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HomeMy WebLinkAboutAffordable Housing Board - Minutes - 07/01/2004CITY OF FORT COLLINS AFFORDABLE HOUSING BOARD MEETING MINUTES 281 N. College Ave. Fort Collins, Colorado July 1, 2004 4 - 6 p.m. Kay Rios, Chair Isabel Garity, Vice Chair Ken Waido, Staff Liaison, 970-221-6753 Marty Tharp, City Council Liaison, 970-484-5711 Board Members Present: Kay Rios, Jon Fairchild, Joe Rowan, Peter Tippett and Sunshine Workman. Isabel Garity and Jane Phelan were excused. Staff Present: Ken Waido, Maurice Head Council Members Present: None Guests: Sandra Gibson, Senior Advisory Board; Tom Honn, Fort Collins Housing Authority Board and co-chair of the Affordable Housing Coalition for Larimer County; Michelle Jacobs, Homebuilders Association of Northern Colorado; Keith Cowan, Hickory Village; Paul Gallenstein, Sunflower; Joan Green, MPOAC;; Dave Osborn, attorney, Steve Dunham and John Sprengle, ARC; Christian Hendrickson, attorney, and Meghan Pfanstiel, Colorado Manufactured Housing Association; Paul Eckman, Deputy City Attorney; Felix Lee, City of Fort Collins Chief Building Official. Chair Kay Rios called the meeting to order with a quorum present at 4 p.m. n Public Discussion Sandra Gibson distributed a survey about changing the name of the Fort Collins Senior Center. She explained that the change was being considered to target baby -boomers who might be reluctant to use the facility with "senior" in its name but who are a growing demographic to be served. It would remain an adult center with current programs retained, possibly with weekend and evening hours expanded. Kay Rios pointed out that when the voters approved creation of the center, they voted for a senior center, not a community center, and previous efforts to re -direct its focus have been turned down. Ms. Rios then opened the meeting to public comment on the Right -of -First - Refusal Ordinance for Mobile Home Parks, with speakers limited to three minutes. Keith Cowan, owner of the 204-unit Hickory Village Mobile Home Park, said the ordinance represented an additional difficulty for owners who want to sell a mobile home park. It currently requires a great deal of time and due Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 2 of 7 diligence to do now, and if this goes in, sellers would have to repeat the process each time. He said he has purchased and sold back repossessed homes, providing his own financing, because not many banks will take that sort of paper. Additional costs just make it harder to provide affordable housing, because it's already hard enough for residents to come up with enough credit for a unit and the land, so he would like to see this ordinance not pass. Paul Gallenstein, owner of Sunflower, submitted letters from people representing various phases of real estate: a bank, a commercial broker; and an appraiser. He summarized the ideas contained in the letters. The bank is very concerned about the damage this proposal would do to the collateral they hold in his community. All the letters agree that the value of the units and the land will be diminished by first right of refusal. The letter from Real Tec addressed two unintended consequences: restricting the new supply of low-income housing because developers will not take the risk of producing this form of housing if their ability to sell it is encumbered by first right of refusal; and it will contribute to the loss of existing low-income housing by encouraging redevelopment of low-income housing into retail or business parks as likely buyers would be more willing to take the risks to profit from these types of development. The Board should consider incentives, not disincentives, for affordable housing. The appraiser's letter said the ordinance would severely damage the value of the property. Mr. Gallenstein said that the property was his personal retirement account and he doesn't like people messing with it. He also brought the Board's attention to the affordable housing article in today's Coloradoan. He is not in favor of the ordinance, which he said will hurt people like him who don't deserve it. Steve Durham, representing Affordable Residential Communities (ARC), owner of Harmony Road Mobile Home Park, was managing partner in Wikiup Mobile Home Park, a 338-space park in Adams County. When the majority owner decided to sell, the due diligence involved was very expensive, complicated and difficult process. Anyone with the money to buy a park is going to require correct information on rents, taxes, utilities and all the things that go into valuation of the property. The difference between the asking price and the selling price can be significant, based on the due diligence. Adding another 120 days onto the due diligence period, and removing the option for negotiation, will make it extremely difficult to merchandise a mobile home park. The unintended effects on affordable housing are very real. At Wikiup, in an attempt to provide affordable housing, the owners held the mortgages for purchasers of the units, and when the park was sold, the paper went with it. Trying to find a buyer who was willing to assume responsibility for this risky paper complicated the sale. As it was, they went through five different due diligences with different offers and counteroffers. It was very unsettling to the tenants to be notified on a regular basis that you are in negotiation for a sale. That in and of itself can diminish the value of the property. If this ordinance is designed to stop Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 3 of 7 change of use, it's important to understand that change of use occurs when the price far exceeds the value that the space has in a mobile home park. So providing first right of refusal will be providing nothing of any consequence in that case. There's no enforcement or penalty in the ordinance, either. When you look at these technicalities and the reality of whether mobile home residents can actually become purchasers, this ordinance could do more harm than good. Christian Hendrickson and Meghan Pfanstiel spoke on behalf of the statewide Colorado Manufactured Housing Association, which represents six parks in the area. Ms. Pfanstiel said that if this ordinance were in effect, Fort Collins would be the last place in Colorado a buyer would look for a park. There would also would be less incentive to invest in the property if owners knew they'd be facing difficulties in selling. Communities are owned by different types of people and ownership takes different forms - for example, REITs that bundle many different communities into one investment owned by many partners - and first right of refusal would take away some of those options. The ordinance would also have an adverse affect on title insurance; Ms. Pfanstiel has asked Land Title Group to forward a detailed letter to the Board. Mr. Hendrickson said that from a legal standpoint, this ordinance could actually impair or diminish affordable housing in Fort Collins, which is not the goal. In his research, he has not found anything that gives the City the authority to impair property and contract rights along these lines. It is inconsistent with existing legislation, and similar legislation has been struck down as unconstitutional by federal and state courts in California and Washington, which has a constitution very similar to Colorado's. In some cases, it has been considered a taking. It's not a public use, but a transfer of the property from one private entity - the current owners - to another private group - the community residents, who are not a protected class under the law. He added it could be void for vagueness and there are retroactivity and other problems with the proposed ordinance. Dave Osborn, a Fort Collins attorney specializing in real estate development representing ARC, felt that adopting this ordinance would severely impact existing property values and the ability to drive those values higher in the future. He added it seemed unrealistic that any benefit would be bestowed on anybody and a large detriment will be placed on owners. ARC's local investment is about $15 million; the chance that any bank will lend people who have no prior experience in organizing and managing a big business $12 million is about equal to the chance that they can raise $3 million for the down. The state of Colorado has wisely chosen not to enact this kind of legislation, and neither has any other city in Colorado, so there is precedent and sound policy reasons that it should not be enacted. He suggested figuring out some incentives for affordable manufactured housing in Fort Collins. It's a viable source of affordable housing, and that should be your focus. Due diligence can cost thousands of dollars, and if you have to do it four or five times, no one's going to make an offer, which will affect the value Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 4 of 7 of the real estate appraisals, and the community will lose tax revenues. There is no public or private benefit to the ordinance; rather, it would be penalizing people who are providing good housing without creating any real benefit. It would be wise to turn down this ordinance and have it die a sound, quick death New Busin Minutes The minutes of June 3, 2004, were unanimously accepted as presented, on a motion from Joe Rowan seconded by Sunshine Workman. Right -of -First -Refusal Ordinance for Mobile Home Parks Kay Rios pointed out that when the Affordable Housing Board had originally talked about first right of refusal, it was looking at Section 8 complex and other forms of housing built with public money, for a guarantee that if public funds were used, the housing would remain affordable. Looking at private property, especially existing properties, is pretty iffy. This group has been looking at incentives for a long time, how do we encourage more affordable housing? The issue of upgrades required when new owners take over a mobile home park, and how to help people on fixed incomes afford to make them or find new housing if they can't, is still on the Board's annual Work Plan. Joe Rowan reported on his conversation with Councilwoman Marty Tharp about City Council's reasons for requesting staff draft this ordinance. She had little additional background, except that it grew out of a conversation between Councilman Eric Hamrick and the residents of the Harmony Road park. Jon Fairchild asked if there was another side of the story, if there was support for the ordinance in the community. Kay Rios said the issues were the same as when ARC first acquired Harmony Road, but this does not address them and walks a close line constitutionally. Joe Rowan added that, functionally, it's totally unworkable. Mr. Fairchild said he could see no justification for supporting it, since he hadn't heard a single reason why it would be a good idea, and if it increased the likelihood for a change of use in existing parks and meant we lost some existing parks, that was serious. Jon Fairchild moved the Affordable Housing Board recommend against City Council adopting the right -of -first -refusal ordinance for mobile home parks as presented. Joe Rowan seconded, and offered a friendly amendment that the City Council not consider the ordinance. The amendment was accepted. Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 5 of 7 Maurice Head said that one of the reason the issue has come up is that residents of the Harmony Road park had been forced out by rent increases over the last few years, and they want some control over their housing and stability in the rent. The intent is to provide some kind of protection for the residents, although purchasing would be a very difficult to do. Kay Rios agreed that some of the residents, especially seniors, were put in a difficult situation by the increases, and the Board arranged some emergency assistance for some cases, but questioned whether this ordinance addresses that. The motion carried unanimously, 5-0. Jon Fairchild will draft a memo to Council and e-mail it to the rest of the Board for approval. Kay Rios suggested Paul Gallenstein contact Ken Waido for a slot on a future agenda to discuss affordable financing ideas as a guest speaker. International Residential Code (IRC) Felix Lee announced that City Council will be voting on adoption of the IRC on July 20. He also distributed new figures showing the estimated energy savings/costs of implementing the new building code. Kay Rios pointed out that the Housing Authority Board was split on whether to support the IRC, in part because mortgage lenders do not take utilities expenses into consideration when deciding whether a borrower qualifies for a loan. Joe Rowan explained E-Star mortgages that do allow borrowers to have 2 percent high debt ratios if they are purchasing an energy -efficient house, but such mortgages are rarely used even though they have been available for about a decade. Mr. Lee confirmed that the IRC applies only to single-family units either detached or attached such as townhomes, not to condos or apartments. He also discussed some of the construction issues involved in ensuring good air quality in energy -efficient houses. The IRC addresses the HVAC system, to make sure it is operating efficiently, and educating builders on the correct installation of properly sized units. Kay Rios expressed concern about the additional costs associated with adopting the IRC, which she recalled cause a split on the Board the last time the issue was considered. Jon Fairchild said the Board had split over the issue of the radon mitigation system rather than the energy efficiency components. He suggested that way to keep the costs down would be to require the minimum radon mitigation option, which added no cost to construction, rather than either the passive or active systems proposed. Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 6 of 7 By consensus, the Board authorized Jon Fairchild to do further research with the Housing Authority and draft a memo to City Council supporting new construction radon mitigation option 8 — subslab preparation only. He will distribute the memo to the rest of the Board for approval. Memorandum in Support of the Priority Needs Study By consensus, the Board approved the memo from Kay Rios to City Council in support of the Priority Affordable Needs and Strategies Report, with minor typographical corrections in the final paragraph. Housing Authority Update Maurice Head reported on the Housing Authority's situation regarding Sleepy Willow Apartments. Instead of granting the request for $800,000 of CDBG funds, the City and FCHA have sent out a request for proposals for a study of improvements that can improve the marketability of the complex. The RFP asks for recommendations on five-year capital improvement needs as well as the most cost-effective measures that can be taken immediately. The "curb - appeal" piece will be done separately from the long-range plan, so it can be incorporated into the application for the fall cycle of the Competitive Process. The RFP also asks for a comparison of Sleepy Willow with seven or eight similar properties around town; a review of property management structure; creative approaches to reducing the 30 percent vacancy rate, and market research with tenants and potential tenants. Deadline for bids is July 9; the consultant will be selected shortly thereafter, and the first part of the study should be completed in mid -August or September. Existing issues are not health and safety related; the study is to determine how to make good, decent, safe affordable basic housing more appealing to the market, ideally for less than $800,000. The Tenant -based Rental Assistance program set to start later this summer may provide some relief and some time to address the underlying issues. Old Business City Budget/Affordable Housing Fund Ken Waido reported that sales tax revenues are up over last year, but there are no plans by City Council to reinstate any budget cuts. Kay Rios and Joe Rowan asked to see comparisons with last year and 2000, with an eye to asking for reinstatement. Fort Collins Affordable Housing Board July 1, 2004 Minutes Page 7 of 7 Update/Reports on Subcommittee Efforts None. Kay Rios suggested the Advocacy Subcommittee move on its Work Plan items related to helping residents afford to remain in manufactured housing. Ken Waido added that the Larimer County Home Improvement Program has agreed to fund emergency type repairs for manufactured housing. Ms. Rios will reconvene the Advocacy Subcommitee to discuss this further. Liaison Reports None. Open Board Discussion Ken Waido announced that the City will be accepting applications for the fall cycle of the Competitive Process through the third Thursday of August. He also reported on a homebuilder who refunded the money of a purchaser upset that Habitat for Humanity was building on the lot next door. Joe Rowan reported on a resident of the Collins Airpark who was offered $250 for her home by the absentee owners of the park. The home was assessed at $27,500, but the resident can't move it or sell it without giving management right of first refusal. Management would be obligated to match a bona fide offer, but the onus of marketing the property is on the tenant and buyers know that the owner could always outbid them by a dollar, which puts a damper on the market. He suggested that this is one of the issues more appropriate for the Board to address. Kay Rios agreed, saying that manufactured housing will become more important to affordable housing in the near future. Mr. Rowan asked for a discussion of the down -payment program be placed on a future agenda, to explore ways to recycle more of those dollars so new money can be focused on very low AMI families. He will draft a memo for the August meeting packet. Meeting adjourned at 5:50 p.m. Respectfully submitted by Kate Jeracki July 21, 2004