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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/01/2021 - RESOLUTION 2021-063 AUTHORIZING THE ASSIGNMENT OF Agenda Item 8 Item # 8 Page 1 AGENDA ITEM SUMMARY June 1, 2021 City Council STAFF Sue Beck-Ferkiss, Social Policy and Housing Programs Manager Ingrid Decker, Legal SUBJECT Resolution 2021-063 Authorizing the Assignment of the City’s Private Activity Bond Allocation for 2021 to Housing Catalyst to Finance the New Construction and Rehabilitation of Affordable Housing Units. EXECUTIVE SUMMARY The purpose of this item is to support the new construction and rehabilitation of affordable housing at two connected locations in the City by assigning the City’s 2021 Allocation of Private Activity Bond (PAB) capacity to Housing Catalyst. PAB capacity is required for development projects using state or federal 4% Low -Income Housing Tax Credit financing. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The State of Colorado Private Activity Bond (PAB) allocation program is established by the Colorado Private Activity Bond Ceiling Allocation Act, Colorado Revised Statutes Section 24-32-1707, et seq., (the Allocation Act). PABs are tax-exempt bonds that can be issued by eligible authorities. The proceeds of the sale of the bonds may be used for specific purposes as determined by the Internal Revenue Service. Permitted purposes include, but are not limited to, affordable housing development and rehabilitation. Historically, PAB financing has also been used by the City for economic and industrial development purposes. In 2021, the total amount available statewide is $638,849,090. Fifty percent of the state ceiling is allocated directly to statewide authorities and the other half is allocated directly to local governments based on population size. The City has been notified that, pursuant to Section 24-32-1706 of the Allocation Act, its allocation of the state ceiling for 2020 is $9,438,581. (Attachment 1) PAB capacity is merely the authority to take on tax exempt debt and is not an allocation of funding. The City will not incur debt by assigning this allocation and this will not affect the City's credit rating. If a local government does not issue bonds or assign the bond cap to an eligible entity for a local project or projects by September 15 each year, the City allocation for that year automatically reverts to the state’s pool of available bond capacity. The Colorado Housing and Finance Authority (CHFA) offers a 4% Low Income Tax Housing Credit (LIHTC) Program, which is a financing mechanism for the development and rehabilitation of affordable housing. CHFA requires that affordable housing developments seeking 4% LIHTC financing also pair the tax credits with PAB financing. Historically, Fort Collins has assigned its annual allocation on a first come, first served basis. From 2009 through 2012, the Fort Collins allocation was not used locally and therefore reverted to the state’s pool of available bond capacity. In 2013, 2014, 2015 and 2017 the City assigned its full allocation to the Fort Collins Housing Authority, now Housing Catalyst (HC), for the rehabilitation of affordable rental housing units. In 2016, the PAB was assigned to CHFA for the benefit of two local affordable housing projects. Agenda Item 8 Item # 8 Page 2 Beginning in 2018, due to the increased popularity of this financing program, the City implemented an application process for requesting the City’s annual allocation of PAB. The guidelines are set forth in the City’s General Financial Policies. Applications are due annually by March 15 and are reviewed by the City PAB committee. Finance policy states that the following factors be considered when making a recommendation for allocation of PAB capacity: • How well the project meets the land use, economic development and/or affordable housing goals of the City. • Project feasibility and timing. • Leverage of other investment into the project. • Maintenance of or increase in local tax base. • Competing uses for the City’s allocation. • Whether the City’s allocation should be used in multiple projects. • Whether the application should be considered by any City Board or commission. This year the City has received one request for PAB capacity (Attachment 2). It is from HC for the Impala Redevelopment and Renovation project, which will provide affordable rental homes for individuals and families with incomes ranging from 30-80% area median income (AMI). The location is just south of Poudre High School on South Impala Drive and Impala Circle. (Attachment 3). This project will convert 11 single family homes owned by HC into 26 renovated duplexes and 60 new apartments. The project will utilize low income - housing tax credit financing and will require approximately $16 million in PAB capacity. In addition to the City’s 2021 PAB capacity of $9,438,581, HC will look to acquire PAB capacity from other allocating entities to obtain the necessary total allocation. They can also ask for some of the City’s 2022 allocation if needed. The City’s PAB committee, which is composed of staff representatives from the Social Sustainability, Economic Health and Finance departments, considered the application and recommend a ssigning the entire 2021 PAB allocation to HC for the purpose of renovating and constructing affordable apartment homes. For HC to use the City’s allocation of PAB capacity, Council must adopt a resolution assigning the 2021 PAB allocation to HC who will issue the bonds for the qualifying project. CITY FINANCIAL IMPACTS The City will not issue the Private Activity Bonds and the bonds will not be obligations of the City. The debt service on the bonds will be repaid from revenue generated by the housing dev elopments and does not constitute a debt of the City. This action will not affect the City's credit rating. The construction of 60 new units and the rehabilitation of 26 duplexes will require goods and labor which will benefit the local economy. BOARD / COMMISSION RECOMMENDATION The Affordable Housing Board considered this request at their May 2021 meeting and supports the PAB Committee’s recommendation to provide the 2021 PAB allocation to HC for this project. PUBLIC OUTREACH The Affordable Housing Board heard this matter at their remote May meeting which was open to the public. The process to seek PAB capacity is detailed on the Social Sustainability Department’s web page and the guidelines are set forth in the City’s General Financial Policies. ATTACHMENTS 1. 2021 Allocation Letter (PDF) 2. Housing Catalyst Application (PDF) 3. Location Map (PDF) 4. Affordable Housing Board Minutes (draft) (PDF) January 12,2021 Kelley Vodden Controller City of Fort Collins P.O. Box 580 Fort Collins, CO 80522 Re: Private Activity Bond Allocation of $9,438,581 Dear Ms. Vodden: I hereby certify that the above amount will be allocated to the respective local government for the purpose of issuing Private Activity Bonds (PAB) in 2021 under the state ceiling imposed by the Internal Revenue Code of 1986, as amended. In accordance with the provisions of C.R.S. 24-32-1709.5, a fee on bonds issued is due to DOLA for the portion of each issuance that originated from a direct allocation. The amount of this fee is subject to revision, but is currently 0.027% of bonds issued. This fee is also due within five working days of the bond closing. In the event that the full allocation amount is not issued, or the fee rate changes, the fee will be recalculated to reflect the actual amount issued and the rate in effect at the time of closing. If you have any questions, please contact Andrew Paredes at (303) 864-7822 or andrew.paredes@state.co.us. Sincerely, Rick M. Garcia Executive Director ATTACHMENT 1 March 15, 2021 Jacqueline Kozak-Thiel Chief Sustainability Officer City of Fort Collins P.O. Box 580 Fort Collins, CO 80522 RE: Request for assignment of 2021 Private Activity Bonding Authority Dear Ms. Kozak-Thiel: Housing Catalyst respectfully requests assignment from the City of Fort Collins’ 2021 Private Activity Bond (PAB) cap for the purpose of affordable housing development. As the primary developer and operator of affordable housing in Northern Colorado, Housing Catalyst intends to utilize this authorization to further expand affordable housing opportunities within the City of Fort Collins. As a quasi-governmental entity formed under the state housing statute, Housing Catalyst will be the direct issuer of bonds utilizing the PAB allocation. Therefore, the City of Fort Collins will not be required to provide assistance, nor incur any costs associated with the utilization of the authorized PAB cap. Housing Catalyst contact information for this request: Julie Brewen, CEO 970-416-2910 / jbrewen@housingcatalyst.com 1715 W. Mountain Ave. Fort Collins, CO 80521 Amount of Allocation Requested: $9,438,581 Bound Counsel Firm: Gilmore & Bell, P.C. 15 West South Temple, Suite 250 Salt Lake City, UT 84101 Principal Contact: Ryan Warburton 801-258-2726 / rwarburton@gilmorebell.com ATTACHMENT 2 Description of Applicant’s Local Projects: See Exhibit I Number of Years Entity has been doing business in State of Colorado: 49 years Certificate of Good Standing: Housing Catalyst was originally formed as the Housing Authority of the City of Fort Collins in 1971 under state statute. As a result, this legal entity does not maintain a corporate filing with the Colorado Secretary of State office and therefore is not required to maintain a Certificate of Good Standing under that entity. Description of Assets to be Purchased or Constructed: Housing Catalyst is requesting this allocation to begin accumulation of the PAB cap needed to fund the development of new affordable housing units as well as for the preservation of existing affordable housing units. Our organization intends to utilize our Village on Impala property as well as our neighboring property to redevelop and renovate affordable housing units. Currently, this project is planning to utilize 4% Low Income Housing Tax Credits and will require PAB cap. The planned project will contribute to the need for affordable housing in the City of Fort Collins. The Impala Redevelopment and Renovation project will provide affordable rental homes for individuals and families with incomes ranging from 30-80% Area Median Income (AMI). The location of the project is just south of Poudre High School on South Impala Drive and Impala Circle. The project currently consists of 26 duplexes to be renovated and 60 apartments to be constructed, replacing 11 existing single-family homes; all of which is currently owned by Housing Catalyst. The project will be completed using 4% Low Income Housing Tax Credits and Private Activity Bonds. Current estimates indicate approximately $16 million in PABs will be required for the project. Housing Catalyst intends to work with other County and State allocating entities to obtain the necessary total allocation. Once the PAB cap is allocated to Housing Catalyst, it can be carried over or maintained for 3 years to allow for its utilization in an approved project. Housing Catalyst also maintains a robust development pipeline to continue to address the significant need for affordable housing in the community. Any PAB allocation awarded to Housing Catalyst will be utilized to meet this need, either through partnerships or Housing Catalyst’s own pipeline of new construction and preservation projects. Explanation of how project aligns with City objectives: Housing Catalyst is the primary affordable housing provider, developer, and operator in the City of Fort Collins and is a public housing authority formed under state statute. All projects of Housing Catalyst align with the objectives outlined in the City of Fort Collins 2015-2019 Affordable Housing Strategic Plan. Largely, Housing Catalyst upholds an objective to assist all affordable housing deals in Northern Colorado to come to fruition. This assistance is achieved in several ways, including education, tracking and prioritizing developments, providing technical expertise in development and financing, and issuing PAB on their behalf. Number of Housing Units and Target Demographics: The proposed property to be redeveloped and renovated with allocated PAB cap is anticipated to include 86 affordable rental homes. Target populations will be individuals and families with income ranging from 0-80% of AMI. As previously mentioned, 100% of Housing Catalyst’s development work is focused in meeting the affordable housing needs of the community and serving households at or below 80% AMI, with a strong emphasis on serving as many very low-income households as possible. Statement from Bond Counsel of Project Eligibility: See Exhibit II Thank you for your consideration. I am happy to provide any additional information as needed. Sincerely, Julie J. Brewen CEO DEVELOPMENT RESUME  Housing Catalyst is the largest affordable housing developer and property management company in Fort Collins.  Established in 1971, Housing Catalyst owns and operates over 1,200 affordable homes and assists more than  2,100 families (over 4,000 individuals) in Northern Colorado through our rental properties and housing  programs. We provide critical tools and resources to serve families within the full spectrum of needs from  moving out of homelessness to achieving homeownership.   Housing Catalyst creates vibrant, sustainable communities, incorporating green building design into all our  ventures and serve as a model for high standards in asset and property management. We have received  numerous awards for project designs, innovations, environmental sustainability, accountability, and financial  reporting. The organization is led by a skilled executive management team with extensive experience in real  estate acquisition, development, and management, along with strong financial administration and management.   Housing Catalyst uses a Triple Bottom Line model to build healthy and sustainable affordable communities. We  have secured housing tax credits and other local and federal funding sources for the following recent  developments and renovations:   Oak 140 (2022)  ∙(79) Studio, 1, & 2 bedroom apartments ∙$22.8 million new construction begins June 2021 ∙4% LIHTC, State tax credits, $12.9 million Private Activity Bonds Mason Place Permanent Supportive Housing  (2021)   ∙(60) 1 & 2 bedroom apartments ∙$19.4 million new construction ∙9% LIHTC ∙$11.9 million LIHTC investment Myrtle Street Singe Room Occupancy (2021)  ∙16 apartments ∙$880,000 renovation ∙City of Fort Collins Affordable Housing Fund, Villages, Ltd. equity Village on Shields (2018)  ∙(285) 1,2, & 3 bedroom apartments ∙$68 million renovation ∙4% LIHTC, RAD proceeds, State tax credits, CDBG, HOME, Owner loan ∙$22 million LIHTC investment ∙$17.5 million LIHTC, $8.5 million RAD proceeds, $35 million Private Activity Bonds Village on Horsetooth (2018)  ∙(96) 1,2,3 &4 bedroom apartments ∙$27 million new construction ∙4% LIHTC, State tax credits, CDBG‐DR, RAD proceeds, $19 million Private Activity Bonds Village on Redwood (2017)  ∙(72) 1,2,3 & 4 bedroom apartments/ townhomes ∙$19.4 million new construction ∙4% LIHTC, State tax credits, RAD proceeds ∙$6.7 million LIHTC, $3.3 million State Tax Credits, $1.7 million RAD proceeds, $12 million Private Activity Bonds Redtail Ponds Permanent Supportive Housing  (2015)   ∙(60) 1 & 2 bedroom apartments ∙$12.5 million new construction ∙9% LIHTC ∙$8 million LIHTC investment Village on Plum (2015)  ∙(95) 1, 2 & 3 bedroom apartments ∙$16.1 million renovation ∙4% LIHTC Rehab ∙$5.3 million LIHTC investment, $8.75 million Private Activity Bonds Exhibit I Exhibit II POUDRESR HIGH GRANDVIEWCEMETERY CITY PARK NINEGOLF COURSE W Mulberry St S Taft Hill RdPonderosa DrBriarwoodCtMyrtleCt W Olive Ct W Magnolia Ct Woodford Ct Tyler StBriarwoodRdW Olive St SI mpalaDrImpala Cir Copyright nearmap 2015 300-400 Impala CirFort Collins, CO 80521 CITY OF FORT COLLINS GEOGRAPHIC INFORMATION SYSTEM MAP PRODUCTS These map products and all underlying data are developed for use by the City of Fort Collins for its internal purposes only, and were not designed or intended for general use by members of the public. The City makes no representation or warranty as to its accuracy, timeliness, or completeness, and in particular, its accuracy in labeling or displaying dimensions, contours, property boundaries, or placement of location of any map features thereon. THE CITY OF FORT COLLINS MAKES NO WARRANTY OF MERCHANTABILITY OR WARRANTY FOR FITNESS OF USE FOR PARTICULAR PURPOSE, EXPRESSED OR IMPLIED, WITH RESPECT TO THESE MAP PRODUCTS OR THE UNDERLYING DATA. Any users of these map products, map applications, or data, accepts them AS IS, WITH ALL FAULTS, and assumes all responsibility of the use thereof, and further covenants and agrees to hold the City harmless from and against all damage, loss, or liability arising from any use of this map product, in consideration of the City's having made this information available. Independent verification of all data contained herein should be obtained by any users of these products, or underlying data. The City disclaims, and shall not be held liable for any and all damage, loss, or liability, whether direct, indirect, or consequential, which arises or may arise from these map products or the use thereof by any person or entity. Printed: May 18, 20210250500125Feet © ATTACHMENT 3 AFFORDABLE HOUSING BOARD REGULAR MEETING May 6, 2021, 4:00-6:00pm Remote/Online via Zoom due to COVID-19 3 /4 /2021 – MINUTES Page 1 1.CALL TO ORDER Kristin Fritz called the meeting to order at 4:03 PM 2.ROLL CALL a.Board Members Present: Diane Cohn, Kristin Fritz, Bob Pawlikowski, Tatiana Zentner, Daphne Bear, John Singleton b.Board Members Absent: Jennifer Bray c.Staff Members Present: ▪Sue Beck-Ferkiss, Staff Liaison – City of Fort Collins ▪Kleena Brown, Minutes – City of Fort Collins ▪Meaghan Overton (joined in progress) – City of Fort Collins d.Citizens Present: ▪Marilyn Heller 3.AGENDA REVIEW - no changes XXX 6. NEW BUSINESS c. Allocation of 2021 Private Activity Bond (PAB) – Sue Beck-Ferkiss (Kristin recused from discussion) ▪Private activity bonds- capacity to borrow money at tax exempt rates. Can be used for economic development as well as affordable housing. Amount of bonds based on population-based formula by IRS. Every year the city gets and allocation. The city has 9.4 million this year. ▪If bond capacity is not assigned, then the bond will return to state balance on September 16th. ▪Housing Catalyst is requesting the full 2021 allocation for the rehabilitation and new construction of affordable housing at the Impala project. ▪The Private Activity Bond Committee recommends the city assigns full 2021 allocation to Housing Catalyst’s Impala Project. Similarly, the Affordable Housing Board is being asked for a recommendation. Diane moved to recommend assigning the City’s entire 2021 PAB allocation to Housing Catalyst for the Impala project. John seconded. Motion passes 5-0-1. (Kristin recused) ATTACHMENT 4 DRAFT -1- RESOLUTION 2021-063 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE ASSIGNMENT OF THE CITY’S PRIVATE ACTIVITY BOND ALLOCATION FOR 2021 TO HOUSING CATALYST TO FINANCE THE NEW CONSTRUCTION AND REHABILITATION OF AFFORDABLE HOUSING UNITS WHEREAS, the City of Fort Collins is authorized and empowered under the laws of the State of Colorado (the “State”) to issue revenue bonds for purposes including the financing of multi-family rental housing projects for low- and moderate-income persons and families; and WHEREAS, the Internal Revenue Code of 1986, as amended (the “Code”), restricts the amount of tax-exempt bonds (“Private Activity Bonds” or “PAB”) which may be issued in the State (the “State Ceiling”); and WHEREAS, pursuant to the Code, the Colorado General Assembly adopted the Colorado Private Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the “Allocation Act”), providing for the allocation of the State Ceiling among various State and local governmental units, and further providing for the assignment of such allocations from such governmental units to any entity or person with the authority to issue bonds; and WHEREAS, pursuant to an allocation under Section 24-32-1706 of the Allocation Act, the City has received a direct allocation of the 2021 State Ceiling for the issuance of Private Activity Bonds in the aggregate principal amount of $9,438,581 (the “2021 Allocation”); and WHEREAS, if the City does not issue bonds or assign its annual allocation to another entity by September 15 of each year, its allocation is relinquished to the statewide balance; and WHEREAS, the City received one application for the 2021 Allocation from Housing Catalyst, seeking PAB capacity for the Impala Redevelopment and Renovation project (the “Project”), which would convert eleven single family homes owned by Housing Catalyst into 26 renovated duplexes and 60 new apartments; and WHEREAS, the City’s PAB Committee considered the application and recommends assigning the 2021 Allocation to Housing Catalyst pursuant to Section 24-32-1706 of the Allocation Act; and WHEREAS, Housing Catalyst has expressed its willingness to attempt to issue Revenue Bonds in an amount equal to or greater than the 2021 Allocation; and WHEREAS, the City Council finds that the 2021 Allocation can be utilized most efficiently by assigning it to Housing Catalyst to issue Private Activity Bonds for financing the Project, and that such assignment will advance the City’s objective of increasing the availability of adequate affordable housing for low- and moderate-income persons and families within the City; and -2- WHEREAS, the Council wishes to assign the 2021 Allocation to Housing Catalyst, which assignment is to be evidenced by an Assignment of Allocation agreement between the City and Housing Catalyst; and WHEREAS, a draft of the proposed Assignment of Allocation is attached as Exhibit “A” and incorporated herein by reference. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby approves assignment to Housing Catalyst of the City’s 2021 Allocation of $9,438,581 for the Project as described herein. Section 3. That the City Council hereby authorizes the Mayor to execute an Assignment of Allocation with Housing Catalyst in substantially the form attached as Exhibit “A,” along with such other terms and conditions as the City Manager, in consultation with the City Attorney, determines are necessary or appropriate to protect the interests of the City or effectuate the purposes of this Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 1st day of June, A.D. 2021. _________________________________ Mayor ATTEST: _____________________________ City Clerk ASSIGNMENT OF ALLOCATION THIS ASSIGNMENT (the “Assignment”), dated ________ , 2021 is between the City of Fort Collins, Colorado, a municipal corporation (the “Assignor”), and Housing Catalyst, a body corporate and politic (the “Assignee”). RECITALS A.The Assignee intends to finance the construction of 86 units of new and renovated rental housing on Impala Drive and Impala Circle, all for households with incomes ranging from 30% to 80% of area median income (the “Project”.) The Project will be designed to qualify as a “project” within the meaning of Title 29, Article 4, Part 2, Colorado Revised Statutes, as amended (the “Act”). B.The Assignee intends to provide for the issuance of its Multifamily Housing Revenue Bonds (the “Proposed Bonds”), pursuant to the provisions of the Act for the purpose of financing the Project. C.The Assignee has requested that the Assignor assign to the Assignee the Assignor’s 2021 allocation of $9,438,581 (the “Allocation”) under the bond ceiling for the State of Colorado and its issuing authorities (“the State Ceiling”) computed under Section 146(d) of the Internal Revenue Code of 1986 (the “Code”) as provided for the Assignor as a “designated local issu ing authority” under part 17 of article 32 of title 24, Colorado Revised Statutes (the “Allocation Act”), for use in connection with the financing of the Projects. D.Subject to the terms and conditions set forth herein, the Assignor desires to assign to the Assignee, and the Assignee desires to accept, such Allocation from the State Ceiling. ASSIGNMENT In exchange for the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1.The Assignor hereby assigns and transfers to the Assignee the Assignor’s 2021 Allocation of $9,438,581 from the State Ceiling for private activity bonds. The Assignor and the Assignee understand that such assigned allocation shall automatically be relinquished to the “Statewide Balance” as defined under the Allocation Act unless (a) the Proposed Bonds are issued by the Assignee on or before September 15, 2021, or (b) Section 24-32-1706(3)(c), C.R.S., applies. 2.The Assignor represents that it has received no monetary consideration for the assignment set forth above. 3.The Assignee hereby: (a)accepts the assignment of the Assignor’s Allocation from the State Ceiling described above; EXHIBIT A 2 (b) agrees to use its best efforts to issue and use the Proposed Bonds for the purpose of financing the Projects; and (b) agrees to abide by each of the terms and conditions of this Assignment in connection with the use of such Allocation. 4. The Assignor hereby consents to the election by the Assignee, if the Assignee in its discretion so decides, to treat all or any portion of the assignment set forth herein as an allocation for a project with a carryforward purpose. 5. This Assignment shall not constitute a debt or indebtedness or financial obligation of the Assignor within the meaning of the constitution or statutes of the State of Colorado, nor give rise to a pecuniary liability or charge against the general credit or taxing power of the Assignor. [The remainder of this page is intentionally left blank] EXHIBIT A [Signature Page to Assignment of Allocation] S-1 IN WITNESS WHEREOF, the Assignor and the Assignee have caused this instrument to be executed to be effective as of the date and year first written above. CITY OF FORT COLLINS, COLORADO, as Assignor ____________________________________ Jeni Arndt, Mayor ATTEST: APPROVED AS TO FORM: ____________________________________ ____________________________________ City Clerk Assistant City Attorney ____________________________ _______________________________ (print name) (print name) HOUSING CATALYST, as Assignee By: ________________________________ Its: ________________________________ ATTEST: By: ________________________________ Its: ________________________________ EXHIBIT A