ 148,080 3 Bdrm 1 1119 $ 1556 $ $80 1,476 $ 17,712 2 Bdrm 1 851 $ 800 $ $0 800 $ 9,600 52 $ $ $ 641,292 0.115385 ' 7 2,736 1 VACANCY t 5% $ (32,201) EFFECTIVE GROSS INCOME $ 611,827 16 rTax Credit Operating Assumptions OPERATING EXPENSES: Cost Per Unit Annual Per Year % of Total Expense Administrative 1,100 21.76% $ 57,200 Management Fee(5% vacancy) 706 13.96% ' 36,710 HOME/Tax Credit Compliance Monitor Fee 50 0.99% 2,600 Maintenance& Utilities 1,900 37.58% 98,800 Real Estate Taxes and Insurance 1,000 _ 19.78% 52,000 Reserves _ 300 _ 5.93% 15,600 TOTAL $5,056 100.00% $ 262,910 Year 1 is a partial year, inflation on expenses is at 3% and income at 2%. YEAR YEAR2 YEAR3 YEAR4 YEAR YEAR YEAR YEAR YEAR YEAR10 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 GROSS RENTAL INCOME 320,646 641,292 641,292 654,118 667,200 680,544 694,155 708,038 722,199 736,643 79 MISC.NCOME 2,736 2,736 2, 1 2,847 2,903 2,962 3,621 3,081 3,143 3,206 LESS VACANCY(7%) (16,032) (32,065) (32,065) (32,706) (33,360) (34,027) (34,708) (35,402) (36,110) (36,832) icing - EFFECTIVE GROSS INCOME 307,350 611,963 612,018 624,258 636,744 649,479 662,468 675,717 689,232 703,016 OPERATING EXP&RESERVES (262,910) (262,910) (262,910) (2707797) (278,921) (287,288) (295,907) (304,784) (313,928) (323,346) NET OPERATING INCOME $ 44,440 349,054 349,109 353,462 357,823 362,190 366,561 370,933 375,304 379,671 ANNUAL DEBT SERV ICE PERM LOAN (284,705) (284,705) (284,705) (284,705) (284,705) (284,705) (284,705) (284,705) (284,705) ANNUAL DEBT SERV ICE ANNUAL DEBT SERV ICE-JOME (42,613) (42,613) (42,613) (42,613) (42,613) (42,613) (42,613) (42,613) (42,613) OPERATIONAL CASH FLOW 44,440 21,736 21,790 26,143 30,505 34,872 39,243 43,615 47,986 52,353 ANNUAL PRINCIPAL REDUCTION PERM 32,000 32,517 34,351 36,289 38,336 40,498 42,782 45,196 41,745 50,438 ANNUAL PRINCIPAL REDUCTION-HOME 33,000 33,896 34,235 34,577 34,923 35,272 35,625 35,981 36,341 36,705 ANNUAL RESERVES 15,600 15,600 15,600 15,600 15,600 15,600 15,600 15,600 15,600 15,600 DEPRECIATION (113,822) (6092343) (262,910) (576,943) (563,083) (550,483) (544,543) (544,543) (544,723) (544,543) OPERATIONAL GAIN(LOSS) 11,219 (505,594) (156,933) (464,333) (443,719) (424,241) (411,293) (404,151) (397,051) (389,447) BRIDGE INTEREST _ EXPENSES FUNDED W/OTHER SOURCES AMORTIZED EXPENSE (22,461) (4,260) (4,260) (4,260) (4,260) (4,260) (4,260) (4,260) (4,260) (4,260) PARTNERSHIP EXPENSE (2,999) (2,999) (3,056) (3,114) (3,173) (3,234) (3,295) (3,358) (3,421) (3,486) NETGAIN/(LOSS) (14,241) (512,854) (164,249) (471,708) (451,153) (431,734) (418,848) (411,769) (404,732) (397,194) DEBT SERVICE COVERAGE 1.23% 1.23% 1.24% 1.26% 1.27% 1.29% 1.30% 1.32% 1.33% DEBT SERV ICE COVERAGE W/HOME Payment 1.07 1.07 1.08 1.09 1.11 1.12 1.13 1.15 1.16 PROJECT CASH FLOW(Operational Cash Flow Anus Partnership Expense) 41,441 18,737 18,734 23,029 27,331 31,638 35,948 40,257 44,565 48,866 Deferred Developer Fee Payback (18,737) (18,734) (23,029) (27,331) (31,638) (35,948) (40,257) (44,565) (48,866) TOTAL CASH FLOW 41,441 1 1 1 17 City Permit and other Impact Fees estimated at $595,000. Could we decrease cost through reduced fees? ITEM DESCRIPTION TAX CREDIT Land Cost price p 7.30 1,590,000 Offsite Improvements Special Space for St Als Services Site Improvements/ Environmental $10,380,000 1,800,000 Contingency 429,000 Clubhouse Equip. & Furnishings 70,000 Building 8,580,000 Permits & Fees 595,000 IHFA Equity Financing Bond related costs Construction Insurance and Payment and Performance Bond 80,000 Construction Interest 286,000 Taxes 5,000 Construction Loan Fee 50,000 Title Fees/close/disburse 25,000 Legal/Accounting (EI.Basis Audit) 40,000 18 City Permit and other Impact Fees estimated at $595,000. Could we decrease cost through reduced fees? Permanent Loan Loan Fee/Rate Lock 3,800 Org Legal Fees 35,000 Title Fees/close/disburse 10,000 Soft Cost Contingency 75,000 Architect/Engineering Fees 350,000 Survey 15,000 Soils/mkt/enivronmental 30,000 Const. Lender Arch. Inspections 10,000 Appraisal 15,000 Tax Credit Fees 64,000 Developer Fee 1,528,840 Subtotal 15,686,640 Lease Up Expense Reserves for Lease Up Expenses 40,000 Total Development Costs $15,106,248 15,726,640 Operating Reserve 273,807 1/2 MAIDS Revenue Fund Deposit 05/31/22 16,000,447 19 Permit • Impact On April 19, 2022 there as a presentation made by City Staff in a Council Work session where one of the strategies presented in a matrix of ideas as a way to address housing needs would be to reduce impact fees for affordable housing developments. Multi Family Building Permit and Fee Calculator(Estimate Only) How to use this worksheet: Fill out the applicable blue fields with the information descibed In the"Description"column. Verify that you're using the correct unit,which is specified in the"Unit to Enter'column. Many fees are auto calculated based off information you provide in various locations.These are estimates only. DESCRIPTION QUANTITY UNIT TQ ENTER UNIT PRICE AMOUNT BUILDING PERMIT FEES: Enter the total number aF dwelling units 52 Number of Units Total Projact Value(Thom is a S50.00 base fee*S550 per S1000 project value) $10,833000.00 Dollars S5.50 IS 59,fi]1.50 Total Square Footage of Climate Controlled Space 51973 Square Feat Building plan review fee %of Building Permit Fee fi5% $ ]8,7fi0A6 Fire plan review fee %of Building Permit Fee 1 30% S 17,699A5 IMPACT AND ASSESSMENT FEES: Meridian Pam Impact Fee 999 Average Unit Size 556.00 $ 2,912.00 Meridian Flre Impact Fee 999 Average Unit Stu $258.00 $ 13,416A0 Mardian Park Impact Fee 990 Average Unit SU. $781.00 $ 40,612.00 Choose whether your project is Lowrisa(1-2 floors)or Midi(3-10 floors)to calculate Ada Caunry Low1169(1-21boB) S2 Number of Units 51.689.00 $ 96,2T6.00 Highway District Impact Fee.Calculated per uniL(Updated 10112021) Water Assessment 52 Numberof Unlls $1.973.00 S 10 59"a Sewer Assessment 52 Number of Units S3.884.00 $ 201,968.00 Wear Assessment Land—pi. calculated b 'Assessments Calculalof ERU S3.884.00 METER FEES: 1 112 Inch Water Meter 9 1 1121nch Water Meter $1,557.85 S 14,020.65 2 Inch Landscape Molar T 1 21nch Landscape Meter S1.344.61 f 2,699.62 PUBLIC WORKS PLAN REVIEW FEE& Does your project have new water a sewer main(Including Ire hytlrante er Ise service Ines) Yes Does your project have any new water or sewer service Ines? Yes bon New Water Main,Hrenls,Fire Line, dl se or Sewer Main($288 be-fee+$0.40 par(near fount) ar t) 9D1 Line Fast $0.40 f 64BAO !ED Dualred Licesned Professional Engineer(OLPE)Ravi":needed for projects with new man 2 Number of Sheets $298.70 $ 597.40 Drainage Plan Review 3.82 Square Acres $ 26.00 PUBLIC WORKS INSPECTION FEES: Inspection with No Public Main(services ezisfing or new services installed) Based o0lnformadon Flat Fee 57200 pravded n'PUBLIC Inspection for New Water Main,Hydrants.Flre Line,andfor Sewer Man(50.69 par linear fool) WORKS PLAN REVIEW 901 Lln—Feet $0.69 $ 621.69 FEES'section TOTAL $ 594,687.19 Need City to Review Estimate- Developer/Architect completed form 20 How the Tax Credit Works WORKS �� Allocates Credits State Housing Based on Population Finance Agency E lm Tax Credit Sells Credits Developer Investor/Syndicator Provides Equity Develo mentNOW11 ' will 21 How the Tax Credit • HOW LIHTC WORKS FOR DEVELOPERS 9% LIHTC can cover 70-90% of a project's cost, depending on the market, but affordable housing developers usually cannot use the tax credits themselves 4% LIHTC covers 30-40% of a project's costs and requires that over 50% of project financing comes from tax-exempt bond debt • Developers secure credits and "sell" them to investors or syndicators for equity • That equity comes in scheduled capital contributions, often at closing, completion of construction, and stabilized occupancy 22 How the Tax CreditWorks How many tax credits will a project receive? How's it calculated: A project receives, for each year of the ten-year credit period, tax credits equal to..... Tax Credit Calculation: Eligible base is basically depreciable Eligible Basis $6,000,000 basis; Eligible basis does not include land, syndication, QCT/DDA basis boost x 130% organization, or permanent Eligible Basis (adjusted) $7,800,000 financing costs; Qualified census tracts or Difficult Applicable Fraction x 75% development area, can increase the Eligible basis by 30%-for Qualified Basis $5,850,000 projects within these QCTs or DDAs Credit Rate x 9.00 Qualified basis equals a building's eligible basis multiplied by the Annual Tax Credits $526,500 building's aenlicaNe fraction Ten years x 10 Annt!-qi credit amount is calculated using the qualified basis of each Total Tax Credits $5,265,000 building in the project, multiplied by the monthly (or fixed) tax credit rate ♦ NOVOGRADAC �� Enterprise- �V&C0MPANYNCW 23 Unfortunately, this project does not work well for noncompetitive 4% credits due to its smaller size and the fact that it is not in a HUD qualified census tract. The Idaho Workforce Housing Credit funded through Federal ARPA is intended to be paired with 4% tax credit projects rather than 9% credit projects. Competitive 9% Tax Credit Potential sources: 9%Tax Credit AMOUNT SOURCES: Permanent Loan 4,600,000 HOME/Housing Trust Fund Loan (IHFA) 1,099,743 Funding Gap 1,350,000 Deferred Developer Fee 251,574 Tax Credit Equity 8,699,130 TOTAL $ 16,000,447 Noncompetitive 4% Tax Credit Tax Exempt Bond scenario gap is much larger, even with Idaho Workforce Housing Trust Fund (ARPA). It also has higher cost due to legal and financing associated costs associated with the Bonds. Typically 4% bond projects are 60 units or more- many are around 100+ units. 4%Tax Credit AMOUNT SOURCES: Permanent Loan 5,000,000 HOME Loan 1,099,743 Gap 2,479,928 Idaho Workforce Housing Trust Fund 2,600,000 Deferred Developer Fee 251,574 Tax Credit Equity 7 4,960,397 TOTAL 77-7 $1 16,391,642 24 Funding Ask Our ask is for $1,350,000 from the City of Meridian which could come from a number of possible combined sources: Option 1: $1,350,000 grant from Meridian General Fund: 1) Our understanding is that the City is not set up to provide lending directly to projects at this time, so our suggestion would be a $1,350,000 grant out of the Meridian General Fund to The Housing Company. The Housing Company would then loan at 0% interest the $1,350,000 to the project. The reason it needs to be structured this way is as follows: 2) If it is granted directly to the project before going through The Housing Company it would generate taxable grant income to the Partnership (the ownership entity will be a Limited Partnership and is taxable). This Limited Partnership has The Housing Company as General Partner and the tax credit investor as limited partner. 3) If the grant goes directly to the Partnership it would reduce tax credit eligible basis to the project. 4) The result is a 40% reduction in the net benefit to the project if it is a direct grant to the partnership. 5) Having a grant pass through a non-profit entity before going to a project is incredibly common in the affordable housing industry due to the reasons above and we have done many projects this way. Option 2: Combination of reduced impact fees and grant from General Fund totaling$1,350,000 between the reduced impact fees and grant. Based on the current estimate of fees, that would be $595,000 fees, and $755,000 grant from the City of Meridian General Fund. 25 Timeline Zoning and Annexation January-February 2022 CUP and Certificate of Zoning September 2022 Appropriateness Application submitted to IHFA August 5, 2022 IHFA awards announced November 2022 Building Permit Application Summer 2022 — Winter 2022 Close Financing/Construction Spring of 2023. sta rt 26