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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/19/2021 - RESOLUTION 2021-099 APPROVING FIRST AMENDMENT TO A Agenda Item 17 Item # 17 Page 1 AGENDA ITEM SUMMARY October 19, 2021 City Council STAFF Clay Frickey, Redevelopment Program Manager John Duval, Legal SUBJECT Resolution 2021-099 Approving First Amendment to Agreement to Secure Public Benefits for the Northfield Development. EXECUTIVE SUMMARY The purpose of this item is to consider a modification of the Agreement to Secure Public Benefits for the Northfield Development (Public Benefits Agreement). The Public Benefits Agreement was approved by Council in June 2020 and contemplates the developer of the Northfield development will provide certain public benefits identified in it, including affordable housing, to be secured by a 20-year covenant. The Northfield developer has partnered with Mercy Housing (Mercy), a provider of affordable housing nationwide, to build affordable rental housing units that would provide the affordable-housing benefit as contemplated in the Public Benefits Agreement. Mercy has obtained approval from the Planning and Zoning Commission for 84 units of affordable housing. This housing exceeds the requirements of the Public Benefits Agreement, which requires only 65 units. However, Mercy is requesting that the Public Benefits Agreement be modified to accommodate the financing Mercy needs for the project. But, at City staff’s request, Mercy and the Northfield developer have agreed to increase the 20-year covenant to a 30-year covenant. The lender Mercy wishes to use to finance the project requires a modification of the Public Benefits Agreement before the lender will fully fund the project. The modification would allow the lender, if Mercy defaults on its loan and the lender forecloses on the project, to rent the affordable housing units to households earning 80% Area Median Income (AMI) rather than the 60% of AMI currently required in the Public Benefits Agreement. Staff supports this modification for the following reasons: • It will ensure the rental units remain affordable even if foreclosure occurs. • Mercy will deliver 84 affordable units rather than the 65 required under the Public Benefits Agreement. • By proceeding now, Mercy will deliver the affordable units at the beginning of Northfield’s development. • The risk of foreclosure is low as only 0.65% of properties using Low Income Housing Tax Credits enter foreclosure per a recent survey of property owners of 21,000 units that used Low Income Housing Tax Credits. • Mercy has also never had a property it owns or developed enter foreclosure. • Mercy and the Northfield developer have agreed to increase the 20-year covenant to a 30-year covenant. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION On October 1, 2019, Council adopted Resolution 2019-101 approving the Consolidated Service Plan for Northfield Metropolitan District Nos. 1 through 3 (Service Plan). The Service Plan supports the proposed development of approximately 56 acres located north of Vine Drive on the west side of Lindenmeier Agenda Item 17 Item # 17 Page 2 Road/Lemay Avenue (southeast of the Lake Canal and north of the to-be designated historic Alta Vista neighborhood). The development contemplates 442 residential units and a mixed-use center that will offer light commercial use on the first floor, residential for-rent units on the second floor, and small amenities open to the public. Subsequently on June 2, 2020, Council adopted Resolution 2020-050 approving the Public Benefits Agreement. The Public Benefits Agreement requires the developer to provide or secure to the City’s satisfaction a variety of public benefits as a precondition to the Northfield Metropolitan Districts (Districts) imposing property tax and issuing bonds or debt to finance the public improvements to be provided by the Districts. The public benefits identified in the Public Benefits Agreement include: • Water and Energy Conservation - LEED Gold certification for each unit, Heat Recovery Ventilation Systems (HRV), solar photovoltaic homes, each unit achieving a Home Energy Rating System (HERS) score of 35-49, electric vehicle charging station in each unit. • Critical Public Infrastructure - construct and design Suniga Road through property, replace and upsize sewer pipe, construction of regional trail through site. • Affordable Housing - at least 65 units of affordable housing with average rent of all units affordable to households earning 60% of Area Median Income (AMI). • Smart Growth Management and Community and Neighborhood Livability - alley loaded homes, historic park adjacent to Alta Vista neighborhood, and 100% attached housing in development. Landmark Homes, the developer of the Northfield development, has partnered with Mercy to deliver the affordable-housing benefit required by the Public Benefits Agreement. Mercy submitted to the City on April 30, 2021, a formal development application, Northfield Commons - MJA210001. Mercy’s development proposal differs from the original Northfield development plan. Mercy proposes 84 units of affordable housing rather than the 65 required by the Public Benefits Agreement. On August 19, 2021, the Planning and Zoning Commission approved Northfield Commons - MJA210001. Since gaining approval, Mercy has been pursuing financing for their proposed development. In doing so, Mercy’s lender has requested adding a subordination clause to the Public Benefits Agreement related to the 20-year affordability restrictive covenant required by the Public Benefits Agreement. Without this subordination clause, Mercy likely cannot proceed with their development. Proposed Subordination Clause The subordination clause proposed by the lender would allow Mercy’s lender, if Mercy defaults under its loan and the lender forecloses on the project, to rent the 84 units at 80% of AMI. Under the current Public Benefits Agreement, the average rent for all units must be 60% of AMI. This subordination clause would ensure all 84 units would retain an affordability restriction even if foreclosure occurs, but just not at 60% AMI. Although the proposed subordination clause would not retain the level of affordability per the Public Benefits Agreement, the units would remain affordable at 80% AMI. This subordination clause provides the lender with some additional financial flexibility to rent to higher income households if a foreclosure occurs and keeps an affordability restriction in line with the intent of the Public Benefits Agreement. Without this subordination clause. Mercy his indicated it may not be able to obtain the needed financing for this development. Advantages and Disadvantages of Subordination Clause The advantage of adopting this subordination clause is that it will allow Mercy to continue with its proposed development. Assuming Northfield develops as initially proposed, Mercy providing 84 affordable units means the development will exceed the required number of affordable units per the Public Benefits Agreement. Mercy’s participation in Northfield will also ensure the delivery of affordable units from the outset of the development rather than waiting for a later delivery of affordable units. The modified subordination clause will also keep some level of affordability if foreclosure occurs. The disadvantage of adding this subordination clause to the Public Benefits Agreement is there is a risk that the units built by Mercy will not be as affordable as the initial Public Benefits Agreement contemplated if a Agenda Item 17 Item # 17 Page 3 foreclosure occurs. Mercy Housing has never developed, financed or owned properties that have been foreclosed. According to a 2018 survey conducted by CohnReznick of owners of over 21,000 units developed using Low Income Housing Tax Credits (LIHTC), the cumulative foreclosure rate of units developed using LIHTC was 0.65%. ATTACHMENTS 1. Mercy Housing Memo to Council (PDF) 2. Agenda Item Summary, October 1, 2019 (PDF) 3. Agenda Item Summary, June 2, 2020 (PDF) 4. Northfield Site Plan (PDF) 5. Northfield Commons Site Plan Set (PDF) 6. Powerpoint Presentation (PDF)  MercyHousingMountainPlains|mercyhousingmountainplains.org 1600Broadway,Suite2000|Denver,Colorado80202o|303.830.3300f|303.830.3301  6816S.137thPlaza|Omaha,Nebraska68137o|402.393.2096f|402.393.2144 4802E.RayRoad,Suite23|Phoenix,Arizona85044o|602.952.9525f|480.755.2298 TTY|800Ͳ877Ͳ8973or711mercyhousing.org  MercyHousingissponsoredbycommunitiesofCatholicSisters  September29,2021 RE:RequestofAmendmenttoanAgreementofPublicBenefitsforNorthfieldMetroDistrictas pertainingtoa20ͲyearAffordableHousingCovenant  DearFortCollinsCityCouncilMembers,  LandmarkHomes/DCFNorthfieldLLC,theDeveloperofrecordforthePublicBenefitAgreement(PBA)for NorthfieldMetroDistrictsignedOctober5,2020,anditsintendedpartnerfordevelopmentofaffordable housingrentalunitsatNorthfield,MercyHousingMountainPlans(“MercyHousing”),arerequestingan amendmenttotherecordedPBA. Background: MercyHousingandLandmarkHomesenteredanAgreementforPurchaseandSaleofapproximately5 acresoflandencompassedinthelargerNorthfieldMetroDistrict’s~53acres.MercyHousingand LandmarkHomesagreedtheinclusionofMercyHousing’sintendedaffordablerentalhousingat NorthfieldwouldbecountedtowardtheCity’srequirementforincludingaffordablelivingunitsat80% AMIforHomeownershipor60%AMImaxforaffordablerentalunits.CityCouncilapprovedthecreation ofNorthfieldMetroDistrictanditsAgreementofPublicBenefiton10/5/2020.PertheAgreement,at least65livingunitswithinNorthfieldaretobecreatedaseitheraffordablerentalunitsatanaverageof 60%AreaMedianIncome(AMI)orownershipunitsataverageof80%AMI. Presently,MercyHousingisplanning84unitsofrentalaffordablehousingata60%AMIaveragefor families(mixof1,2,3bedrooms)inanintegratedfashionwiththebalanceoftheLandmarkHomes developmentonapproximately5acressouthofthenewlyextendedSunigaRoad.(Seeattachedsite plan).MercyHousing’saffordabledevelopmentwillalsoadheretotheotherstipulationsrequiredfor livingunitsintheAgreement,suchasmeetinganLEEDforHomesGoldstandardandinclusionofsolar photovoltaic. Whiletheoriginalplatentailed65townhomeunitstoaffordable,MercyHousingandLandmarkhave workedtoincreasetheaffordabilityonsiteto84unitsincontextuallyappropriatethreestory12Ͳplex buildings.MercyHousing’sprojectNorthfieldCommonshasbeenapprovedbyCityPlanningunderits PDPSubmittalprocess,andhassubmittedinSeptember2021forFinalPlanApproval.FortCollins PlanningandZoningBoardhasalsounanimouslyapprovedMercyHousing’srequestformajor ATTACHMENT 1 2  modificationtotheNorthfieldPlatforthedesignatedaffordabletractsforourcurrentdesignonAugust 19,2021.WearemovingaheadwithfinalconstructiondocumentsandplanningprocedureswithCity PlanningandDevelopmentStaff.Currentlyourarchitectandteamareprojectingfinalapprovaland permitstobereadybymidDecember2021,andagroundbreakingsoonafterward. AllofMercyHousing’sprojectfinancinghasbeenapprovedorisintheprocessofbeingfinalized.Project Financingthathasapprovalorisintheprocessofapprovalincludesapproximately$11,000,000ofFederal LowIncomeHousingTaxCredits,$2,000,000ofprivatemissionalignedcapital,$1,600,000ofState funding,andourconventionalfirstmortgageloan.LandmarkHomeshasagreedtodonatethelandto MercyHousingfortheprojecttoachievefinancialviability,aswell.Additionally,TheCityofFortCollins AffordableHousingCommitteeandCityCouncilhaveapproved$1,000,000inannualcompetitive allocationoftheCity’sFederalHOMEfundingtowardtheprojectsubjecttoallotherfundingbeing committed.Ithastakenlotsorcoordination,andfranklysomegenerositytoputthisprojecttogether, andweneedonemoremissingpiecetogetitacrossthefinishline. TheRequest: ThePublicBenefitAgreement’SectionI.CoutlinestheaffordabilityrequirementsfortheNorthfieldMetro DistrictandrightlydefinesamechanismbywhichtheCitycanholdthedeveloperresponsibleforensuring aminimum20Ͳyearaffordabilitycovenantthatisreflectiveofthetargetedincomesforaffordable homeownershipandrental(80%maxforsaleAMIand60%averageforrentAMIrespectively). Additionally,theAgreement(Sec.I.C.3)stipulatesthat“whenrecorded,the20ͲYearCovenantshallnot besubordinatetoanylienorotherfinancialencumbranceotherthanliensforrealpropertytaxes”. AtissueistheCity’scurrentrequirementforthe20Ͳyearaffordabilitycovenanttoremainunsubordinated andtorunaheadofanyinlienprioritytoNorthfieldCommons’firstmortgageholderandcommercial lender.WhileMercyHousingunderstandstheCity’sintentiontomaintainaffordabilityatdesignated unitswithinNorthfield,unfortunatelytheexactwordingoftheclausehasasignificantadversefinancial impacttoourandotherprojects.MercyHousinghasverifiedwithourpreferredlenderandtwoother commerciallendersthattheunsubordinateddeedrestrictionof60%AMIrentsonthepropertywill adverselyaffectthebanks’typicalloantovalueallocationandreducetheirpermanentloanamount proportionalitytothesecurityandcollaterallostintheveryunlikelyeventofforeclosure.Recently, MercyHousing’spreferredprojectlender,amongothers,confirmedthattheunsubordinatedrequirement wouldreduceourcurrentestimatedloanproceedsapproximately$950,000tomeettherequirementof theCity’scovenant.NeitherMercynortheprojectcannotaffordadditionalgapcaused,andsuchgap willfurtherdelayandendangerfinancialfeasibilityoftheprojectmovingforward. MercyHousingandLandmarkHomesarerequestingamodification(pleaseseeattachedAmendment)to thePublicBenefitAgreementthatwouldallowtheaffordablehousingdeedͲrestrictedrentstoincreaseto 80%AMImaximumonlyintheextremelyunlikelyeventofforeclosurebythelender,ordeedinlieu,atthe property.MercyHousinghasconfirmedwithlender’slegaltheallowanceofupto80%AMIineventof foreclosurewouldallowarestorationoftypicalloansizingandunderwritingaswearecurrently projecting. Additionally,NorthfieldCommonswillhaveupto(3)threeadditionalrestrictivedeedcovenantsfrom ColoradoHousingFinanceAuthority,TheCityofFortCollinsAffordableHousingDepartmentandThe StateofColorado’sDivisionofHousing.Allthesecovenantswillrequiretheproject’scurrentaveragerent 3  of57%AMIandwillbeineffectfor40years.Thedifferenceisallthreearepartiallysubordinatedtoour firstmortgage.Allsuch“soft”fundersalsoacknowledgethattheactualchancesofforeclosureonan affordablerentalpropertyareessentiallynonͲexistent.Infact,asurveyofover22,000lowͲincometax creditpropertiesshowedanannualforeclosurerateoflessthan.1%,andcumulativerateoflessthe1%. Thissurveyrepresentedmorethan70%ofthecreditpropertiesplacedinservicesincetheinceptionof theIRSSection42programin19861.MercyHousinghasservedmorethan152,000peoplenationally. Wehaveparticipatedinthedevelopment,preservationand/orfinancingofmorethan48,200affordable homes.WeareoneofonlyafewnationalorganizationsthatprovideaffordablehousingforalllowͲand moderateͲincomepopulations.MercyHousinghasneverdeveloped,financed,orownedpropertiesthat haveenteredintoforeclosureofdeedinlieu. Conclusion: MercyHousingownsandoperatesa62ͲunitfamilyaffordableapartmentinFortCollins,SpringfieldCourt andisexcitedtoaddtoourfootprintintheCitybyprovidingmuchneededaffordableoptionsforworking familieswithour84ͲunitNorthfieldCommons.MercyHousinghassignificantlocalsupportforthe project,includingtheCity’sPublicHousingAuthority,HousingCatalyst,whowillbeprovidingtheproperty taxexemptionandissuingourtaxͲexemptbonds,theCityofFortCollinsAffordableHousingDepartment, TheStateofColorado,andLarimerCounty.LandmarkHomesandMercyHousingareproudoftheunique partnershipandvisionofthePBAthatleveragesthecreationofametrodistrictstructurewithincreasing theCity’saffordablerentalstock. MercyHousinghopestherequestcanbeapprovedbytheCityCouncilandwearewillingtoanswerany questionsregardingthespecificaspectsoftherequest. Respectfully,    KuhlBrown DirectorofRealEstateDevelopment MercyHousingMountainPlains    1LIHTCPropertiesShowTheirStrength|HousingFinanceMagazine Agenda Item 12 Item # 12 Page 1 AGENDA ITEM SUMMARY October 1, 2019 City Council STAFF Josh Birks, Economic Health Director John Duval, Legal SUBJECT Items Relating to the Northfield Metro District Nos. 1 through 3 Consolidated Service Plan. EXECUTIVE SUMMARY A.Resolution 2019-101 Reconsidering, Rehearing and Approving the Consolidated Service Plan for Northfield Metropolitan District Nos. 1-3. B.Resolution 2019-102 Making Findings, Determinations and Conclusions Denying on Rehearing the Consolidated Service Plan for Northfield Metropolitan District Nos. 1-3. The purpose of this item is for City Council to consider on rehearing approval of the Northfield Metropolitan District Nos. 1 through 3 Consolidated Service Plan (the “Service Plan”) or, alternatively , to deny the Service Plan on rehearing. Resolution 2019-101 is what Council should adopt to approve the Service Plan. Resolution 2019-102 is what Council should adopt to deny the Service Plan. If Resolution 2019-102 is adopted to deny the Service Plan, Council should also decide in Section 5 of the Resolution what its reasons are for denial on the basis of non-compliance with the Council’s current Metro District Policy (Policy). The Policy contemplates that only Service Plans that provide “extraordinary public benefits that align with the goals and objectives of the City” are favored for approval. The developer of the proposed Northfield Development has submitted the Service Plan to support the proposed development of approximately 56 acres located nort h of Vine Street on the west side of Lindenmeier Road/Lemay Avenue (southeast of the Lake Canal and north of the to -be designated historic Alta Vista neighborhood). The development is anticipated to include 442 residential units and a mixed -use center that will offer light commercial use on the first floor, residential for -rent units on the second floor, and small amenities open to the public. The project has committed to provide approximately 15 percent for -sale affordable housing units. A Mill Levy Cap of 50.00 mills has been proposed under the Service Plan to support the project. As per the Council’s Metro District Policy, proceedings for a public hearing for a Metro District Service Plan public hearing are as follows: 1.Announcement of item 2.Consideration of any procedural issues 3.Explanation of the application by City staff 4.Presentation by the applicant (suggested time: 15 minutes) 5.Public testimony regarding the application 6.Rebuttal testimony by the applicant (suggested time: 10 minutes) 7.Councilmember questions of City staff and the applicant 8.Motion, discussion and vote by City Council. The public hearing for this Service Plan was previously noticed in accordance with Council’s Metro District Policy to be conducted at Council’s August 20, 2019, meeting. However, Council voted at that meeting, as COPYATTACHMENT 2 Agenda Item 12 Item # 12 Page 2 authorized in Section 2.c. of the Council’s Rules of Procedure, to continue this matter to the Council’s next regular meeting, which is this September 3, 2019, meeting. The applicant mailed on August 22, 2019, n otice of this continuance to the fee-title owners of property within the proposed Districts and published this notice in the Coloradoan on August 24, 2019. At its September 3, 2019 meeting, the Council adopted a motion to again continue the hearing, resch eduling the hearing for the September 17, 2019 meeting. At its September 17, 2019, meeting, City Council voted to deny approval of the Service Plan. However, at its September 24, 2019, meeting, City Council voted to reconsider and re-hear the application, which was scheduled for this October 1, 2019 meeting. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION NOTE: Highlight indicates updated public benefits information from the latest version of the submitted Ser vice Plan. City Council raised several questions as a result of the motion to reconsider the Service Plan. Answers to these questions will be provided in a read-before memo on October 1, 2019. Council’s Discretion under its Policy The Council’s Metro District Policy contemplates that Council will consider favorably those metro district service plans that will “deliver extraordinary public benefits.” However, the Policy also provides that approval of service plans is within the Council’s sole discretion. In the exercise of that discretion, the Council may reject, approve, or conditionally approve service plans on a case -by-case basis. The Council therefore retains under the Policy the full authority to determine whether the proposed “extraordinary public benefits” proposed under a particular service plan are sufficient. Project Overview Landmark Homes is proposing a residential community situated within walking distance of the City’s Old Town. The Planned Development incorporates goals of the following plans: City Plan, Transportation Master Plan, Master Street Plan, Nature in the City Strategic Plan, Natural Areas Master Plan, Paved Recreational Trail Master Plan, Northside Neighborhoods Plan, Pedestrian Plan, and Bicycle Master Plan. The proposed Northfield Metro District Nos. 1 through 3 (the “Metro Districts”) will support 56 acres of planned development located north of Vine Street on the west side of Lindenmeier Road/Lemay Avenue (southeast of the Lake Canal and north of the to-be designated historic Alta Vista neighborhood). (Attachment 1) The project anticipates constructing: • Approximately 442 residential units (a mix of single-family and multi-family). • Minimum of 14.7% affordable (65 units) either for-sale or for-rent units. • The affordable for-sale units will be offered at an AMI of 80% or lower. The affordable for-rent units will be offered at rents at or below 80% of Area Median Income (“AMI”) with the average of all rents at or below 60% AMI. • The remaining housing units in the project are expected to be priced in an attainable range, considered by other cities to be between 80% and 120% of AMI. COPY Agenda Item 12 Item # 12 Page 3 Table 1 Proposed Unit Pricing Residential Units (2019-2025) Housing Type # Units Price Brownstones 139 $388,518 Flats 180 359,040 Value Condo 16 316,200 Stacked Condo 40 306,714 Deed Restricted Condo 65 265,200 Studio Rental 2 200,000 Total/Average 442 $347,504 • A mixed-use center that will offer light commercial use on the first floor, residential for -rent units on the second floor, and small amenities open to the public. Table 2 Commercial Building Space Pricing Commercial (2022) Type Sq Ft Price Retail 2,679 $225 Total $602,775 • An enhanced setback from the Lake Canal Wetlands to further protect them from new development; and • On-site Regional Trail as well as the off- site pedestrian connection for the northeastern portion up to the intersection at Lemay Avenue and Conifer Street. Council Finance Review Follow-Up On July 15, 2019, the Council Finance Committee reviewed the proposed Consolidated Service Plan for Metro Districts. The Committee requested additional information on a few items: • Affordable Housing - How does the City ensure the Metro District will provide affordable housing? Below are some of the manners in which housing could be delivered, however, the list is not exhaustive: o Traditional Delivery - Existing affordable housing providers could construct units within the district using their traditional funding approaches. These units would need to be rented or sold at a price point that complies with the City’s policy. The monthly cost to the user would be no different within the district than outside the district. Therefore, the housing provider would need to identify and obtain additional subsidy to cover the resulting lower sales price for a unit that wi ll cost the same inside and outside of a District. o Land Trust - A developer could elect to transfer or sell affordable housing lots to a Land Trust operating in the City. The Land Trust, typically a non-profit, would then reduce the tax burden to the occupant by removing 25 to 30 percent of property value associated with land. In addition, a Land Trust would also have to price units following the same principles - meaning that the net cost to the occupant would be consistent inside and outside a district. o Land Bank - A developer could elect to sell a portion of their property to the City’s land bank program at a market or discounted rate. These units would need to be rented or sold at a price point that complies with the City’s policy. The monthly cost to the user would be no different within the district than outside the district. COPY Agenda Item 12 Item # 12 Page 4 The Economic Health Office understands the concern with the reservation of lots for affordable housing. Staff is looking into options for ensuring the building of affordab le housing units and whether reservations or some alternative method will better achieve this goal. • How will the solar in the Metro District be managed? o Utilities is working on the analysis and management of solar within the system. As part of the br oader system, staff is coordinating a work plan and schedule for the development of a distributed energy resources roadmap with the Energy Board and community stakeholders. The work plan will maintain alignment with proposed updates to the Energy Policy, Climate Action Plan Framework and Platte River Integrated Resources Plan. o Utilities is planning to incorporate “smart” inverter capabilities into our solar interconnection guidelines (for all installations). These capabilities will initially enable Utilit ies to prescribe settings, which will limit potential negative impacts of too much solar in specific areas. In the future, the inverters may allow Utilities to dynamically control settings which will support the electric distribution system. On September 3, 2019, the Council requested additional information on a few items: • Are Metro District accelerating the pace of development in Fort Collins? o The demand for housing in Fort Collins, specifically for attainable housing units, exists with or without a Metro District. A single Metro District itself will have minimal impact on the pace of development, especially in an area where development would naturally occur based on the demand for housing. o Northfield is building at a density of eight units per acre, lower than the allowed density of 12 units per acre. o Compared to a “code built”, non-Metro District development, the Northfield Metro District is anticipated to have a lower environmental impact based on the environmental public benefits they will implement , thereby helping the City reach its CAP goals. • Will including amenities such as a pool impact the price of properties across the community? o Northfield is including a pool and clubhouse in their development, however, these amenities are not unique to developments in Fort Collins and we don’t believe it will have an impact to overall housing prices in the surrounding neighborhood or City housing prices on the whole. Service Plan Overview Under Landmark Homes’ proposed Service Plan, the Metro Districts would be used to construct critical public infrastructure and other site costs reducing the overall development costs. Staff has reviewed the Service Plan and determined that it includes all the information required by Section 32 - 1-202(2) of the Colorado Revised Statutes. The required information is: COPY Agenda Item 12 Item # 12 Page 5 (a) A description of the Districts’ proposed services; (b) A financial plan showing how the proposed services are to be financed, including the proposed operating revenue derived from property taxes for the first budget year of the Districts; (c) All proposed indebtedness for the Districts displayed together with a schedule indicating the year or years in which the debt is scheduled to be issued; (d) A preliminary engineering or architectural survey showing how the proposed services are to be provided; (e) A map of the proposed Districts’ boundaries and an estimate of the population and valuation for assessment of the proposed Districts; (f) A general description of the facilities to be constructed and the standards of such construction, including a statement of how the facility and service standards of the proposed Districts will be compatible with the City’s facility and service standards; (g) A general description of the estimated cost of acquiring land, engineering services, legal services, administrative services, initial proposed indebtedness and estimated proposed maximum interest rates and discounts, and other major expenses related to the organization and initial operation of the Districts; and (f) A description of any arrangement or proposed agreement with any political subdivision for the performance of any services between the proposed Districts and such other political subdivision, and, if the form contract to be used is available, it shall be attached to the Service Plan. The Service Plan calls for the creation of three Metro Districts working collaboratively to deliver the proposed Northfield development. The phased development is anticipated to occur over the next nine plus years and support an estimated population of 1,139. A few highlights about the proposed Service Plan, include: • Assessed Value - Estimated to be approximately $13.3 million in 2029 at full build-out • Aggregate Mill Levy - 50 mills, subject to Gallagher Adjustments • Debt Mill Levy - 40 mills, may not be levied until an approved development plan or intergovernmental agreement has been executed that delivers the pledged public benefits • Operating Mill Levy - Up to an additional 10 mills (aggregate mill levy 50 mills) to f und several on-going operations, such as but not limited to: (a) a non-potable irrigation system, and (b) road infrastructure. Once a District imposes a Debt Mill Levy, such District’s Operating Mill Levy cannot exceed ten (10) mills at any point. • Maximum Debt Authorization - Anticipated to be approximately $16 million to cover a portion of the estimated $30 million in project costs • Regional Mill Levy - The Regional Mill Levy of 5 mills shall not be counted against the Aggregate Mill Levy Maximum Public Improvements The Service Plan anticipates using the Debt Mill Levy to support the issuance of bonds in the maximum amount of $16 million to fund all or a portion of the following $30 million in public improvements (details available in Exhibits D and G of the Service Plan): • Earthwork and Grading - Approximately $5.4 million in earthwork and site preparation costs associated with the proposed project. • Roadway Improvements - Approximately $6.4 million in total costs to construct asphalt infrastructure for streets and parking on the project, including Suniga arterial (costed at $2.5M). • Potable Water Improvements - Approximately $0.6 million in costs to construct potable water infrastructure supporting the project. COPY Agenda Item 12 Item # 12 Page 6 • Sanitary Sewer Improvement - Approximately $1.3 million constructing the sanitary sewer infrastructure, including upsizing, both on-site ($0.7M) and off-site ($0.6M) for the project • Storm Sewer Improvements - Approximately $1.9 million in costs to construct the main storm sewer system and infrastructure for the project. • Open Space/Landscaping - Approximately $4.0 million in costs for Regional Trail construction, neighborhood park development, development of clubhouse/pool, and other landscaping • Miscellaneous / Amenity - Approximately $5.5 million in miscellaneous costs associated with the project, such as engineering, inspection, and administrative costs, plus a 20% contingency estimate of $5.1 million. The subtotal for basic costs associated with public improvements through the Metro Districts is approximately $20.3 million (previously $19.6); non-basic costs are approximately $9.8 million (previously $10.5) which brings the project to an approximate total of $30.1 million. Public Benefits As required by the City Council’s current M etro District Policy (Metro District Policy), the Service Plan will deliver several extraordinary development outcomes that support several public benefits. A general list of benefits and, where available, their estimated value is described below (details in Exhibit G of the Service Plan): COPY Agenda Item 12 Item # 12 Page 7 Table 3 Northfield Metro District Public Benefits Evaluation COPY Agenda Item 12 Item # 12 Page 8 Affordable Housing - The financing and reimbursement options created by the Metropolitan Districts will enable the Northfield project to deliver a minimum of 65 units or 14.7% of the total project at affordable rates. These units will be delivered under the following guidelines: o A minimum of 65 (14.7%) for-sale affordable units offered at a price affordable of 80% AMI and/or for - rent affordable units offered at rents at or below 80% AMI with the average of all rents at or below 60% AMI. o Landmark has a signed LOI with Mercy Housing, a very well established affordable, for -rent multifamily builder that has projects around the nation. o Enforceability: The affordable units shall be secured through one of the mechanisms described below (or through any other mechanism agreed upon in writing between the City and the Developer) prior to receipt from the City of a building permit for more than fifty percent (50%) of th e total number of dwelling units authorized under the approved development plan. ➢ Construction of the affordable units by the Developer, but only those Developer-constructed affordable units for which the City has issued a certificate of occupancy will be counted toward the satisfaction of the total number of affordable units needed. ➢ Sale of lots for the affordable units by the Developer to a non-profit or for-profit builder who will contractually guarantee to the City that the builder will only build affordable units on the those lots. At the time such sale is closed and the contractual guarantee has been provided to the City to its satisfaction, the number of housing units approved for construction on such lots shall count toward the number of affordable units needed. o Units will be deed restricted for at least 20 years. • Environmental Sustainability o Energy Conservation  Solar - Northfield plans to include solar panels on all units. These buildings will feature a photovoltaic system that will produce at least 1kW of power for each unit. Thus, a 12-unit building will have roughly 12kW of solar panels. (previously, solar only on the condo units.)  EV Chargers - Northfield will also deliver a 240V outlet in every garage to provide a place for the electric vehicle fast-charging stations and further encourage residents to drive eco-friendly cars.  LEED Gold Certification - Northfield has committed to construct all 442 units, including the affordable housing units, to meet LEED Gold certification. LEED measures nine key areas that ensure the entire community, beyond just the individual homes, are meeting and exceeding green materials and practices. These nines areas are sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, location and linkages, awareness and education, innovation in design, and regional priority. Northfield has engaged the environmental group The Green Insight to help achieve this certification and will be responsible for the inspections throughout the building process to ensure Northfield receives the LEED Gold certifications.  HERS Rating Commitment - All the homes will commit to HERS ratings ranging from 35 to 49 (previously 49 to 55) compared to the average Fort Collins HERS ratings of new home ranging from 58 to 62. Increased energy efficient building materials and methods were considered to increase the energy efficiency of the homes. According to the HERS index, these homes in Northfield will be 51-65% (previously 45-51%) more energy efficient than a standard new home and 81-95% (previously 75-81%) more efficient than the average resale home. The HERS ratings are incorporated into the LEED scores and are part of the entire LEED Gold certification and standard. Landmark will contract with a green energy consultant to ensure the buildings are constructed according to energy efficient standards and that official HERS scores are certified upon completion.  Energy Recovery Ventilator (ERV) Systems – – An ERV system will also be installed on every market rate unit to improve air quality inside the homes. When homes get very tight due to efficient construction techniques, the air inside can get stagnant. The ERV system helps bring in fresh outside air and condition it to the inside temperature through an energy efficient recovery core. COPY Agenda Item 12 Item # 12 Page 9 o Environmental Conservation - The project provides an enhanced setback from the Lake Canal Wetlands to further protect them from new development. The connections over Lake Canal will be constructed with low impact box culverts and abide by and exceed Army Core of Engineers standards for historic protected wetlands. Landscaped areas will focus on low -water usage designs. Initial hydro- zone calculations indicate Northfield will use 6.87 (previously 7.63) gallons of water per square foot, well below the City’s limit of 15 gallons of water per square foot. • Off-Site Sewer Improvements - Northfield plans to replace and upsize the sewer line from Vine Drive, around Alta Vista, and along a portion of Lemay Avenue. It is not clear at this early stage whether the developer or the district will contract for construction of the upsizing, but they will seek reimbursement from the city for the upsized portion. • Regional Trail - Rather than simply designating an on-site easement for the future trail construction by the City, Northfield plans to finance and deliver the on-site Regional Trail as well as the off-site pedestrian connection for the northeastern portion up to the intersection at Lemay Avenue and Conifer Street. • Community Gateway - Northfield will promote the City’s objective of preserving and enhancing historic resources. The southeastern edge of Northfield borders the to -be-designated historic Alta Vista neighborhood. To blend the transition to new dev elopment and pay homage to the neighborhood’s history, Northfield will feature an Interpretive Historical Park and Gateway Features bordering Alta Vista. These additions were developed in collaboration with neighbors in the Alta Vista neighborhood and woul d provide an extraordinary benefit to the City as a whole. • Economic Health Outcomes - Northfield is located within walking and/or biking distance to some of the largest employment hubs in the City, including City of Fort Collins Municipal Offices, Colora do State University, Woodward, and New Belgium Brewing. Northfield's proximity to these hubs and affordable and its attainable price points set the project apart from other recent residential developments in Fort Collins. Through Northfield, the City will gain high-quality, attainable housing near the City’s economic and cultural core, helping reduce congestion in the City and provide workforce housing. Policy Comparison The conceptual use of a Metro District at Northfield complies with the City’s existin g policy. Northfield Proposal Mulberry Waterfield Montava Current Policy Mill Levy Caps 50 Mills 50 Mills 50 Mills 60 Mills 50 Mills Basic Infrastructure Partially Partially Partially Partially To enable public benefit Eminent Domain Will Comply Will Comply Will Comply Will Comply Prohibited Debt Limitation Will Comply Will Comply Will Comply Will Comply 100% of Capacity Dissolution Limit Ongoing for O&M Ongoing for O&M Will Comply Will Comply 40 years (end user refunding exception) Citizen Control Will Comply Will Comply Will Comply Will Comply As early as possible Multiple Districts Yes Yes Yes Yes Projected over an extended period Commercial/ Residential Ratio Residential and Commercial Residential and Commercial 100% Residential Mixed Use N/A Performance Assurances The proposed Service Plan prohibits the issuance of any debt or imposition of the debt mill levy or fees to pay debt unless and until the delivery of the Public Benefits are secured for each development phase of the p roject in a manner that is approved by City Council, as outlined in the February 2019 updated City Metro District Policy. This requirement can be satisfied by one or both of the following methods, as applicable: • Intergovernmental Agreement - For any of the Public Benefits to be provided by one or more of the Metro Districts, each such District must enter into an intergovernmental agreement with the City agreeing to provide those Public Benefits as a legally enforceable multiple-fiscal year obligation of the District under COPY Agenda Item 12 Item # 12 Page 10 TABOR or by securing performance of that obligation with a surety bond, letter of credit or other security acceptable to the City and all such intergovernmental agreements must be approved by the City Council by resolution; • Approved Development Plan - For any of the Public Benefits to be provided by one or more Developers of the Planned Development, each such Developer must enter into a development agreement with the City under the Developer’s applicable Approved Development Plan, which agreement must legally obligate the Developer to provide those Public Benefits before the City is required to issue building permits and/or certificates of occupancy for structures to be built under the Approved Development Plan for that phase of the Planned Development or to secure such obligations Public Benefits and Triple Bottom Line The Metro District Policy supports the formation of a metro district regardless of development type when a District delivers extraordinary public benefits. The public benefits should be: (1) aligned with the goals and objectives of the City whether such extraordinary public benefits are provided by the metro district or by the entity developing the metro district because metro districts exist to provide public improvem ents; and (2) not be practically provided by the City or an existing public entity, within a reasonable time and on a comparable basis. The Service Plan for the Northfield Project delivers several proposed policy outcomes. (Attachment 3) Triple Bottom Line - Scan An interdisciplinary staff team prepared a Triple Bottom Line Scan (TBL Scan) of the proposed Service Plan. (Attachment 4) The net analysis is generally neutral to slightly positive. Note that the TBL Scan is not for the development itself, but for the difference between the Metro District benefits and a non-Metro District development. The highlights are provided below: • Economic - The proposed affordable housing is expected to have a positive impact on retaining and attracting talent to strengthen our local labor force for employers. The pricing of the remaining homes at 80-120% of AMI meets the community’s needs for housing at that income level. Northfield is located within walking and/or biking distance to some of the largest employment hubs . • Environmental - Some benefit is expected from the proposed solar, but overall the proposed environmental public benefits were interpreted as weak by staff under the current proposal. Additional clarity is needed to assess any improved benefit. However, the applicant completed additional HERs testing after the TBL Scan was completed, and the positive results of the testing are not included in the Triple Bottom Line Report. • Social - This area is expected to have the most positive impact due to the commitme nts to affordable housing. Financial Assessment Utilizing the District’s Financial Plan, the City reviewed the Financial Plan in partnership with Economic & Planning Systems. (Attachment 5) The review concluded the following: • The proposed mill levies are in line with the City’s policy. • The market values used in the public revenue estimates are reasonable. • EPS expressed concern about residential absorption of Northfield in the context of other new North College developments: Waterfield, Water’s Edge, and Montava. • EPS found it difficult to assess if there would be “extraordinary benefits” with the following: clubhouse and swimming pool, allowed density/more open space, and increased landscaped area. Basic Infrastructure and Public Benefit The Metro District Policy allows a metro district to fund “basic infrastructure”, that which is typically expected to be provided by a developer (both in type and magnitude), when the inclusion of “basic” infrastructure offsets COPY Agenda Item 12 Item # 12 Page 11 higher costs associated with extraordinary development outcomes that cannot directly be provided by a metro district (Defined in Exhibit A of the Metro District Policy, e.g., rooftop solar, affordable housing, etc.). The Developer has identified an estimated $18.7 million in public benefit s which are outlined in Table 3. After reviewing the Service Plan, estimated public benefits, and the Maximum Debt Authorization of $16 million, staff recommends approval of the Service Plan. Estimated Property Taxes Table 4 Annual Tax Levied on Residential Property with $300,000 Actual Value within the District (Assuming Maximum District Mill Levy) Taxing Entity Mill Levies (2018) Annual tax levied Northfield Metropolitan District No. 50.00 $1,080.00 Poudre R-1 General Fund 40.30 $870.48 Larimer County 22.40 $483.90 Poudre R-1 Bond Payment 12.33 $266.33 City of Fort Collins 9.80 $211.62 Poudre River Public Library District 3.00 $64.80 Health District of Northern Larimer County 2.17 $46.81 Northern Colorado Water Cons. District 1.00 $21.60 Larimer County Pest Control District 0.14 $3.07 TOTAL:141.14 $3,048.61 Applicant Supplied Materials The applicant requesting consideration of the Service Plan has submitted a PowerPoint presentation for Council’s review. (Attachment 8) CITY FINANCIAL IMPACTS The proposed Service Plan will not have an impact on the City’s financials. The applicant has paid the fees required under the City’s Metro District Policy, which fees are designed to offset the cost of staff and outsid e consultant and legal review. In addition, the proposed Service Plan includes a requirement that the following notice be included in all debt issued by the Districts: “By acceptance of this instrument, the owner of this Debt agrees and consents to all of the limitations with respect to the payment of the principal and interest on this Debt contained herein, in the resolution of the District authorizing the issuance of this Debt and in the Service Plan of the District. This Debt is not and cannot be a Debt of the City of Fort Collins.” ATTACHMENTS 1. Vicinity Map (PDF) 2. Comparison of September 17 Service Plan with Current Version (PDF) 3. Triple Bottom Line Summary (PDF) 4. EPS Northfield Metro District Review (PDF) 5. Combined Vicinity Map (PDF) 6. Northfield September 25, 2019 PowerPoint Presentation (PDF) 7. PowerPoint Presentation (PDF) COPY Agenda Item 13 Item # 13 Page 1 AGENDA ITEM SUMMARY June 2, 2020 City Council STAFF Josh Birks, Economic Health Director Rachel Rogers, Senior Specialist Economic Sustainability John Duval, Legal SUBJECT Resolution 2020-050 Approving an Agreement to Secure Public Benefits for the Northfield Development. EXECUTIVE SUMMARY This item meets the following COVID-19 emergency priorities for being on the Council agenda: •Priority 4 - Items that are substantially complete, has completed significant public process, and is ready for Council consideration. This item is being brought forward to help ensure that work does not have to be redone and can continue to move forward. This item is vital to secure necessary project financing and is also related to Council’s previous action of approving a metropolitan district service plan to be used in this project to help fund certain public benefits, i.e., much-needed affordable and attainable housing. The project will also provide additional economic benefits of construction employment and significant permit fee revenue to the City. These benefits are material, especially in the midst of the pending economic slowdown as a result of the COVID-19 pandemic. The purpose of this item is to consider Resolution 2020-050, which will approve the Agreement to Secure Public Benefits for the Northfield Development (attached as Exhibit A to the Resolution) (Public Benefits Agreement). The Agreement is contemplated in the Consolidated Service Plan for Northfield Metropolitan Districts Nos. 1-3, approved by City Council on October 1, 2019. Staff has completed its review of the Public Benefits Agreement to ensure it conforms to the service plan that was approved by Council. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION Project Overview Landmark Homes (“Landmark”) is proposing to construct approximately 442 homes on 56 acres, in total 139 units in brownstones, 180 units in flats style homes, 121 condo units and 2 studio rentals above the commercial space. The project, called Northfield, will include 65 deed restricted units affordable for low income households earning no more than 80% of Fort Collins Area Median Income (AMI), with those units offered as for-rent affordable units affordable, on average, for low income households earning no more than 60% of AMI. The remaining housing units in the project are expected to be priced in an attainable range, considered to be between 81% and 120% of AMI. In addition, there will be a mixed-use center that will offer light commercial use on the first floor, the two residential for-rent units on the second floor, and small amenities open to the public. ATTACHMENT 3 Agenda Item 13 Item # 13 Page 2 Landmark has committed to building healthy, efficient, and local homes. It achieves this goal by: • Healthy - A Heat Recovery Ventilation (HRV) system will be installed in every market rate unit to improve air quality inside the homes. When homes get very tight due to efficient construction techniques, the air inside can get stagnant. The HRV system helps bring in fresh outside air and condition it to the inside temperature through an energy efficient recovery core. • Efficient - All homes are constructed to meet Leadership in Energy and Environmental Design (LEED) Gold Certification. • Alternative Energy - Landmark plans to include solar panels on every market rate unit. These buildings will feature a photovoltaic system that will produce approximately 1kW of power for each unit. Thus, a 12- unit building will have roughly 12kW of solar panels. In addition, Northfield development will also include a 240V outlet in every garage unit to provide a place for the electric vehicle fast-charging stations and further encourage residents to drive eco-friendly cars. Public Benefits The Service Plan anticipates using the Debt Mill Levy to support the issuance of bonds in the maximum amount of $16 million to fund all or a portion of the following $18.7 million in public improvements: 1. Water and Energy Conservation a. LEED Gold Certification - It shall be a condition to the City’s issuance of the certificate of occupancy for each dwelling unit built that the City is provided with a copy of the final application submitted and signed by the Green Rater for the LEED Gold certification for that unit (Certification). The Certification issued for that unit must also be provided to the City within 30 days of the issuance of the certificate of occupancy as a precondition to the City’s issuance of any new building permits for dwelling units to be built under the approved Final Development Plan (FDP). b. Heat Recovery Ventilator (HRV) Systems c. Solar Photovoltaic (PV) Homes - evidence of one of the following must be provided to the City by a Green Rater: (i) the installation of a rooftop solar photovoltaic system, or (ii) access to Distributed Energy Storage. If such evidence is not provided to the City, the City shall not be required to issue a certificate of occupancy for any new dwelling unit to be built under the approved FDP d. Home Energy Rating System (HERS) Rating Commitment of 35 to 49. e. Electric Vehicle (EV) charging stations in each garage - a 240V outlet shall be included in every garage 2. Critical Public Infrastructure a. Design and construction of Suniga Road as a four-lane major arterial in the dedicated Suniga Road right-of-way between the existing Redwood Road and the Lemay Avenue. b. Northfield plans to replace and upsize the sewer line from Vine Drive, around Alta Vista, and along a portion of Lemay Avenue. It is not clear at this early stage whether the developer or the district will contract for construction of the upsizing, but they will seek reimbursement from the City for the upsized portion. c. Northfield plans to finance and deliver the on-site Regional Trail as well as the off-site pedestrian connection for the northeastern portion up to the intersection at Lemay Avenue and Conifer Street. 3. Affordable Housing a. At least 65 units, approximately 15% of the total number of dwelling units approved within the FDP shall be either for-sale or for-rent affordable housing units (“Required Affordable Units”) affordable for households earning eighty percent (80%) or less of the area median income for a family of four for the Fort Collins/Loveland Metropolitan Statistical Area published annually by the U.S. Department of Housing and Urban Development (“AMI”). The Required Affordable Units are offered as for -rent units, such units must be rented at a price affordable in Larimer County, Colorado, for an AMI of 80% Agenda Item 13 Item # 13 Page 3 or lower and the average of all rents for those units must be affordable for households earning no more than the 60%. b. Forty-three (43) of the Required Affordable Units shall be secured through one of the mechanisms described in Sections I.C.1.a. through c. of the Public Benefits Agreement (or through any other mechanism agreed upon in writing between the City and the Developer) prior to receipt from the City of a building permit for more than two hundred twenty-one (221) of the total number of dwelling units authorized under the approved FDP, and the remaining twenty-two (22) of the Required Affordable Units shall be so secured prior to receipt from the City of a building permit for the last eighty-eight (88) of the dwelling units authorized under the approved FDP. 4. Smart Growth Management and Community and Neighborhood Livability a. Alley access to the garages of the homes. b. The southeastern edge of Northfield borders the to-be-designated historic Alta Vista neighborhood. To blend the transition to new development and pay homage to the neighborhood’s history, Northfield will feature an Interpretive Historical Park and Gateway Features bordering Alta Vista. These additions were developed in collaboration with neighbors in the Alta Vista neighborhood and would provide an extraordinary benefit to the City as a whole. c. Smaller lot sizes. d. 100% of units will be attached housing types (four to eight-unit townhomes and eight to twelve-unit condominium buildings). Performance Assurances The Northfield Service Plan prohibits the issuance of any debt or imposition of the debt mill levy or fees to pay debt unless and until the delivery of the Public Benefits area secured for each development phase of the project in a manner that is approved by Council. This requirement can be satisfied by one or both of the following methods, as applicable: • Intergovernmental Agreement - For any of the Public Benefits to be provided by one or more of the Districts, each such District must enter into an intergovernmental agreement with the City agreeing to provide those Public Benefits as a legally enforceable multiple-fiscal year obligation of the District under TABOR or by securing performance of that obligation with a surety bond, letter of credit or other security acceptable to the City and all such intergovernmental agreements must be approved by the City Council by resolution; • Approved Development Plan - For any of the Public Benefits to be provided by one or more Developers of the Planned Development, each such Developer must enter into a development agreement with the City under the Developer’s applicable Approved Development Plan, which agreement must legally obligate the Developer to provide those Public Benefits before the City is required to issue building permits and/or certificates of occupancy for structures to be built under the Approved Development Plan for that phase of the Planned Development or to secure such obligations with a surety bond, letter of credit or other security acceptable to the City and all such development agreements must be approved by the City Council by resolution. Here, the method being used to secure the Northfield Public Benefits is as an approved development plan, which is the proposed Public Benefits Agreement attached to the Resolution. Funding/Securing of Public Benefits Although the intent is that one or more of the Districts will ultimately reimburse the Developer for those Public Benefits they have the legal ability to fund, the Northfield developer shall have the obligation to develop, construct and/or install the Public Benefits in accordance with the terms and conditions of the Public Benefits Agreement. Agenda Item 13 Item # 13 Page 4 Service Plan Overview Review The Service Plan calls for the creation of three Metro Districts to work collaboratively to deliver the proposed Northfield Project. The phased development is anticipated to reach build out in 2026 with an estimated population of 1,145. A few highlights about the proposed Service Plan, include: • Assessed Value - Estimated to be approximately $13.3 million in 2029 at full build-out • Aggregate Mill Levy - 50 mills, subject to Gallagher Adjustments • Debt Mill Levy - 40 mills, may not be levied until an approved development plan or intergovernmental agreement has been executed that delivers the pledged public benefits • Operating Mill Levy - Up to an additional 10 mills (aggregate mill levy of 50 mills) to fund several on-going operations, such as but not limited to: (a) a non-potable irrigation system, and (b) road infrastructure. Once a District imposes a Debt Mill Levy, such District’s Operating Mill Levy cannot exceed ten (10) mills at any point. • Maximum Debt Authorization - Anticipated to be approximately $16 million to cover a portion of the estimated $30 million in project costs • Regional Mill Levy - The Regional Mill Levy of 5 mills shall not be counted against the Aggregate Mill Levy Maximum Approval of Public Benefits Agreement Contingent on FDP Approval In April 2019, the City’s Planning and Zoning Board approved Landmark’s project development plan (PDP) for the development of the property and the City has recently approved the final development plan (FDP) for the property, Landmark and the City have not yet entered into the development agreement required as part of the FDP approval (Development Agreement). Therefore, the Council’s approval of the Public Benefits Agreement in the Resolution is contingent on the City and Landmark hereafter entering into the Development Agreement. In addition, since Landmark has not yet closed on its purchase of the property for this project, the Public Benefits Agreement will not be fully effective unless and until Landmark closes on its purchase of the property. Conclusion The Public Benefits Agreement conforms to the public benefits outlined in the Service Plan. Staff recommends adoption of the Resolution, as the Agreement meets both the letter and spirit of the Metropolitan District Policy and helps the City achieve its strategic objectives. The Metropolitan District Policy speaks to the City’s commitment to Climate Action Plan (CAP) goals with energy efficiency benefits that exceed the City’s current code. In addition, the project will create at least 65 units of affordable housing, addressing the City’s objective of increasing the inventory of affordable units as outlined in the Affordable Housing Strategic Plan. CITY FINANCIAL IMPACTS The proposed Public Benefits Agreement will not have an impact on the City’s financials. The applicant has paid the fees required under the City’s previous metropolitan district policy, which fees are designed to offset the cost of staff and outside consultant review. ATTACHMENTS 1. Resolution 2019-101 (PDF) 2. Powerpoint presentation (PDF) ATTACHMENT 4 ATTACHMENT 5 Northfield Public Benefits Agreement Amendment10/19/2021Clay Frickey, Redevelopment Program ManagerATTACHMENT 6 2Background• Council has taken two actions related to Northfield• October 1, 2019 – Adopted Metropolitan District Nos. 1-3• June 2, 2020 – Adopted Public Benefits Agreement• Public Benefits Agreement included provision of 64 units of affordable housing• Mercy Housing developing affordable units• Planning & Zoning Commission approved plan on August 19, 2021• Lender requires amendment to Public Benefits Agreement• Without amendment, Mercy unable to finance project Northfield Overview• 56 acres• NW of Vine and Lemay• 442 units• Townhomes• Multi-family• Small clubhouse and community center• Completes ~½ mile of SunigaRoad3Northfield Commons Northfield Commons Overview• Proposes 84 rental units• Affordable to households earning 60% Area Median Income• Original Northfield plan proposed 65 units• Only 65 affordable units required in Public Benefits Agreement• Planning & Zoning Commission approved on August 19, 20214 5Proposed Amendment to Public Benefits Agreement• Current requires rentals be affordable to households earning 60% Area Median Income• Amendment triggered if units enter foreclosure• Receiver would be able to rent to households earning 80% Area Median IncomeAdvantages DisadvantageMercy able to proceed Less affordable in event of foreclosureCurrent plan exceeds Public Benefits AgreementForeclosure rate for similar projects under 1%Retains some level of affordability even due to foreclosure 6RecommendationStaff recommends adoption of the Resolution. -1- RESOLUTION 2021-099 OF THE CITY COUNCIL OF THE CITY OF FORT COLLINS APPROVING FIRST ADDENDUM TO AGREEMENT TO SECURE PUBLIC BENEFITS FOR THE NORTHFIELD DEVELOPMENT WHEREAS, on June 2, 2020, DFC Northfield, LLC, a Florida limited liability company, (the “Developer”) and the City entered into that certain “Agreement to Secure Public Benefits for the Northfield Development” (the “Public Benefits Agreement”); and WHEREAS, the Public Benefits Agreement was recorded on October 20, 2020, at Reception #20200085794 in the records of the Larimer County Clerk and Recorder; and WHEREAS, the City and Developer entered into the Public Benefits Agreement to secure for the City the various public benefits the Developer must provide under the Consolidated Service Plan for the Northfield Metropolitan District Nos. 1-3 (the “Service Plan”) as a precondition to Northfield District Nos. 1-3 (the “Districts”) being authorized to impose property tax and issue debt, which Service Plan the City Council approved on October 1, 2019, in Resolution 2019-101; and WHEREAS, the public benefits to be so provided are described in Exhibit “G” of the Service Plan and include: (1) affordable and attainable housing, (2) environmental sustainability, (3) critical public infrastructure, and (4) smart growth management and community and neighborhood livability (collectively, the “Public Benefits”); and WHEREAS, the City Council approved the Public Benefits Agreement on June 2, 2020, in Resolution 2020-050; and WHEREAS, the Public Benefits Agreement describes in more detail the specific Public Benefits to be provided and how they are to be provided by the Developer (and its successors and assigns) and how the provision of the Public Benefits is to be secured to benefit the City; and WHEREAS, the boundaries of the District include the 55.263 acres of real property legally described in the Northfield Final Plat, City of Fort Collins, recorded on April 28, 2020, at Reception #20200029164 in the records of the Larimer County Clerk and Recorder (the “Property”); and WHEREAS, regarding the Public Benefits described as “affordable and attainable housing,” Section I.C.1 of the Public Benefits Agreement contemplates the Developer will build on the Property at least 65 dwelling units that must be affordable for either (i) ownership by households earning 80% or less of the area median income (“AMI”) for a family of four for the Fort Collins/Loveland Metropolitan Statistical Area as set by the U. S. Department of Housing and Urban Development (“HUD”) or (ii) as rental units affordable on average to households earning no more than 60% of AMI for the Fort Collins/Loveland Metropolitan Statistical Area as set by HUD (the “Affordable Housing”); and -2- WHEREAS, Section I.C.3. of the Public Benefits Agreement also requires that each unit of the Affordable Housing must be subject to a recorded restrictive covenant for 20 years from the date of issuance of the first certificate of occupancy that requires the unit to continue to meet the affordability requirements for Affordable Housing during that time period and, when recorded, the covenant must not be subordinate to any lien or other financial encumbrance other than liens for real property taxes (the “Covenant Requirement”); and WHEREAS, when the Public Benefits Agreement was entered into, the Developer was the owner of the Property; and WHEREAS, since then, the Developer has sold approximately 5 acres of the Property, known as Tract U and Tract V, (the “Tracts”) to an affiliated company, Northfield Land, LLC, a Colorado limited liability company (“Northfield”); and WHEREAS, Northfield is under contract with Mercy Housing Mountain Plains, a Colorado nonprofit corporation (“Mercy Housing”) to sell the Tracts to it; and WHEREAS, Mercy Housing is a nonprofit corporation that develops affordable housing nationwide and plans to purchase the Tracts to develop on them 84 dwelling units as rental units to be rented at a rent affordable on average to households earning no more than 60% of AMI for the Fort Collins/Loveland Metropolitan Statistical Area as set by HUD (the “Mercy Project”); and WHEREAS, if Mercy Housing develops the Mercy Project on the Tracts as it proposes and does so subject to the Covenant Requirement, the Mercy Project will satisfy and exceed the Developer’s Affordable Housing requirement of the Public Benefits Agreement; and WHEREAS, Mercy Housing is, however, unable to obtain all of the financing needed for the Mercy Project if it must be developed subject to the Covenant Requirement; WHEREAS, Mercy Housing’s primary lender for the Mercy Project is only willing to loan the full amount needed for the Project if the Covenant Requirement is modified to allow the lender (and its successors and assigns), if the Mercy Housing defaults in payment of the loan and the lender forecloses on the Mercy Project or accepts from Mercy Housing a deed-in-lieu-of- foreclosure, to increase the average of rents from those affordable to households earning no more than 60% of AMI to those affordable to households earning no more than 80% of AMI; and WHEREAS, Mercy Housing therefore requests that the City Council agree to a modification of the Covenant Requirement to allow such increase in the affordable rent for the Mercy Project dwelling units, but only if the lender, or its successors or assigns, forecloses on the Mercy Project or accepts a deed-in-lieu-of-foreclosure; and WHEREAS, the Developer and Northfield have agreed, in consideration of the City agreeing to Mercy Housing’s requested modification of the Covenant Requirement, to increase the duration of the Covenant Requirement from 20 years to 30 years; and -3- WHEREAS, City staff and the Developer have negotiated the “First Addendum to Agreement to Secure Public Benefits for the Northfield Development” attached as Exhibit “A” and incorporated herein by reference (the “First Addendum”), which sets forth the terms and conditions by which the Covenant Requirement will be modified as requested by Mercy Housing and the City’s restrictive covenant, as set forth in the First Addendum, will be imposed on and recorded against the Tracts and Mercy Project and the duration of it increased from 20 years to 30 years; and WHEREAS, the City Council hereby finds that approval of the First Addendum is in the City’s best interest and will serve the public’s health, safety and welfare. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, 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 the First Addendum. Section 3. That the Interim City Manager is authorized to enter into the First Addendum on the City’s behalf in substantially the form attached as Exhibit “A,” subject to minor modifications as the Interim City Manager, in consultation with the City Attorney, may determine to be necessary and appropriate to protect the interests of the City or to the effectuate the purposes of this Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 19th day of October, A.D. 2021. _________________________________ Mayor ATTEST: _____________________________ Interim City Clerk 1 2165.4700; 1155190 FIRST ADDENDUM TO AGREEMENT TO SECURE PUBLIC BENEFITS FOR THE NORTHFIELD DEVELOPMENT THIS FIRST ADDENDUM TO AGREEMENT TO SECURE PUBLIC BENEFITS FOR THE NORTHFIELD DEVELOPMENT (this “Addendum”) is made and entered into this ____ day of ______________, 2021, by and between the CITY OF FORT COLLINS, COLORADO, a Municipal Corporation (the “City”) and DFC NORTHFIELD, LLC, a Florida limited liability company (the “Developer”), and affiliate Northfield Land, LLC, a Colorado Limited liability company (the “Affordable Developer”). WITNESSETH: WHEREAS, the City and Developer previously entered into that certain Agreement to Secure Public Benefits for the Northfield Development (the “Public Benefits Agreement”) dated June 2, 2020, and recorded on October 20, 2020, at Reception No. 20200085794 in the real property records of Larimer County, Colorado with respect to that 55.263 acre property legally described in the Northfield Final Plat, City of Fort Collins, recorded on April 28, 2020, at Reception No. 20200029164 (the “Property”); and WHEREAS, the Affordable Developer has purchased Tracts U and V from within the Property from the Developer, and the Affordable Developer is under contract to sell Tracts U and Tract V to Mercy Housing Mountain Plains, a Colorado nonprofit corporation (“Mercy Housing”); and WHEREAS Tracts U and V are part of a replat that is pending City development-review approval, and pursuant to the replat Tracts U and V will be renamed Tracts A and B of Northfield Commons (“Tracts A and B”); and WHEREAS, the Affordable Developer and Mercy Housing intend that Tracts A and B be developed to include at least 65 dwelling units that will be offered at rents not exceeding 30% of the adjusted income of a household whose annual income equals 80% of Area Median Income (“AMI”) for the Fort Collins/Loveland Metropolitan Statistical Area, as determined by the Secretary of Housing and Urban Development, with adjustments for the number of bedrooms in the unit, and which shall be made available for occupancy by individuals or families whose income is 80% or less of AMI, with adjustments for family size, provided that the average of all rents in at least 65 dwelling units on Tracts A and B must be at or below 60% AMI, using the averaging methodology adopted by the Colorado Housing and Finance Authority (collectively, the “Mercy Housing Affordable Units”); and WHEREAS, attempts by Mercy to finance the Mercy Housing Affordable Units have identified the need for new terms to be added to the Public Benefits Agreement to address lender protections in the unlikely event of a foreclosure or deed in lieu of foreclosure of the M ercy Housing Affordable Units; and WHEREAS, to accommodate the financing and planned development of the Mercy Housing Affordable Units, the City, the Developer, and the Affordable Developer hereby agree to the supplementation of the Public Benefits Agreement as described in this Addendum. EXHIBIT A 2 2165.4700; 1155190 NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is agreed as follows: 1. Supplementation of Section I.C.1. The following language shall supplement Section I.C.1 of the Public Benefits Agreement: If there is an event of foreclosure (or deed in lieu thereof) of a first priority deed of trust or similar security instrument lien encumbering title to Tracts A and B, which instrument secures a loan made to Developer or its successor by an unrelated third party lender (such unrelated third party lender and its successors or assigns, whether as assignee of the lien or successor in title to Tracts A and/or B through foreclosure or deed in lieu of foreclosure, a “Lender”), and such loan was made for the purpose of constructing and/or operating some or all of the Required Affordable Units, then such event shall be referred to herein as a “First Priority Lender Foreclosure”. In the event of a First Priority Lender Foreclosure, the average of all rents in at least 65 dwelling units on Tracts A and B may be adjusted upward, but must remain at or below 80% AMI, using the averaging methodology adopted by the Colorado Housing and Finance Authority. Each such Lender is an intended third-party beneficiary hereunder with regard to this provision. 2. 30-Year Covenant. Section I.C.3 of the Public Benefits Agreement requires the Developer to execute and record a “20-Year Covenant” in the real property records of Larimer County, as defined in the Public Benefits Agreement. In consideration for the Supplementation of Section I.C.1. contained above, the Affordable Developer agrees to extend the term of the “20- Year Covenant” to 30 years as set forth more fully below. a. Commitment of Affordable Developer. Affordable Developer hereby agrees (i) to develop or cause to be developed the Mercy Housing Affordable Units on Tracts A and B, and (ii) that, for 30 years following the date of issuance of the first certificate of occupancy for the building(s) containing the Mercy Housing Affordable Units, Tracts A and B may only be used to provide the Mercy Housing Affordable Units and related ancillary or accessory uses (“Affordable Developer’s Commitment”). b. Affordable Developer’s Commitment to Run with Title. Affordable Developer’s Commitment shall constitute a covenant running with title to the Tracts A and B as a burden thereon, for the benefit of, and enforceable by the City, and Affordable Developer’s Commitment shall bind Affordable Developer and all subsequent owners of the Mercy Housing Affordable Units. Each and every conveyance of Tracts A and B, for all purposes, shall be deemed to include and incorporate by this reference, the Affordable Developer’s Commitment, even absent specific reference thereto in any subsequent document of conveyance of the Mercy Affordable Units. c. City Acknowledgement. The City agrees that execution and recordation of this Addendum satisfies the Developer’s obligation under Section I.C.3 of the Public Benefits Agreement to record a 20-Year Covenant. The Parties agree that nothing in this Section 2 is intended to conflict with or supersede the provisions of Section 1 above. 3 2165.4700; 1155190 3. Prior Provisions Effective. As supplemented herein, the terms of the Public Benefits Agreement shall remain in full force and effect without limitation. [Remainder of page left intentionally blank. Signature pages follow.] 4 2165.4700; 1155190 IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the day and year first written above. CITY: CITY OF FORT COLLINS, COLORADO, a Municipal Corporation By: _______________________________ Kelly DiMartino, Interim City Manager ATTEST: ____________________________ Tammi Pusheck, Interim City Clerk APPROVED AS TO CONTENT: ___________________________ City Engineer APPROVED AS TO FORM: _____________________________ John R. Duval, Deputy City Attorney 5 2165.4700; 1155190 DEVELOPER: DFC NORTHFIELD LLC, a Florida limited liability company, by DF Capital Management Direct, LLC, a Florida limited liability company, its manager By: _____________________________ Christopher Butler, Manager STATE OF COLORADO ) ) ss. COUNTY OF LARIMER ) The foregoing First Addendum to Agreement to Secure Public Benefits for the Northfield Development was acknowledged before me this ___ day of ___________, 2021, by Christopher Butler, as manager of DF Capital Management Direct, LLC, as manager of DFC Northfield, LLC. WITNESS my hand and official seal. _____________________________ Notary Public My commission expires: ______________ 6 2165.4700; 1155190 AFFORDABLE DEVELOPER: NORTHFIELD LAND LLC, a Colorado limited liability company By: _____________________________ Jason Sherrill, Manager STATE OF COLORADO ) ) ss. COUNTY OF LARIMER ) The foregoing First Addendum to Agreement to Secure Public Benefits for the Northfield Development was acknowledged before me this ___ day of ___________, 2021, by Jason Sherrill, as manager of Northfield Land, LLC. WITNESS my hand and official seal. _____________________________ Notary Public My commission expires: ______________