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HomeMy WebLinkAboutCommunity Development Block Grant Commission - Minutes - 10/04/2001CITY OF FORT COLLINS COMMUNITY DEVELOPMENT BLOCK GRANT Meeting Minutes Question and Answer Session October 4, 2001 Phil Majerus, Chair Alfred Flores, Vice Chair Bill Bertschy, City Council Liaison The meeting of the Community Development Block Grant Commission was called to order by Chairman Phil Majerus, beginning at 6:00 p.m., at 281 North College Avenue, Fort Collins, Colorado. Board members present included: Chairman Phil Majerus, Alfred Flores, Terri Bryant, Linda Coxen, Vi Guthrie, Brett Hill, Tia Molander, Jennifer Molock, Bill Steffes, Dennis Vanderheiden, and Cheryl Zimlich. Staff present: Ken Waido, Julie Smith, Heidi Phelps, Maurice Head, and Stacy Kelley. HO 1. City of Fort Collins Julie Smith presentation. On October 15, the 500th Home Buyer Assistance loan will be closed since fall of 1995. The City is applying for $100,000 out of Affordable Housing Fund monies and $200,00 from HOME funds. Federal funds are subject to the Uniform Relocation Act. If $1 of Federal funding is used on a rental, the renter must be paid moving costs, a difference in rent for 42 months, and location assistance provided. There is a 90-day limit where the house must be vacant, owner -occupied, or occupied by the renter. If non -Federal funds can be used, the City can give the rental unit the same assistance as it would with Federal funding. The following discussion was held in response to questions by the Commission: The full $8,000 amount is not needed for houses in the $70,000-90,000 range. Once homes are $140,000-$170,000, the whole amount is usually used for assistance. Under $5,000 is never seen, but between $5,000 and $7,000 is common. There have been only four foreclosures out of the 500 loans. The program is rather helpless in foreclosures. The lien is usually not paid off in the foreclosure. A little less than $20,000 has been lost through the foreclosures. Approximately 25 house deals have been rental situations. Different machinations have been tried, but the seller has generally been able to sell the house at market rates. This grant would only be used for these rental units. The $100,000 would comprise about 12 closings and would probably happen fairly fast. If the units go fast, there may be a reapplication next year; if not, the program will keep working on the amount that is funded. Community Development cock Grant Commission Meeting of October 4, 2001 Page 2 Repayment of the grant is earmarked as Federal money. The repayment is placed into the program income. The Affordable Housing Fund repayments would not have Federal restrictions. About $300,000 has been returned to the program from owners paying back the buyer assistance. 0 NC 1. CARE Housing Chadrick Martinez presentation. This application concerns the 36-unit 100% affordable housing development at Fairbrooke, targeting 50% or below, with a majority of the units at 40% and below. This month will see lease of 12 units with final completion in January or February 2002. There have been unanticipated costs. Increases have been made to the reserves. Payment & performance bonds must be in place. The CARE architect will have to be brought in as owner representative. Legal fees will go up unexpectedly as costs to the partnership. Changes to the development, in the form of adding a community center, have driven up costs. Because this is a turnkey project, a bridge loan capacity is needed. Gap funding is needed between construction and permanent loans before the infusion of cash comes from the tax credit investors. CARE has done quite well in the competitive process for tax credit investment, but there is a shortfall compared to what was shown on the pro formas. Apparently, $300,000 in CDBG funding is ineligible. The original request here was to be for $200,000, but there may be a $300,000 deficit due to the ineligible program funds. Ms. Phelps reiterated staff's support of the project. Because of the changes of financing strategies, instead of CARE buying a new structure that is finished and CDBG taking care of the land part, CARE is picking up a construction loan in process. Regulations state that funds may not be used for new construction, so the funding has become ineligible due to the change in strategy. This is not an insurmountable obstacle. Switching of CDBG money with other sources is a possibility. Mr. Martinez explained the CARE view. The tax credit attorney advised that ownership had to be obtained by November 1, with 10% payout, in order to secure the nonprofit tax credits. The developer, as for -profit, could not go forward owning the property and be eligible. An extension of time is not allowable, and possession needs to be taken by November 1 to secure $2.2 million of tax credit equity. Once CARE has ownership, it can deal with the general contractor and carry the project forward. This is an issue that was not disclosed by the attorneys until approximately September. The tax credit attorney was brought in late when non -local investors came into the picture. Community Development block Grant Commission Meeting of October 4, 2001 Page 3 Mr. Martinez explained the time guidelines of local counsel and specialized counsel and how these regulations came into play. CARE did not have a turnkey approach for its other units. It had intended to buy the project in January or February as a completed project. A 10% carryover investment is required, and ownership must be shown to secure the nonprofit tax credit set -asides. Mr. Martinez assured that the project is moving forward, and will look to whatever funding sources it may take to finish the project and make it viable. The product will be ready very soon. Money is not needed beyond the `lost' $300,000 and the $200,000 that is being requested at this session. A bank was lined up for the assumption, HOME dollars were dedicated, and tax credit investors were lined up. Ms. Phelps noted the quick timeline involved. CARE is ineligible for any funding past this cycle. CDBG is not allowable, and next fall will see the project completed and rented out. There is now a total of $550,000 CDBG funding in this cycle. Ms. Smith noted the other totals: $602,000 in HOME; $92,250 in 2000 CHDO; $102,450 in 2001 CHDO; $671,950 in the Affordable Housing Fund. CARE is the only applicant eligible for CHDO funds. A prior investor could not compete on this project. US Bank will be the investor. Every investment from every source is dedicated and tracked separately and specifically. There have been many eligible areas for CDBG funding, and some outstanding development fees may be eligible on the project. Funds that are tied into new construction are not CDBG-eligible. CARE has a good track record, and any assistance that can keep the project affordable will be helpful. The amount in reserve was investor -driven. It is not bad for the project to have that level of reserves, but the level is mandated and must be funded. It is constantly built up through rent revenues. Depending on how the acquisition proceeds, the closing must occur by November 1. Rentals will be made in late October. More units will be added in approximately December, January or February 2002 will see completion of the project. The community building will be the last building, placed in approximately February. A unit is set aside for the project manager, and they are screened to be income - eligible. If the project were finished now, there would be no problem with CDBG funding. The problem is taking ownership to be eligible for tax credits. The project is not running behind schedule. TBRA 1. Neighbor to Neighbor Community Development oiock Grant Commission Meeting of October 4, 2001 Page 4 Rusty Collins and Robert Thompson presentation. This is part of a larger Northern Front Range Continuum of Care. The Northern Front Range Continuum of Care is 40 entities listed, 20 active, of nonprofits and government entities. It came together from the Supernova funding from HUD. This funding comes from the Federal government, and after Denver and the State receive funding, the rest is distributed around the state. Both Larimer County projects received number one priority as well as the permanent project for Larimer County Mental Health. The program is distributed across two counties. Matching funds of $45,000 were received from the Division of Housing. The County is putting in funds, as well as Loveland, Greeley, and Wells Fargo. The two -county effort raised grant money a few years ago for 42 families in Larimer and Weld Counties in transitional housing. The effort was used to help homeless to move to rental and then possibly to home ownership. 27 of those families live in Fort Collins. Congress mandated some changes several years ago, with the result that the Continuum ran out of money six months ago. $90,000 is needed to run the project through the end of the year until it becomes eligible for renewal. There is a resulting six -to -nine month, $90,000 gap. The homeless families did not know they were at risk. Different municipalities and the State and County have provided funds. The City of Fort Collins advised that the grant for $20,000 be run through the competitive process. The transaction would be seamless for the affected families. This program leverages over $1 million to the various families, and the program is appropriate and eligible. The following discussion was held in response to questions by the Commission: The grant was submitted under Neighbor to Neighbor, so that entity is the subrecipient of the funds. No administration or case management funds stay with Neighbor to Neighbor. Mr. Collins is also chairman of the cooperative effort. The families are not just Neighbor to Neighbor clients; also involved are Catholic Charities, the Mission, the City of Greeley, Alternatives to Violence, and the Larimer County Mental Health Center. This funding will be used to keep eligibility in the HUD program at the end of this program year. Normally, there is a renewal cycle with HUD. Two years ago, Congress declared that the first 30% of funding goes to permanent housing. This created a problem for many continuum efforts that compete across the whole state. Staff stated that this gap was not as a result of shortcomings with the Continuum. HOME and CDBG administration is not allowed to keep a contingency fund for requests like this. This must be run through the approval process. The appropriate source of money for this is the Affordable Housing Fund. Community Development block Grant Commission Meeting of October 4, 2001 Page 5 Partial funding would help, but ultimately, the Continuum must hit that $90,000 figure through some means. More funding will be sought. All sources have been exhausted up to this point. These funds will be kept within the City limits. There is policy direction to recognize Fort Collins as a regional player. The Northern Front Range Continuum of Care is grant -funded. HUD is utilized for rent assistance, supportive service dollars, and social service money for families. That money is leveraged with all the other services and support that are provided. This money will be of direct benefit to families; no administration or overhead is involved. NC 2. KB Home Steve Klausing presentation. This project involves Provincetowne. There are 141 affordable housing units in a community of 350. These are two- and three - bedroom townhouse -style products. The cost is lower than Denver by $10,000- $40,000 per unit. The prices in Fort Collins are set by contract with the City. The rate includes all owner expenses; $1,050 for a three -bedroom unit; $950 for a two -bedroom unit. The applicant is asking for $1,000 per homeowner, paid directly to homeowner, to assist with the closing. $62,000 would go to KB to help with the closing. $7,000 would be used to assist KB with limited accessibility units for handicapped. 27 units are now accessible. $15,000 per fully accessible unit is being asked for the expenses in order to provide that. These units are priced within $6,000 of the maximum it can be priced at. Homeowners like options, and the options will be available. $15,000 is the price for handicapped accessible units, which brings the cost of the unit higher than legally allowed. The applicant would like to fully serve the special needs population. $90,000 requested for the permit fee. The applicant is asking $3/square foot, for 3% of the construction price. The reason is found in the project pro formas. 70% will now be received of minimum corporate return. With this subsidy, it would take the project to 79% of minimum return. Without the subsidy, the return to shareholders is 1%; with subsidy, it elevates to 3%. The minimum corporate return is 5%. The following discussion was held in response to questions by the Commission: The construction cost is $113/square foot. That is detailed out for the various plans. This same product is sold in south Arapahoe County for $10,000-$40,000 per unit more. This was not originally designed to fit within the category of affordable housing. The other locations have not qualified as affordable. This was seen as an integral product for this community. The developer wanted a Community Development cslock Grant Commission Meeting of October 4, 2001 Page 6 project that would blend in with the community. The project will have a homeowners association to maintain buildings, grounds, and other items. This project could be built anyplace in Fort Collins, although not for this price. The lawsuit has received some publicity regards the property at Lemay and Trilby. Another community of higher -priced homes already exists there. One person does not want this product regardless of the mix of homes. He has twice filed a lawsuit. The Court of Appeals dismissed the first one. The second suit was filed in the last six months. 90% of the lawsuit is same grounds as raised before and defeated. The project is moving dirt, and models are being built. The City was a co-defendant in each lawsuit and has been good to work with. The total amount of money in the affordable project alone is $20 million. The genesis of the present iteration of this project was with Pridemark. Pridemark won the bid for this contract, and KB Home subsequently bought Pridemark. This project proceeded under the full guidelines of the City. The rest of the project will be under City Plan. KB knew coming into the Pridemark acquisition that this was going to be an affordable project but did not know what sale price would be, because that was a moving target. KB knew that the Pridemark acquisition included the contract for 168 acres. KB is not interested in doing a project that is patently affordable housing. It could have built a cheaper product. KB wishes homebuyers to buy this and be enabled to move up to another home. This should be an integral part of the community. If the grant is not awarded, costs will have to be cut somewhere. The developer asked for variances and was granted them. KB will build this, sell it, and work with the buyers. Perhaps the project would not allow a $6,000 cushion for features, although that is desired. This is not down payment assistance; zero down is the target. This is the first affordable housing project of this nature in Colorado. KB used to have the name Kaufman Broad. A City sales tax rebate did not come out of this program. Under the City's guidelines and policies, the developer does not need to pay a use tax on materials. These units are being sold as condos to maintain the outside of buildings, but the concept appears as townhouses. Water and maintenance will be in the homeowners association fee, with possibly another utility included as well. It could be as much as $150/month for the townhomes, including exterior maintenance. KB does not build multifamily housing. The only attached product is townhouses. The applicant distributed brochures concerning its product in Arapahoe County, some of which is the same as being installed in Fort Collins. 90-95% of the homes sold are financed. In some communities, there is 100-103% financing, with rates under 6%. This enables home buyers to move in with tremendous Community Development oiock Grant Commission Meeting of October 4, 2001 Page 7 savings. Kaufman Broad did a rental project several years ago, but there has been nothing east of Colorado in about 20 years. A new division just opened in Florida. AQ 1. Bethphage Jim Berscheidt and Lori Thompson presentation. Bethphage is a local charity started in 1985 in Fort Collins. It began elsewhere in 1913, so it has a great deal of experience dealing with developmental disabilities and providing services. There were many requests to expand its services, and in 1980, the office moved to Omaha and started expanding. Bethphage serves people with developmental disabilities that occur before the age of 22. The population served included people with autism and traumatic brain injury. 70 individuals are served in Fort Collins. Bethphage provides homes for the clients. The group home is for people who cannot take care of themselves. A five -unit group home is sought in this application. This home was developed to be a group home. The original owners had a son with developmental disability and modified the home so that their son could live in the home after their death. Their son passed away on June 30, and the parents do not now wish to stay in the home. Home is modeled for a group home, and Bethphage is proceeding on this opportunity. The residents would have average income of $5,000-$12,000 a year, falling well below 30% AMI. They are a high needs group. Many are without families and are medically fragile. This home is an important component in the community. A lawsuit was filed recently by parents of developmentally disabled individuals against the State of Colorado because of the State's slowness in providing effective service. Bethphage exists to provide service. Staff noted that the project is not eligible for CDBG or HOME funds but is eligible for moneys from the Affordable Housing Fund. $671,000 is presently available from that fund. The following discussion was held in response to questions by the Commission: Other sources available would be a possible capital campaign or to take out a loan to fund the needed amount. There is money set aside by the organization for projects like this, but the funds are limited. Internal fundraising dollars were used for down payments in the past, from such activities as a golf tournament and other sources. The residents are able to work and go to a sheltered workshop. The money earned is the residents' spending money. Social Security pays $496 for room and board. Community Developmeni Block Grant Commission Meeting of October 4, 2001 Page 8 This is the only program accredited through a specific agency with very tough standards. It involves a two-year accreditation. It is affiliated as a social ministry with the Lutheran Church but is not owned, operated, or does not receive funding from the Lutheran Church. The founder was affiliated with that church. In the last survey, it was found that the program served more Catholics than Lutherans. Staff is from all denominations. Much volunteer assistance is provided. Individual churches help as well. This home would serve five clients. The ratio is typically two staff for every five people served. Staff is available 24/7. Some staff people receive advanced training to handle medical issues. The building is not within Fort Collins city limits but is located in the City Urban Growth Area. The program does not discriminate where people come from. In terms of serving specifically Fort Collins residents, it would be dependent on whether the client has family nearby. The program prefers clients to be around family locations. This property would be the fourth property owned by the organization. A full-time manager is assigned to each. Host homes are scattered throughout Northern Colorado. Maintenance is contracted out and represents a line item in the budget. Grants are applied for maintenance as well, and volunteer help is used. Some clients are lined up to move into this property immediately upon acquisition. A rental home in Loveland is a financial disaster. Two of the residents live in Loveland right now. The proposed home is in same area as the other three group homes. Bethphage will undoubtedly keep this property for at least 20 years. The ranch - style home is around 2,000 square feet. Down payment assistance was applied for from Federal Home Loan Bank. This opportunity arose so quickly that time was not available for ready access to grants. Any applicable grants will be applied for. Fund-raising is done every year. The owners could not bear to stay in this home, and the sale price seems to be in line with other fair -market homes in the area. However, another home at fair market would demand extra funds to re -equip the house. An appraisal will be done. The former appraisal was in line with the asking price. The location is in the Imperial Estates subdivision and is not obviously a group home by appearance. AQ 4/1­10 2. Fort Collins Habitat for Humanity Candace Mayo presentation. The program locally has seen a major growth spurt in the last year. Habitat's 17th house locally will be started in a few weeks. The Lions Club provided a grant for handicapped accessible housing. The Affordable Community Development Block Grant Commission Meeting of October 4, 2001 Page 9 Housing Fund is needed for down payment assistance to buy two lots to provide for large families. HOME funds were ordinarily applied for, but because four - bedroom houses are being provided in Waterglen, the assessments may be too high for HOME eligibility. These families will be well below 50% AMI. Development fees are being requested for two lots in regard to fees at Waterglen, including City fees and tap fees. Habitat has hired a full-time construction manager for working on lots in Waterglen. Land acquisition money was requested in regard to two lots, but the lots were not under contract by grant deadline. Seven applications from families have been accepted for new houses; more applications will be accepted after the turn of the year. In the past, Fort Collins Habitat has built one house per year. This year has seen, four, then starting a fifth. Future yearly plans call for seven, then ten. Habitat feels that these numbers are appropriate for a city this size. Habitat is building partnerships with local organizations that are sponsoring houses. Habitat is also building awareness of its efforts in the community. Staff noted that two houses are for large families; one house contains amenities for special needs. In one family, the father is legally blind. Three children were in the family at the time of selection, and the wife was pregnant. The subsequent birth was twins with disabilities. More expense is needed to build a house for these needs. The other family selected is a delightful, large Hispanic family. These will be the first four -bedroom houses being built by Habitat. An architect on board of directors designs the houses. The Fort Collins Habitat has never used Habitat's set plans. The group can estimate closely what the cost will be but not the final appraised value. The last three -bedroom home appraised for $170,000. If this house appraises over that, the buyer cannot use Home Buyer Assistance funds for a down payment. Assessments are coming in from Waterglen and may come in at $180,000-$185,000. If the appraisal comes in under that value, Home Buyer Assistance funds can be used. Affordable Housing Fund moneys represent a safety net. Another factor in price: Habitat is not motivated to build garages, but must in order to comply with subdivision requirements. The request for development fees total $41,000 of CDBG-eligible funding; home ownership comprises $32,000. All moneys will be received locally, none from the national organization. The project is looking to achieve 85% of the cost from individual donors. Nationwide money does not to go local organizations. The national organization provides administrative support, manuals, plans, training across the board. There is a nominal charge for training. Local efforts try to add 10% in order to tithe the funds to Habitat International. For every house built Community Development u,ock Grant Commission Meeting of October 4, 2001 Page 10 here, 10 more can be built somewhere else. Habitat International goes to Third World countries. Last year, tithed money went to India for aid in the earthquake area. Habitat can choose where the money goes internationally. The fees are paid at the end of the project. Land acquisition is very scary in Fort Collins at present. Habitat will have to find a for -profit developer in order to find available lots. Habitat has not talked to the Affordable Housing Board for creative solutions. Habitat has been offered two houses off of the Taft Hill widening project. Two existing houses need to be moved somewhere. 20-year affordability is tied into the projects. The Willox project was lost. The contract could not be performed upon; the land is now being reserved for a King Soopers. AQ 2. Fort Collins Housing Authority and Fort Collins Housing Corporation Staff summary: The Fort Collins Housing Authority was approved by the State as a CHDO, eligible for CHDO funds. HUD has taken exception and has refused to release the $92,000 of CHDO funds. Now the $92,000 needs to be switched with regular HOME funds. The $92,000 then is reprogrammed, with the only eligible recipient being CARE. Staff will appeal the CHDO issue as far as possible. This project is a success model in other areas. Julie Brewen presentation. The application is for $241,000 for the Rigden Farm project. In the last funding round, half the amount requested was funded. The project now requests the balance for rental units. Sierra made a half -million dollar investment in buying modular homes but will turn to stick -built for all construction. The modular home concept did not work for this project. A site diagram was distributed; the site for this project is the sixth filing, northeast corner. The plan includes four different housing types, single- family, on larger scale lots. The outer boundary contains single-family with attached garage, separate lots, but adjoining garages may be built. Each model will have different sets of elevations and a color scheme and will vary lot to lot. The streetscape will be developed to fit. The interior lots will be duplex units. Drawings of the townhome model were distributed. The modular units ultimately were approximately 10-15% over the stick -built price. In a project with many units and volume discounts, the stick -built approach works better. The project also faced quality control issues with the modular units. An inquiry was made concerning last year's request to help with home ownership; this year, the request is to assist with rental units. The applicant responded that the request last year was split. This year, the rental portion needs help in order to address the appropriate AMI level. Affordable units were placed Community Development Block Grant Commission Meeting of October 4, 2001 Page 11 on the eastern edge because basements are not possible there; this results in lower construction costs. The units are not placed there because of the sewage treatment plant. The units are next to the lake. The gravel pit to the east will be out of business in 2003. Lafarge is planning to develop that site. The neighboring property features $300,000 homes. The goal is to make an integrated community reflecting the new urbanism and that embodies City Plan. The garages will be set back. The project will be maintained architecturally. There is a great deal of dedicated open space area. Surrounding properties are is medium to upper -end residential. The donation of the land comes from Sierra; it is the difference between the contract and appraisal. The contract was done without approvals in place. The appraisal that was done based the value of land at $2 million. Once approvals were in place, the value of the property escalated to $4.6 million. The project donated the contract to the housing authority for $2.6 million as a charitable donation. The $2.6 million applies to just the rental; it is doubled for the entire donation. 33 rentals units will be available. There is not a great deal of funds in replacement reserves. These units are new; $17,000/month will be available in 2008 for 285 units. That is additional to reserve/replacement funds now. A note will be paid for 108 units, and then monies will become available from those units. Reserve/replacement is a budget priority. The application for HOME funds from the State goes to the State Board on the second Tuesday of November. State recommends full funding pending a letter of commitment from the bank and the appraisal. If funding is not awarded, then the affordability level will change, most likely on for -sale units. The financing needs to be offset. Units would be built, but they would be less affordable. The projection has a combination of three -bedroom and two -bedroom units. Two -bedrooms do not cash -flow as well. There are two - bedrooms units in the for -sale category. There is a great deal of demand for two - and three -bedroom units at 50% AMI. The project is now in the final stages of approval. No real neighborhood opposition has arisen. The experience with the modular units was sour enough that the developer will be writing checks at some closings. This has not been a cost benefit to the developer. The elevations presented will be shown throughout the whole community as representative of City Plan. The developer wants to show this affordable housing as an example for the whole country. Community Development .ock Grant Commission Meeting of October 4, 2001 Page 12 Staff noted that the Housing Authority also originally came in for a triplex acquisition on Stanford Road, but was not able to secure the property. AQ 5. Lagunitas Jon Prouty presentation. He has built numerous innovative and aesthetic patio home communities. He gave examples of Red Fox Meadows on West Prospect and Red Tail, south of Harmony on College. There is no reason why aesthetics and quality can't be incorporated with relatively little effort and modest expense. The applicant gave a phone number, 226-5000, at which he is available for questions or areas of inquiry. It is difficult to gauge the market despite the City's many great studies. Details were given of places where workers come from who cannot afford to live in the city. Anecdotally, service and retail people complain of the city being too expensive. They cannot afford a down payment and would use public transportation. They like the quality of life in Fort Collins because it is a safe community, but they have no time for activities or money for recreation. Employment numbers have risen 32%; housing costs risen 56%. Economic forces are driving these figures. Affordable housing needs to be jump-started by the City through clever programs, and the trade for funding must be made by keeping properties affordable in perpetuity. There is a multiplier effect in moving from affordable rental into affordable ownership then into full ownership, causing 10 houses per year. The ongoing enforcement mechanism needs to be a nonpublic cost. The process doesn't need super -homeowner associations. There can be deed restrictions with aspects of: locking in affordability; qualification of purchaser; locking in the price appreciation of housing to the cost of living. This mechanism would hold the price of housing down to the cost of living. Wages increase faster than just cost of living. If enforced by a promissory note geared to the appreciation in excess of what's allowable, this would legitimately define the excess purchase price over what's allowed. It could be secured by deed of trust with the City, so all parties are involved. The private sector needs to be jump-started by public sector. The applicant advocated not driving retail and service employees out of town. He spoke of not allowing "Aspenization and apartheid" in Fort Collins. In response to questions by the Commission, the applicant stated that the requested subsidy of $1.2 million was representative of the hard bargain that needs to be driven. A market must be created. People under 80% AMI cannot make the price or the needed down payment. If public assistance reduces the price of a $110,000 home to $95,000, it opens a huge window of people who can Community Developmen, Block Grant Commission Meeting of October 4, 2001 Page 13 afford it. At resale, they become greatly affordable under the restriction of affordability in perpetuity. When housing costs have risen elsewhere, the next low-AMI buyer sees a great savings in the sale price. The applicant is ready to go to the free market and willing to commit to a project to make this concept happen. The private sector can accomplish this; developers are just not running the numbers, or they are too greedy. Under this scenario, the housing every year would become more and more affordable. The project is going forward, and the applicant wishes to encourage the City to enable a highly successful model. The proposed project would contain 38 acres of open space, two ponds, a transit center, and pedestrian spines. The restrictive deeds to keep the property in perpetuity will dissuade buyers who are able to purchase homes on the free market. The lower amount of money needed to buy the housing and the appreciation in earnings is the driving force to attain the means for transition into free-market housing. The applicant is unsure of, and has received different opinions as to, the impact of the railroad tracks that are nearby. The applicant has built 103 houses and is now trying to reach into the affordable market. The costing ran low under City Plan concepts until the results could be seen in the market. The housing started out at $130,000, but it cannot be bought for under $200,000 now. This project would show some flexibility of unit size. Probably one-half of the units would be one- to two -bedroom; the other half would be two- to three - bedroom. The time frames can be reached. The project has been submitted to City with expedited affordable housing preference. The approval time is uncertain. The first unit will have been built six months after approval. Staff explained the CDBG and HOME time frames. These funds will flip over into the new fiscal year. The Aspen example was used as a community that has learned to deal with restrictive deeds. A city has difficulty with people complying with a 20 years restrictive deed. The project homes would be shown to and occupied by only by qualified occupants in the targeted AMI range. If the deed restriction is violated, the transaction is voided. There would be a promissory note that limits appreciation. The applicant will explore options used around the country to make sure that the best configuration is used. The buyer would execute a promissory note to the City that portion of the price that is in excess of formula. The note is secured by a deed of trust. The transaction cannot close without the City Attorney signing off on the deed of trust. The applicant will send a copy of the deed restriction? The project is within city limits. Community Developmen, Jock Grant Commission Meeting of October 4, 2001 Page 14 The multiplier effect assumption of three years was challenged. There is no guarantee of how long a family will stay. If the actual figures are different, the correct figures will be used. Upon motion, second, and unanimous approval, the meeting adjourned at 9:05 p.m. Staff stated that although development review concerns are not a part of funding considerations, this project's proximity to the railroad tracks would trigger some Federal mitigation requirements.