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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/06/2000 - RESOLUTION 2000-79 AUTHORIZING THE EXECUTION OF AN AGENDA ITEM SUMMARY ITEM NUMBER: 21 FORT COLLINS CITY COUNCIL DATE: 3une 6,2000 STAFF: Alan Krcmarik ;SUBJECT: Resolution 2000-79 Authorizing the Execution of an Assignment Agreement with the City of Loveland and Acceptance of an Assignment of Allocation. RECOMMENDATION: Staff recommends adoption of the Resolution. FINANCIAL IMPACT: Private activity bonds are paid with revenues generated by the project. The City may not pledge or use its resources for such projects. The total expected cost of the project is approximately $4.5 million. The total amount of tax exempt private activity bonds is about $3.6 million. The Project proponents will finance the remainder of the project with private taxable financing. EXECUTIVE SUMMARY: This Resolution allows the City of Fort Collins to receive an assignment of private activity bond allocation from the City of Loveland. Fort Collins would use the $1,178,750 of allocation from Loveland to supplement the private activity bond allocation received from Latimer County and the State of Colorado. The combination of the allocations from Loveland, Larimer County, and the State would provide a total of$3.6 million of allocation. The proponents of the Residence at Oakridge Project would finance the remainder of the project through private taxable financing. The Resolution also authorizes the City to enter into an agreement with Loveland regarding the assignment and states the intent of the City to provide an assignment of Fort Collins' future private activity bond allocation. BACKGROUND On February 15, 2000, the City Council induced the Residence at Oakridge Assisted Living Project. The Project is an assisted-living rental housing complex to be located along McMurray Drive in Oakridge Business Park. The total amount of the project is anticipated to be about $4.4 million. The Project will contain 44 units (58 beds). Of the total units, 50% will be reserved for persons whose incomes do not exceed 60% of the Area Median Income. The Project will qualify as a low-income rental housing project. The remaining units in the Project will be leased at market rates. DATE: June 6, 2000 1 2 ITEM NUMBER: 21 The total cost of the project is estimated to be $4.5 million. The City secured the Larimer County 2000 private activity bond allocation of$1,579,750. The Project applied for additional allocation from the State of Colorado. The State Allocation Board ranked the project very high and recommended that the Project receive an allocation. Due to some uncertainty about the financing structure, the amount allocated, $800,000, was less than the amount that is needed for the Project to complete the financing. With the County and State allocation, the Project now has $2,379,750 available. The support staff for the State Allocation Board suggested that the City request to use the City of Loveland's 2000 allocation of$1,179,750. Loveland is receptive to this proposal, but would like Fort Collins to assign an equal amount from its 2001 allocation, since the City of Loveland Housing Authority expects that it will have a project in 2001. For additional background, staff has included the agenda item from February 15, 2000. RESOLUTION 2000-79 OF THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO AUTHORIZING THE EXECUTION OF AN ASSIGNMENT AGREEMENT WITH THE CITY OF LOVELAND AND ACCEPTANCE OF AN ASSIGNMENT OF ALLOCATION WHEREAS,representatives of National Healthcare Associates,Inc. (the"Company")have met with officials of the City of Fort Collins, Colorado (the "City"), and have advised the City of the Company's interest in acquiring, constructing, and equipping a multifamily housing assisted living project (the "Project") to be located on approximately 3.02 acres of land east of Wheaton Drive and south of the Comfort Suites in the Oakridge Business Park in Fort Collins, Colorado, subject to the City's financing of the Project by the issuance of multifamily housing revenue bonds, pursuant to the Colorado County and Municipality Development Revenue Bond Act, constituting Article 3, Title 29, Colorado Revised Statutes, as amended(the "Act"); and WHEREAS,the Council on February 15,2000, adopted Resolution 2000-32, Setting Forth the Intention of the City to Issue Multi-Family Housing Revenue Bonds for the National Healthcare Associates Residence at Oakridge Assisted Living Project and Authorizing the Execution of an Assignment Agreement and a Delegation Agreement with Larimer County; and WHEREAS, in accordance therewith, the County has assigned to the City its allocation of the private activity bond volume cap for the State and its issuing authorities pursuant to the Colorado Private Activity Bond Ceiling Allocation Act,constituting Part 17 of Article 32 of Title 24,Colorado Revised Statutes, as amended (the "Allocation Act"); and WHEREAS,the Project has also received an allocation of$800,000 from the Colorado 2000 state-wide balance of private activity bond allocation; and WHEREAS, the City of Loveland ("Loveland") is authorized under the Act to finance projects as defined in the Act,including housing facilities for low-and middle-income persons and families; and WHEREAS, Loveland has been awarded an allocation for the year 2000 of the private activity bond volume cap for the State and its issuing authorities pursuant to the Allocation Act and is willing to assign a portion of that allocation, in the amount of $1,178,750, (the "Assigned Allocation")to the City in order to assist with the financing of the Project,provided that Fort Collins assigns a like portion of its allocation to Loveland for its use in 2001; and WHEREAS,the Council believes that this reciprocal assignment of allocations is in the best interests of the City; and WHEREAS, it is necessary to evidence such assignments by the execution and delivery of Assignment Agreements by and between the City and Loveland in substantially the form attached hereto as Exhibits "A" and "B" and incorporated herein by this reference (the "Assignment Agreements"); and WHEREAS, the City is authorized to enter into intergovernmental agreements to provide any function,service or facility,such as a grant agreement,under Article II,Section 16 of the Charter of the City of Fort Collins and Section 29-1-203, C.R.S. NOW,THEREFORE,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO that, for the purpose of financing the Project, the Mayor is hereby authorized to execute the above-referenced Assignment Agreements,in the forms shown on Exhibits "A" and "B", subject to such modifications thereto in form or substance as the City Manager, in consultation with the City Attorney,may deem necessary to effectuate the purposes set forth herein. Passed and adopted at a regular meeting of the City Council held this 6th day of June, A.D. 2000. Mayor ATTEST: City Clerk • EXHIBIT "A" ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT (the "Assignment") dated the day of June, 2000,is by and between the CITY OF LOVELAND,COLORADO,a body corporate and politic(the "Assignor") and the CITY OF FORT COLLINS, COLORADO, a body corporate and politic (the "Assignee"); RECITALS: WHEREAS, the Assignor and the Assignee are authorized and empowered under the laws of the State of Colorado (the "State") to issue revenue bonds for the purpose of financing 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")which maybe issued in the State to finance such rental housing projects and for certain other purposes (the "State Ceiling"); and WHEREAS, pursuant to the Code, the Colorado legislature 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 the Assignee and other governmental units in the State, and further providing for the assignment of allocations from such other governmental units to the Assignee; and WHEREAS,pursuant to an allocation under Section 24-32-1706 of the Allocation Act, the Assignor has available for assignment to Assignee a portion its allocation of the 2000 State Ceiling for the issuance of a specified principal amount of Private Activity Bonds prior to September 15, 2000, in the amount of$1,178,750 (the "Loveland Allocation"); and WHEREAS, the Assignor has determined that, in order to increase the availability of adequate affordable housing by low- and moderate-income persons and families in the local area, it is necessary or desirable to provide for the utilization of all or a portion of the Loveland Allocation as set forth herein; and WHEREAS,the Assignor has determined that the Loveland Allocation can be utilized most efficiently by assigning it to the Assignee to issue Private Activity Bonds for the purpose of financing one or more multi-family housing projects for low- and moderate-income persons and families, and the Assignee has expressed its willingness to attempt to issue such Private Activity Bonds with respect to the Loveland Allocation; and WHEREAS, subject to the terms and conditions set forth herein, the Assignor desires to assign and transfer to the Assignee, and the Assignee desires to accept, the assignment of the • Loveland Allocation in an amount equal to $1,178,750,which the Assignor and Assignee agree to commit and reserve for the issuance of such private activity bonds; and WHEREAS,the private activity bonds will be issued by the Assignee pursuant to the County and Municipality Development Revenue Bond Act, constituting Article 3 of Title 29, Colorado Revised Statutes,as amended(the"Act"),and such bonds will be used for a purpose which qualifies as a"project" as described in the Act; NOW,THEREFORE,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. In accordance with action taken by the governing body of the Assignor on June 6, 2000, the Assignor hereby assigns and transfers to the Assignee, a portion of the Assignor's 2000 Allocation from the State Ceiling for private activity bonds in an amount equal to $1,178,750 (the "Assigned Allocation"). In addition,the Assignor hereby consents to the election by the Assignee, if the Assignee in its discretion so decides, to treat the Assigned Allocation as an allocation for a project with a carryforward purpose and/or to make a mortgage credit certification election, thus avoiding reversion of the Assigned Allocation to the statewide balance under the Allocation Act. 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 Assigned Allocation from the State Ceiling described above; (b) Agrees to use reasonable efforts to use the Assigned Allocation to finance the multifamily assisted living project to be located east of Wheaton Drive and south of the Comfort Suites in the Oakridge Business Park in Fort Collins, Colorado, and to be known as The Residence at Oakridge(the"Project"),subject to the terms and conditions set forth herein. In the event Assignee is unable to finance the Project on or prior to September 15, 2000, Assignee agrees to use its best efforts to use an amount equal to the 2000 Allocation hereby assigned in connection with the issuance ofPrivate Activity Bonds to finance one or more other multi-family housing projects located within Assignee's boundaries; and (c) Agrees to abide by each of the terms and conditions of this Assignment in connection with the use of the Assigned Allocation. 4. The parties acknowledge that nothing contained in this Assignment shall obligate the Assignee to finance the Project or to use the Assigned Amount to finance any other multi-family housing project located in the City of Fort Collins, and that the issuance of Private Activity Bonds for the benefit of the Project is subject to due compliance with all requirements of law, and contingent upon the determination by the State that a portion of the Statewide Balance of the State Ceiling shall be used to issue such bonds, and a determination by the Assignee that the allocation of authority available for the issuance of such bonds is sufficient, and further contingent upon the authorization of the issuance of suchbonds and execution of such documents and agreements as may 2 be necessary to accomplish the same, by ordinance of the Assignee's City Council, in its sole discretion. 5. This Assignment is effective upon execution and is irrevocable. 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 LOVELAND, COLORADO [SEAL] By Mayor ATTEST: By City Clerk APPROVED AS TO FORM: By City Attorney CITY OF FORT COLLINS, COLORADO [SEAL] By Mayor ATTEST: By City Clerk APPROVED AS TO FORM: By Assistant City Attorney 3 • EXHIBIT "B" ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT(the"Assignment')dated the day of_, is by and between the CITY OF FORT COLLINS,COLORADO, a body corporate and politic (the "Assignor") and the CITY OF LOVELAND, COLORADO, a body corporate and politic (the "Assignee"); RECITALS: WHEREAS, the Assignor and the Assignee are authorized and empowered under the laws of the State of Colorado (the "State") to issue revenue bonds for the purpose of financing 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")which may be issued in the State to finance such rental housing projects and for certain other purposes (the "State Ceiling"); and WHEREAS, pursuant to the Code, the Colorado legislature 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 the Assignee and other governmental units in the State, and further providing for the assignment of allocations from such other governmental units to the Assignee; and WHEREAS,pursuant to an allocation under Section 24-32-1706 of the Allocation Act,the Assignor has available for assignment to Assignee a portion its allocation of the 2001 State Ceiling for the issuance of a specified principal amount of Private Activity Bonds prior to September 15, 2001, in the amount of$1,178,750 (the "Fort Collins Allocation"); and WHEREAS, the Assignor has determined that, in order to increase the availability of adequate affordable housing by low- and moderate-income persons and families in the local area, it is necessary or desirable to provide for the utilization of all or a portion of the Fort Collins Allocation as set forth herein; and WHEREAS, the Assignor has determined that the Fort Collins Allocation can be utilized most efficiently by assigning it to the Assignee to issue Private Activity Bonds for the purpose of financing one or more multi-family housing projects for low- and moderate-income persons and families, and the Assignee has expressed its willingness to attempt to issue such Private Activity Bonds with respect to the Fort Collins Allocation; and WHEREAS, subject to the terms and conditions set forth herein, the Assignor desires to assign and transfer to the Assignee, and the Assignee desires to accept, the assignment of the Fort Collins Allocation in an amount equal to $1,178,750, which the Assignor and Assignee agree to commit and reserve for the issuance of such private activity bonds; and WHEREAS,the private activity bonds will be issued by the Assignee pursuant to the County and Municipality Development Revenue Bond Act, constituting Article 3 of Title 29, Colorado Revised Statutes,as amended(the"Act"),and such bonds will be used for a purpose which qualifies as a"project"as described in the Act; NOW,THEREFORE,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. In accordance with action taken by the governing body of the Assignor on, June 6, 2000, the Assignor hereby assigns and transfers to the Assignee, a portion of the Assignor's 2001 Allocation from the State Ceiling for private activity bonds in an amount equal to $1,178,750 (the "Assigned Allocation"). In addition,the Assignor hereby consents to the election by the Assignee, if the Assignee in its discretion so decides, to treat the Assigned Allocation as an allocation for a project with a carryforward purpose and/or to make a mortgage credit certification election, thus avoiding reversion of the Assigned Allocation to the statewide balance under the Allocation Act. 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 Assigned Allocation from the State Ceiling described above; (b) Agrees to use reasonable efforts to use the Assigned Allocation to finance a project to be sponsored by the Loveland Housing Authority(the"Project"), subject to the terms and conditions set forth herein. In the event Assignee is unable to finance the Project on or prior to September 15,2001,Assignee agrees to use its best efforts to use an amount equal to the 2001 Allocation hereby assigned in connection with the issuance of Private Activity Bonds to finance one or more other multi-family housing projects located within Assignee's boundaries; and (c) Agrees to abide by each of the terms and conditions of this Assignment in connection with the use of the Assigned Allocation. 4. The parties acknowledge that nothing contained in this Assignment shall obligate the Assignee to finance the Project or to use the Assigned Amount to finance any other multi-family housing project located in the City of Loveland, and that the issuance of Private Activity Bonds for the benefit of the Project is subject to due compliance with all requirements of law, and contingent upon the determination by the State that a portion of the Statewide Balance of the State Ceiling shall be used to issue such bonds, and a determination by the Assignee that the allocation of authority available for the issuance of such bonds is sufficient, and further contingent upon the authorization of the issuance of such bonds and execution of such documents and agreements as maybe necessary to accomplish the same,by ordinance of the Assignee's City Council, in its sole discretion. 2 5. This Assignment is effective upon execution and is irrevocable. 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 [SEAL] BY Mayor ATTEST: By City Clerk APPROVED AS TO FORM: By Assistant City Attorney CITY OF LOVELAND, COLORADO [SEAL] By Mayor ATTEST: By City Clerk APPROVED AS TO FORM: By City Attorney 3 AGENDA ITEM SUMMARY ITEM NUMBER: 22 DATE: February 15, 2000 FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik SUBJECT: Resolution 2000-32 Setting Forth the Intention of the City to Issue Multi-Family Housing Revenue Bonds for the National Healthcare Associates Residence at Oakridge Assisted Living Project and Authorizing the Execution of an Assignment Agreement and a Delegation Agreement with Larimer County. RECOMMENDATION: Staff recommends adoption of the Resolution. The Affordable Housing Board's recommendation will be forwarded to Council prior to the meeting on February 15. FINANCIAL IMPACT: The private activity bonds that would be issued by the City for this project cannot be obligations of the City of Fort Collins. The City serves only as the sponsor and issuer of the bonds for the project. The debt service on the bonds would be repaid from revenue generated by the project. The debt service on the private activity bonds does not constitute a debt of the City. The City had an allocation of$2,756,250 of private activity bonds for 2000 and used this allocation for the Fox Meadows Apartments Project. Larimer County's allocation ($1,579,750) is available. If the City induces the project,the proponents will apply for the County's allocation and for additional private activity bond allocation from the Statewide Balance or the Colorado Housing Finance Authority ("CHFA"). EXECUTIVE SUMMARY: In late December 1999,Mr. Robert Mattrazo,a representative of the National Healthcare Associates Project(the"Project"),contacted staff members of the Advance Planning and Finance Departments. The organization has requested the City consider issuing private activity bonds for the purpose of acquiring property, constructing and equipping an assisted living multifamily housing project in the southeast part Fort Collins. The Project would qualify as a low-income rental housing project. The project is located along McMurray Drive in Oakridge Business Park. Forty-four units(58 beds) will be included in the project. Of the total, 50% of the units (beds)will be affordable to persons whose incomes do not exceed 60%of the Area Median Income. The remaining units will be leased at market rental rates. Passage of this Resolution will allow the City to issue up to $4.5 million in tax-exempt private activity bonds for the purpose of constructing the project. The issuance is contingent on the Project receiving an additional allocation from the Statewide Balance or the Colorado Housing Finance Authority. The Resolution also authorizes the execution of an Assignment Agreement and a Delegation Agreement with the County, which would carry out the proposed assignment of the County's allocation to the City. The execution of those agreements is made contingent upon the February 15, 2000 2 22 receipt of the necessary additional allocations for the Project. The proposal is consistent with the City's adopted policies regarding the issuance of multi-family rental housing bonds. Staff finds that the project is consistent with Council's goal of increasing the quality of affordable housing in the City. The project also serves a special niche in the housing market, that of low- income seniors that require some assistance in the course of their daily lives. The project proponent has prepared and submitted an application to secure an the additional Private Activity Bond Allocation from the Statewide Balance of private activity bonds. Based on Council's action on the resolution,the City will support the project proponent in its application to Larimer County and the competitive statewide balance. The deadline for applications for allocations is January 21, 2000. BACKGROUND: One of the Council's top priority work plan goals for since 1995 has been to increase the quality and affordability of housing. In 1984 the City adopted policies for the issuance of tax exempt bonds that would acquire, rehabilitate, or maintain the supply of low-income housing. Through the adoption of Resolution 84-179,specific criteria were set to allow the City the opportunity to pursue its commitment to affordable housing in accordance with State and Federal legislation and regulations. Although the project proponent is seeking support for the Project from the State, CBFA, and Larimer County, the City's support for the Project is crucial, since the Project would be located in the City. As a general rule, the City, rather than the County, issues private activity bonds for projects such as this one that will be located within the City. The Concorde Project has been evaluated according to the criteria for issuance of multi-family revenue bonds set forth in Resolution 84-179. Below, staff has provided a summary of the project and then the evaluation. The Project The Residence at Oakridge Project is planned to be a44-unit assisted living multi-family project in the southeast part of Fort Collins. The site is located along McMurray Drive in the Oakridge Business Park ( see the attached map). The project will contain 44 unit, 58 beds. The project is designed as one-story residential units. Financing for the project also includes tax credits. The Project may apply for other affordable housing programs offered by the City, thereby improving the overall financial viability of the proj ect. According to the information received from the Project proponents,the tenancy for at least 29(50% of the Project) of the beds will be affordable for residents making no greater than 60%of the area median income. The Project proponents have indicated that some of the units maybe reserved at even lower income levels should the financing and cash flow allow. Tenant eligibility and proof of meeting the targeted income clientele will be provided for in the and be regulated by deed restrictions of the tax credit allocation. February 15, 2000 3 22 Criterion#1 The City's policy requires a minimum of 20%of the units be rented to families at or below 70%of median income. The state guidelines are more restrictive,requiring at least 40% of the units to be rented to households at 60% of the area median income. The materials presented for the project indicate that 50% of the units will be affordable to households at 60% of area median income or lower. Therefore,the first policy criterion is met by the project. Criterion#2 For restricted units, the rents must be set at 30% of 70% of median income. The rents for this project will have 45% of the units' monthly rents set at or below 30% of 60% of area median income. The project meets this criterion. RENT CALCULATIONS The Residence at Oakridge Project Rent Calculations The Residence at Oakridge is an assisted living project. Unit sizes and rents are not directly comparable to typical multi-family apartment projects financed with private activity bonds. The table below illustrates unit type, size and mix. Type of Unit Unit Size Number and Type of Number of Set-Aside Market (#Beds/#Bath) in sq. ft. Units Beds Set-Aside Rent Rent Medicaid Shared 380 12 24 24 $309 n/a Private(2/1) Shared Private 380 2 4 0 n/a $365 (2/1) Small Private 225 6 6 5 $433 $433 (1/1) Large Private 330 24 24 0 n/a $605 Based on projected cash flows, staff and the Affordable Housing Board have requested that the project proponents attempt to reserve a portion of the "set-aside" units for persons with income lower than 60% of the Area Median Income. Criterion#3 The City's policy is to request that the owner of the projects provide an additional rent subsidy for the 20% restricted units. (The rent subsidy is provided in lieu of collection the City's normal issuance fee.) February 15, 2000 4 22 This project will have 50%of the beds reserved for persons at 60%of the area median income. In addition, this project serves the frail elderly population. Because this is not a typical low to moderate income project, it is difficult to apply the additional rent subsidy policy. Criterion#4 This criterion requires the use of#2 and#3 to calculate the actual rents for the restricted units. The proponent has agreed to do so. Criterion#5 This criterion requires final approval for the project by the Planning and Zoning Board. Further, any rights for appeal need to have expired. The underlying zoning for the subject property supports the proposed land use. Criterion#6 This criterion requires that amenities for the low-income units be the same as other units in the project. The proponent states that access to complex amenities are open to all residents. All units will have the same features and quality. This criterion will be met. Criterion#7 The owner of the project must meet all Federal and State requirements for the bonds. It is the applicant's intention to meet all requirements. The bond documents for the project will comply with the requirements. This criterion will be met. Criterion#8 Monitoring of the project management to meet the Federal and State requirements will be assigned to the bond trustee. Bond documents will be drafted with this stipulation. The term of the rent restrictions will be 25 years according to the requirements of the Colorado Housing Finance Authority. Criterion#9 and#10 These criteria allow the City to deny a project even if all criteria are met or to vary criteria #1 through#4. Recommendation Staff recommends adoption of the Resolution as it supports Council's goal of increasing the quality and affordability of housing and is consistent with the adopted policies for multi-family housing private activity bonds. The Affordable Housing Board had not completed its recommendation at February 15, 2000 5 22 the time this packet went to print. Staff will provide the Board's recommendation as soon as it is • available. •