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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/15/2000 - RESOLUTION 2000-32 SETTING FORTH THE INTENTION OF AGENDA ITEM SUMMARY ITEM NUMBER: 22 DATE: February 15, 2000 . FORT COLLINS CITY COUNCIL M STAFF: Alan Krcmarik SUBJECT: Resolution 2000-32 Setting Forth the Intention of the City to Issue Multi-Family Housing Revenue i 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 ofthe 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 DATE: February 15, 2000 2 ITEM NUMBER: 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 proj ect proponent is seeking support for the Project from the State,CHFA,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 Proiect The Residence at Oakridge Project is planned to be a 44-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 project. 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 may be 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. DATE: February 15, 2000 3 ITEM NUMBER: 22 Criterion 41 . 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 beset 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 Oak-ridge 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 ofthe"set-aside"units forpersons 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.) . 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. DATE: February 15, 2000 4 ITEM NUMBER: 22 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 the time this packet went to print. Staff will provide the Board's recommendation as soon as it is available. RESOLUTION 2000-32 OF THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO SETTING FORTH THE INTENTION OF THE CITY TO ISSUE MULTIFAMILY HOUSING REVENUE BONDS FOR THE RESIDENCE AT OAKRIDGE PROJECT AND AUTHORIZING THE EXECUTION OF AN ASSIGNMENT AGREEMENT AND A DELEGATION AGREEMENT WITH LARIMER COUNTY 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 interest ofthe Company in acquiring,constructing,and equipping amultifamily 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 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 Project is within the municipal boundaries of the City; and WHEREAS, the Company has represented to the City that the Project will qualify as a • "project" within the meaning of the Act; and WHEREAS,the Council has considered the proposal and has concluded that the benefits to be derived therefrom by the City will be substantial; and WHEREAS, the Council has determined that the Project is consistent with the goals and objectives of the City; and WHEREAS, the Company and the City staff are working with Larimer County, Colorado (the "County"),the Colorado Housing Finance Authority("CHFA")and the State of Colorado (the "State"), seeking to increase the City's private activity bond volume cap allocation sufficient to permit the issuance of multifamily housing revenue bonds for the Project; and WHEREAS,the Council desires to indicate its intent to proceed with financing the Project through the issuance of such revenue bonds, if the additional allocation needed by the City to use in connection with the Project is made available by the County, CHFA, and/or the State; and WHEREAS,the County 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,the County has been awarded$1,579,750(the"2000 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 County is considering the assignment of its 2000 Allocation to the City in order to assist with the financing of the Project; and WHEREAS, it is necessary to evidence such assignment by the execution and delivery by the County of an Assignment Agreement by and between the City and the County in substantially the form attached hereto as Exhibit"A"and incorporated herein by this reference(the"Assignment Agreement'); and WHEREAS, Section 29-3-104(2) of the Act provides that a county or municipality may delegate by resolution or ordinance, as the case may be, to any other county or municipality the authority to act on its behalf in the financing of projects under the Act and that any such delegation may be general or limited in scope and time, and may be irrevocable for the term or terms of any financing agreement or bond issue,all as provided in such resolution or ordinance; and WHEREAS,the County desires to delegate to the City the authority to finance and otherwise take action and exercise power under the Act on behalf of the County with respect to the Bonds and the Project; and WHEREAS,it is necessary to evidence such delegation by the execution and delivery by the County of a Delegation Agreement by and between the City and the County in substantially the form attached hereto as Exhibit 'B" and incorporated herein by this reference (the "Delegation Agreement'). NOW, THEREFORE,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO as follows: Section 1. That in order to induce the Company to undertake the Project, the City shall, subject to the provisions hereof,and,contingent upon the City obtaining sufficient additional private activity bond volume cap allocation from the County,CHFA and/or the State,take all necessary and advisable steps to effect the issuance of multifamily housing revenue bonds(the'Bonds")pursuant to the Act in the maximum aggregate principal amount of Four Million Five Hundred Thousand Dollars($4,500,000)or such lesser amount as shall be determined and agreed upon by the Company and the City to finance the Project. The Bonds will not be general obligations of the City. Neither shall the Bonds,including interest thereon,constitute the debt or indebtedness of the City within the meaning of any limitation of the Constitution or statutes of the State or the Home Rule Charter of the City (the "Charter"), nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers. The Bonds shall be payable solely from and secured by a pledge of revenues derived from and payable by the Company pursuant to financing agreements with the City. Section 2. That no costs or expenses whether incurred by the City or any other party in connection with the issuance of the Bonds or the preparation of any documents by any legal or • financial consultants retained in connection herewith shall be borne by the City. All such costs or expenses shall be paid from the proceeds of the Bonds or otherwise borne by the Company. Section 3. Thatpriorto any execution of a financing agreement,mortgage,indenture of trust, bond purchase agreement or any other necessary documents and agreements in connection with such Bonds, or any obligation on the part of the City to execute the same or to issue the Bonds, such documents and/or agreements shall be submitted to the City for review and approval, and shall, together with the issuance of the Bonds,be subject to the authorization of the same by ordinance of the Council pursuant to law. Section 4. That prior to any further action by the Council,the Company shall provide to the City an opinion of bond counsel satisfactory to the City supporting the legality of the financing of the Project and the utilization of bond proceeds for said Project. Section 5. That nothing contained in this Resolution shall constitute the debt or indebtedness or a multiple fiscal year financial obligation of the City within the meaning of any limitation of the Constitution, or statutes of the State or the Charter of the City,nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers. Section 6. That any commitments of the City contained herein are subject to the condition that within twelve (12) months of the date hereof, or such shorter period of time available under applicable law, unless otherwise extended by agreement between the City and the Company, the . Bonds to be issued pursuant hereto shall be issued and sold. In the event that said Bonds to be issued pursuant hereto are not issued within twelve (12)months, or such shorter period of time available under applicable law,the City's stated intent to issue the Bonds shall terminate, and shall be of no further force or effect. Nothing contained herein shall constitute a warranty or representation by the City that the Bonds will be issued or that the City will receive from the County, CHFA,or the State the necessary private activity bond volume cap allocation. The City shall use reasonable efforts to cooperate with the Company in connection with the Company's efforts to secure from the County, CHFA, and/or the State an allocation from the private activity bond volume cap. Section 7. That all resolutions or part thereof concerning the subject matter hereof in conflict with this Resolution are hereby repealed to the extent of such conflict,provided,however,that this repealer shall not be construed to revive any resolution or part thereof, heretofore repealed. Section 8. That the agreements of the City set forth above are expressly conditioned upon the ability and willingness of the City to issue the Bonds as tax-exempt obligations under the Internal Revenue Code of 1986,as amended,and nothing contained in this Resolution shall be construed as requiring the City to issue the Bonds.and the decision to issue the Bonds shall be in the complete discretion of the City. Section 9. That if any section, paragraph, clause, of provision of this Resolution with the exception of any section,paragraph,clause or provision limiting the City's financial obligation shall • for any reason be held to be invalid or unenforceable, the invalidity or imenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. Section 10. That upon a determination by the County that it shall assign its 2000 Allocation to the City for the purpose of financing the Project,the Mayor is hereby authorized to execute the Assignment Agreement and the Delegation Agreement,together with 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. Section 11. That this Resolution shall take effect immediately upon its introduction and passage. Passed and adopted at a regular meeting of the City Council held this 15th day of February, 2000. Mayor ATTEST: City Clerk EXHIBIT "A" • ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT(the"Assignment")dated the day of February, 2000, is by and between LARIMER COUNTY, 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 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 an 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$1,579,750 (the "2000 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 within the its jurisdiction,and particularly in the City of Fort Collins,it is necessary or desirable to provide for the utilization of all or a portion of the 2000 Allocation; and WHEREAS, the Assignor has determined that the 2000 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 2000 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 Assignor's 2000 Allocation in an amount equal to$1,579,750,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 February- ,2000,the Assignor hereby assigns and transfers to the Assignee,the Assignor's 2000 Allocation from the State Ceiling for private activity bonds in an amount equal to $1,579,750 (the "Assigned Amount"). In addition,the Assignor hereby consents to the election by the Assignee,if the Assignee in its discretion so decides, to treat the Assigned Amount 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 Amount to the statewide balance under the Allocation Act. 2. The Assignor represents that is has received no monetary consideration for the assignment set forth above. 3. The Assignee hereby: (a) Accepts the assignment ofthe Assignor's 2000 Allocation from the State Ceiling described above; (b) Agrees to use reasonable efforts to use the 2000 Allocation to finance the multifamily assisted living project to be located near the intersection of Timberline Road and Horsetooth Road 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 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 Assignor's 2000 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 2 • 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 may 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. LARIMER COUNTY,COLORADO [SEAL] By Chairman, Board of County Commissioners Attest: By County Clerk and Recorder CITY OF FORT COLLINS, COLORADO [SEAL] By Mayor Attest: By City Clerk 3 EXHIBIT "B" • DELEGATION AGREEMENT This DELEGATION AGREEMENT (this "Delegation Agreement") is by and between LARIMER COUNTY, COLORADO, a body corporate and politic (the "County"), and the CITY OF FORT COLLINS, COLORADO, a body corporate and politic (the "City"); RECITALS: WHEREAS, the County and the City are each authorized by the County and Municipality Development Revenue Bond Act, constituting article 3 of title 29, Colorado Revised Statutes, as_ amended(the "Act"),to finance projects as defined in the Act,including housing facilities for low- and middle-income persons and families; and WHEREAS, Section 29-3-104(2) of the Act provides that a county or municipality may delegate by resolution or ordinance,as the case may be,to any other county or municipality authority to act on its behalf in the financing of projects under the Act and that any such delegation may be general or limited in scope and time and may be irrevocable for the term or terms of any financing agreement or bond issue, all as provided in such resolution or ordinance; and WHEREAS,the City proposes to issue multifamily revenue bonds pursuant to the Act(the "Bonds")to finance a multifamily assisted living project to be known as The Residence at Oakridge (the "Project"); and WHEREAS,the County desires to delegate to the City the authority of the County to finance and otherwise take action and exercise power under the Act on behalf of the County with respect to the Project within the County; NOW THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, the County and the City hereby agree as follows: Section 1. The County hereby delegates to the City the authority of the County to finance and otherwise take action and exercise power under the Act on behalf of the County with respect to the Project and the Bonds. Section 2. The City hereby accepts the delegation of authority from the County pursuant to Section 1 hereof and agrees to abide by each of the terms and conditions of this Delegation Agreement in connection with the use of such delegation. Upon satisfaction of the conditions precedent as set forth in this Agreement,the City agrees to issue the Bonds and finance the Project on behalf of the County. Section 3. The parties acknowledge that nothing contained in this Agreement shall obligate the City to finance the Project or any other multi-family housing project located in the City of Fort Collins. The City agrees to make reasonable efforts to issue the Bonds and finance the Project on behalf of the County, 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 the Bonds,and a determination by the City that the allocation of authority available for the issuance of the Bonds is sufficient,and further contingent upon the authorization of the issuance of the Bonds and execution of such documents and agreements as may be necessary to accomplish the same,by ordinance of the City Council of the City, in its sole discretion. Section 4. In the event the City is unable to finance the Project on or prior to September 15, 2000, the City agrees to make reasonable efforts to use the authority delegated to it under this Agreement in connection with the issuance of Private Activity Bonds to finance one or more other multi-family housing projects located within the City's boundaries,subject to due compliance with all requirements of law, and contingent upon a determination by the City 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 may be necessary to accomplish the same, by ordinance of the City Council of the City, in its sole discretion. The County hereby consents to the election by the City, if the City in its discretion so decides, to use the authority delegated hereunder to finance a multifamily housing project with a carryforward purpose and/or to make a mortgage credit certification election. IN WITNESS WHEREOF,the County and the City have caused this Delegation Agreement to be executed to be effective as of February_,2000. LARIMER COUNTY,COLORADO [SEAL] By Chairman,Board of County Commissioners Attest: By County Clerk and Recorder 2 . . CITY OF FORT COLLINS, COLORADO [SEAL] By Mayor Attest: By City Clerk • . 3