Loading...
HomeMy WebLinkAboutAffordable Housing Board - Minutes - 04/06/1995AFFORDABLE HOUSING BOARD MEETING MINUTES April 6, 1995 The meeting of the Affordable Housing Board began at 4:00 p.m. in the Community Planning Conference Room, 281 North College Avenue, Fort Collins, Colorado. AHB members present were Chairperson Mary Cosgrove, Craig Welling, Susan Nabors, Ann Sanders, Christa Sarrazin, Tom Sibbald, and Joann Greer. City Council liaison Gina Janett was present. Staff members present were Ken Waido, Dickson Robin, Joe Frank, and Bob Blanchard. Betty Maloney informed the Board of a League of Women Voters meeting, to be held on April 12, at 7:00 p.m., at Plymouth Congregational Church, 916 West Prospect, concerning the role of the local government in affordable housing. Approval of the minutes was tabled until later in the agenda. Mr. Krcmarik, Finance Director, gave an overview of Industrial Development Revenue Bonds (IDRBs) as tax-exempt financing. The City acts as sponsor of the bonds, which are sold tax-exempt at a lower interest rate, to be used in accordance with guidelines under Federal law. Activity under this strategy has slowed down since 1988 tax law changes. In Fort Collins, the City offers IDRB sponsoring for proponents who rent at least 20 percent of a project's units for low income housing for the life of the project. Mr. Sibbald stated that "life of the project" would be 20 years under Colorado law. Mr. Krcmarik said that the requirement would also be effective as long as the bonds remained outstanding. He estimated that bonds usually stay outstanding for 15 to 20 years. Mr. Peterson of Prime Residential stated that his group specialized in bond financing. They do not plan to use tax credit financing. Mr. Krcmarik noted that the proposed Courtney Park project was renovation and not construction. The proposal would add 20 percent of the existing 240-250 units to the affordable housing inventory. Cash flow problems and the potential for a future Fort Collins housing surplus was discussed. The City is precluded from making payments on the bonds should cash flow become a problem. It was noted that funding from the state pool may not yet exist to issue bonds. Prime Residential is evidently willing to wait until the allocation is available from the State. Ms. Sanders expressed concern that the housing market may fluctuate between now, when Council would be asked for sponsorship, and when bond financing would be available. She expressed reservation, joined by Mr. Sibbald, that one -bedroom units fit the formula to result in the correct calculation. AHB Minutes April 6, 1995 Page 2 Mr. Peterson stated that the project used the maximum suggested bond rents based on families at 50 percent of median income. Families at 30, 40, or 50 percent would have rent not to exceed 30 percent of their gross income. The group presently has 19 other projects. Mr. Peterson estimated that 10 percent of their bond -qualified residents are around the 30 percent median income level. In response to questions, Mr. Peterson stated that they did have'provisions to reduce rents to match a family's ability to pay, and that the maximum allowable rents were the basis for their cash flow projections and underwriting. Applications will be on a first -come -first -served basis. Their policies are in writing. Mr. Peterson further responded that the application to the State will be for 25 percent of the units at the 50 percent median income level. Mr. Sibbald challenged the calculation of the difference between rates of market rent and the rent -restricted units and the means of compliance. Mr. Peterson stated that compliance monitoring is done by a bond trustee who also controls renovation funds. If compliance is not met, the bonds become taxable. Mr. Peterson stated that normally, the City will be a party to the indenture of trust and the tax regulatory agreement. Monitoring responsibilities are usually delegated to the bond trustee. The trustee must be acceptable to the City. Mr. Sibbald recommended that a trustee selection be done early in the process to ensure competence and the ability to monitor compliance. Mr. Peterson stated that the Planning staff could monitor to ensure that public policy is being fulfilled and the appropriate numbers of units are being used. Mr. Peterson noted that American National Bank in Chicago currently is trustee on 16 of their 19 projects and that other banks are familiar with this process as well. Mr. Sibbald recommended that the same trustee not be used on this project but that other people could be consulted on the appropriateness of a trustee. Mr. Sibbald and Mr. Peterson discussed the cash flow and enhanced property value resulting from tax-exempt financing. Mr. Peterson stated that almost all of the issued funds will be put into property improvements. Due to reduced rents of the set -aside units, property value may diminish somewhat as the Fort Collins rental market grows. Mr. Sibbald and Mr. Peterson discussed a lower -than -normal cap rate for the bonds of around 50 basis points, potentially resulting in approximately a million dollars of value in the bond financing enhancement. Mr. Sibbald and Mr. Peterson discussed length of the bond authority. Mr. Sibbald stated that the City should not be giving up its 1996 or 1997 bond authority. Mr. Peterson stated that the State allocation, upon expiration on 9/15, reverts to a state- wide balance, reserving the 1995 authority and carrying over to 1996. Mr. Peterson stated that under federal tax laws, they can only get their inducement resolution within 60 days of closing of the acquisition, as a one-time deal. If they cannot get the 1995 State allocation, that allocation will be reserved and not funded. AHB Minutes April 6, 1995 Page 3 They could not then ask for the 1996 allocation. In response to Ms. Cosgrove's questions, Mr. Peterson stated that at least 15 percent of the allocation must go to rehab, and that close to 15 percent, or $900,000 is budgeted for that effort. He mentioned rehab needed: Parking lots patched; pool decks replaced; ten -year -old appliances replaced; and carpets replaced. Ms. Cosgrove suggested that the group calculate the amount of rent saved over a 15- or 20-year period, based on number of units, in order to show community savings through the project. In response to further questions, Mr. Peterson said that lease terms average six to nine months per the local market. He noted that the number of affordable units was greater than that originally asked for by the City in its 1984 policy, due to increased State and Federal guidelines. Mr. Sibbald expressed a desire to see the 1984 City standards updated to at least current State standards. Moved by Mr. Sibbald, seconded by Ms. Sanders: To recommend to City Council that the City Induce a bond renovation to the benefit of Prime Resident, the bond cap at $2.4 million, with the following conditions: 1) Units reserved for low- and moderate -income use be at 50 percent threshold, with no less than 25 percent of the units reserved for that threshold; 2) Staff be directed, as part of the evaluation of bond documents and the trustee, to ascertain that the trustee is acting in arm's-length fashion regarding compliance, and that the bond documents reflect any compliance defaults to attention of the City within a reasonable time as set by Federal statutes, with such defaults to be corrected within 60 days. In ensuing discussion, Mr. Sibbald expressed concern over: a lack of documented rent levels; a lack of pro forma analysis at maximum rents; and justification for the bond limits. Motion passed unanimously. Mr. Waido and Mr. Blanchard advised the Board on the background of the East Side/West Side Neighborhood Design Guidelines. Proposals have been made to reduce minimum lot sizes and to allow secondary units on lots of 9,000 square feet or larger. Due to neighborhood concerns, Council is reviewing the guidelines for rezoning. Mr. Blanchard spoke of the neighborhood meetings and flyers that staff is using for neighborhood outreach and education. Mr. Blanchard requested a recommendation from the Board or group or individual comments. He noted that no new levels of review are being created with the process but simply more criteria. He distributed handouts detailing what will be reviewed in the compliance process. He noted that alley houses are currently allowed and that the new requirements mandate compatibility with the surrounding neighborhood. Concerns were raised by the Board about the potential for delay of a project by an appeal of a staff decisions that a building permit was issued in conformance with zoning. Mr. Sibbald noted that some projects would be very cost -sensitive and would be harmed by delays caused by the appeal process. AHB Minutes April 6, 1995 Page 4 Mr. Frank noted the Code provisions regarding appeals. He stated that appeals of a use by right are rare. Mr. Sibbald questioned the right of a developer to appeal an administrative denial of a use by right project. Mr. Frank stated that such use -by -right appeals would go to the Zoning Board of Appeals. The vagaries of the conditions of administrative appeals were discussed. Mr. Frank commented that it was important for neighbors to know of the proposed guidelines now in order to appeal the guidelines should they feel the guidelines are unacceptable. Ms. Sanders expressed satisfaction from her observations of the neighborhood meetings and results thereof. Mr. Sibbald suggested that HOME, rehab, and other moneys be marketed as potential funding vehicles for East Side/West Side projects. Moved by Mr. Sibbald, seconded by Ms. Sanders: To recommend support of East Side/West Side design guidelines, upon the following conditions: that a statement be added concerning the effects of the design guidelines on affordable housing; that the guidelines contain a description of City -controlled funds that may enhance the affordability of projects In support of low- and moderate -income housing; and that zoning limitations remain as they were prior to 1992. Brief discussion was held concerning lot size and some neighbors using new guidelines to keep density down as a no -growth vehicle. Motion passed unanimously. Mr. Sibbald noted Council's action in adopting the HOME Allocation Plan. He stated that the only issue resolved by the Board at the prior meeting concerning that plan was to accept applications on a continuous basis. Ms. Nabors agreed that such was the intent of her motion, and that enough outstanding questions not reflected in the minutes remained for the Board not to approve the complete process, application formula, or other substantive matters brought before the Board at the prior hearing. Mr. Sibbald took issue with the time allowed for reading the HOME documents. He noted discrepancies of a maximum cost limitation for a duplex of $131,000 with his own experience. He noted certain statements in the documents that were not understandable or that were unfamiliar to him. He did not feel that the program as outlined was workable. Mr. Waldo suggested that the HOME program be put on the May agenda and that questions be advanced to staff, to be answered at that meeting. No applications have yet been received, and no HOME money has been spent. HUD is changing regulations, so the program will be fluid in its administration. Mr. Sibbald expressed a desire that a memo be sent to Council that the March Board recommendation was not for program approval. Mr. Waldo stated that the issue could be readdressed to Council. Ms. Nabors requested quicker feedback on items addressed by Council affecting affordable housing. Mr. Waido stated that staff would do its best toward that end. He informed the Board of the marketing efforts that Julie Smith is putting together for the HOME program. Ms. Nabors requested that someone familiar with all HOME regulations be present for questions. Mr. Waido AHB Minutes • • April 6, 1995 Page 5 suggested a HUD representative. _ Ms. Cosgrove suggested the possibility of a special interim meeting of the Board to discuss the HOME program issues. Mr. Sibbald reiterated his concerns concerning the cap amounts set forth and their genesis. He advocated delaying the process to further review it rather than implementing a CDBG-styled program that he stated would be ineffective. Ms. Cosgrove expressed reluctance to delay the program further and recommended that a subcommittee, with a HUD representative present, be convened to solidify the Board's ideas and concerns. She recommended that Board members advance their concerns to Mr. Waido or Ms. Smith before a subcommittee would meet. Ms. Nabors recommended that the Board review any subcommittee recommendations for approval. Mr. Sibbald stated that he wanted to know what drove the caps and mortgage rates reflected in the HOME program documents. The subcommittee will be formed of Ms. Greer, Ms. Nabors, and Ms. Cosgrove. Moved by Mr. Welling, seconded by Ms. Nabors: To approve the minutes of March 2, 1995, with the following amendment: That the motion regarding the HOME program did not give full approval to the plan, in that it only addressed timing. Discussion was held concern rehab applications in floodplain areas. Moved by Ms. Sanders, seconded by Mr. Sibbald: To further amend the minutes to reflect that, concerning rehab programs, exceptions for floodplain areas would be pursued. Motion to amend passed unanimously. Moved by Mr. Sibbald: To amend the agenda to allow discussion of the home rehab program administered by the City of Loveland. Discussion was held concerning prior discussions between Board and staff on this issue. Mr. Sibbald expressed reservations on the effectiveness of the program in penetrating the Fort Collins market. Ms. Cosgrove stated that she had a conflict of interest in the discussion. Mr. Welling chaired the ensuing proceedings. Mr. Sibbald stated his opposition to continued contribution to the rehab program if similar numbers were presented again to the Board that reflected a lack of penetration in the Fort Collins market. Mr. Waido stated his impression that Mr. Betters and Mr. Aldridge understood the challenge presented by Board's consensus that they address Fort Collins marketing and floodplain problems or face rejection by Fort Collins in the following year's proposal. Mr. Sibbald requested more frequent reporting of the program numbers, on either a bimonthly or quarterly basis. Ms. Sanders expressed her disapproval of the Fort Collins percentages involved in the funding. Moved by Ms. Nabors, seconded by Ms. Sarrazin: To approve continuation of the Loveland Housing Authority's administration of the rehab program moneys, but noting the Board's desire to see quarterly reports and improved AHB Minutes April 6, 1995 Page 6 performance. Motion passed unanimously. _ Ms. Cosgrove resumed duties as Board chair. Mr. Waldo informed the Board that in order to develop a mobile home park in Fort Collins, the planned unit development process would be utilized, with the attendant public hearings. There is presently no property zoned for mobile home development. Ms. Nabors suggested that the Board look at the most effective ways of developing mobile home housing as being the first front of affordable housing for many people. Mr. Waldo generally related his conversation with Jeff Donaldson concerning development on the proposed property. Mr. Waldo feels that the PUD process is the best avenue for development review. In response to questioning by Mr. Sibbald, Mr. Waldo stated that Mr. Donaldson had been very up -front concerning his mobile home park plans in requesting a zoning change to RP for the property. Mr. Sibbald expressed strong reservations that City money be spent in support of moving the mobile home park absent an economic analysis of the park remaining in its present location. Ms. Cosgrove expressed her desire to see the Board in a proactive, leadership role on this issue. Mr. Waldo outlined his efforts to evaluate costs to rehab the present site versus costs of development on other properties. Mr. Sibbald questioned Mr. Waido's undergraduate degree in qualifying him to make such evaluations. Mr. Sibbald stated that consulting engineers were available, in the range of $5,000-8,000, to make evaluations on infrastructure costs. A suggestion was made that the property owner contribute to the cost of any feasibility studies of available sites. Mr. Waldo stated that the developer was reluctant to spend money on feasibility studies until he knew that his proposed site was a viable option. The Board discussed education issues. Mr. Waldo noted the effect that other boards have on City policy and expressed a desire for the Affordable Housing Board, or some affordable housing entity, to achieve the same level of political effectiveness. Mr. Sibbald stated that the problems with affordable housing lay within the bureaucracy of staff. Ms. Cosgrove noted resistance at times to Board suggestions and stated that such resistance came from a lack of vision, and that such vision is needed at the Council and City Manager level. Mr. Sibbald stated that regulations have been in force for so long that no one knows the initial reasoning for them; that Engineering was not concerned with housing affordability and, in fact, wished to avoid future responsibility for maintenance of city infrastructure; and that problems existed with the agenda of the previous City Manager. Moved by Mr. Sibbald, seconded by Ms. Greer: 1) That staff, within the next 90 days, bring forward Information relating to the possibility of asking Council for a directive to have a cost -benefit analysis done of new development standards AHB Minutes April 6, 1995 Page 7 and regulations; and 2) that a timetable be mapped out on a department basis for engineering and building standards and regulations to ascertain housing affordability or other costs being driven that may be unjustifiable. Mr. Waldo expressed concern that the motion directed staff to action, and that the motion should be addressed to Council. Moved by Mr. Sibbald, seconded by Ms. Greer: To recommend to City Council to request 1) a cost -benefit analysis, to be completed in 90 days, of any new development and utility standards or regulations; and 2) a plan to review all existing development, building, and utility standards that currently exist in the city for their cost-effectiveness. Motion passed unanimously. Mr. Welling moved adjournment, seconded by Mr. Sibbald. Upon a unanimous vote, the meeting adjourned at 6:30 p.m.