HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/19/1999 - RESOLUTION 99-7 SETTING FORTH THE INTENTION OF THE AGENDA ITEM SUMMARY ITEM NUMBER: 19
DATE: January 19, 1999
• FORT COLLINS CITY COUNCIL STAFF:
Alan Krcmarik
SUBJECT:
Resolution 99-7 Setting Forth the Intention of the City to Issue Multi-Family Housing Revenue
Bonds for the Concorde Capital Corporation Project.
RECOMMENDATION:
Staff and the Affordable Housing Board recommend adoption of the Resolution.
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 of 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 has an allocation of$2,684.075 of
private activity bonds for 1999. If the City induces the project, the proponents will apply for
additional private activity bond allocation from the State of Colorado.
EXECUTIVE SUMMARY:
In early December 1998, representatives from Concorde Capital Construction contacted staff
members of the Advance Planning and Finance Departments. Concorde requested the City consider
issuing private activity bonds for the purpose of acquiring property, constructing and equipping
housing project consisting of ranch style and townhomes(the"Project")in Fort Collins. The Project
would qualify as a low-income rental housing project. The project is located in the north part ofFort
Collins near the southeast comer of the intersection of Redwood and Conifer Streets. Up to 150
dwelling units will be included in the project. The site is approximately 13.6 acres. Twenty-seven
percent of the units will be for individuals or households making no greater than 60% of the area
median income. Forty percent of the units will be for households under the 50% median income
level. The remaining 33% of the units will be rented at market rates.
Passage of this Resolution will allow the City to issue up to $11 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 State of Colorado. The proposal is consistent with the
City's adopted policies regarding the issuance of multi-family rental housing bonds. The Affordable
Housing Board reviewed the project at its meeting on January 7, 1999. The Board supports the
proposal.
DATE: January 19, 1999 2 ITEM NUMBER: 19
Staff finds that the project is consistent with Council's goal of increasing the quality of affordable
housing in the City. The project proponent is in the process of preparing an application to secure
an additional Private Activity Bond Allocation from the State of Colorado. Based on Council's
action on the resolution, the City will support the project proponent in its application to the State
Allocation Board for a State allocation. The deadline for applications to the State for allocations is
January 22, 1999.
BACKGROUND:
One of the Council's top priority work plan goals for 95-97 and 97-99 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. 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 Concorde Project is planned to be a 150-unit multi-family project in the north part of Fort
Collins. The site is located at the comer of Redwood and Conifer streets( see the attached map).
This location is within a qualified census tract.
The project will contain 40 two-bedroom units and 110 three-bedroom units. The project is designed
as a combination of ranch and townhouse units. A clubhouse of over 3,000 square-feet will have
a large community room for residents' use. The site is a 13.6 acre tract of land.
The site is a triangle shape and has been designated as "hard to develop" by the Department of
Housing and Urban Development. This designation qualifies the project for additional tax credits,
thereby improving the overall financing of the project.
According to the information received from the Project proponents,the tenancy for at least 60 of the
units will be affordable for residents making no greater than 50% of the area median income.
Twenty-seven percent of the units will be affordable for residents making no more than 60% of
median income. The remaining 33% of the units will be at market rates. For the restricted rental
rates units, rents will be restricted to 30%of targeted income and be regulated by deed restrictions
of the tax credit allocation.
Criterion 91
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 67% 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.
DATE: January 19, 1999 3 ITEM NUMBER: 19
Criterion #2
For restricted units,the rents must be set at 30%of 70%of median income. As stated above, 67%
of the units will be at 30%of 60%of area median income.
The project meets this criterion.
RENT CALCULATIONS
Concorde Capital Corporation Project Rent Calculations
Number of Bedrooms
(Assumes an average of 1.5 people per bedroom)
2 Bedrooms 3 Bedrooms
Income Rent Rent
60% of Median Income $697 $794
50% of Median Income $572 $662
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.) The project applicant has targeted households with 50% of area median income for
40% of the units thereby meeting the additional rent reduction.
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.
I
DATE: January 19, 1999 4 ITEM NUMBER: 19
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 proj ect 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.
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
The project has been presented to the Affordable Housing Board and received its approval. 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.
RESOLUTION 99-7
. OF THE COUNCIL OF THE CITY OF FORT COLLINS,
SETTING FORTH THE INTENTION OF THE
CITY TO ISSUE MULTI-FAMILY HOUSING REVENUE BONDS
FOR THE CONCORDE CAPITAL CORPORATION PROJECT
WHEREAS, representatives of Concorde Capital Corporation (the "Company") have met
with officials of the City of Fort Collins, Colorado, (the "City"), and have advised the City of the
interest of the Company in acquiring, constructing, and equipping a ranch and town home project
(the"Project")to be near the corner of Redman and Conifer Streets,Fort Collins,Colorado,subject
to the City's financing the Project by the issuance of multi-family 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 the State of Colorado,seeking
to increase the City's private activity bond allocation sufficient to permit the issuance of multi-
family 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 State of Colorado approves the necessary
additional allocation for the City to use in connection with the Project.
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 allocation from the State of Colorado,take all necessary and advisable steps to effect
the issuance of multi-family housing revenue bonds (the "Bonds") pursuant to the Act in the
maximum aggregate principal amount of Eleven Million Dollars ($11.000,000) 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 statues of the State of Colorado or the Charter of the City,not 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 bome by the City. All such costs or
expenses shall be paid from the proceeds of the Bond or otherwise borne by the Company.
Section 3. That prior to any execution of a financing agreement,mortgage,indenture oftrust,
bond purchase agreement or any other necessary documents and agreements in connection with such
Bonds, such documents and/or agreements shall be submitted for approval to the City, and, if
satisfactory to the City,their execution shall be authorized by ordinance of the Council pursuant to
law.
Section 4. That prior to any further action by the Council,the Company shall provide the
City with an opinion of a qualified bond counsel, 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
of the City within the meaning of any limitation of the Constitution or statutes of the State of
Colorado or the Charter of the City, not give rise to a pecuniary liability of the City or a charge
against its general credit or taxing powers.
Section 6. That all 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 eventthat 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 of Fort Collins shall be under no obligation to perform any of the
terms and conditions contained herein. Nothing contained herein shall constitute a warranty or
representation by the City that the Bond will received from the State of Colorado any necessary
allocation of a portion of the private activity bond limit authorized for the State of Colorado pursuant
to the Internal Revenue Code of 1986,as amended. If an allocation for the Project is necessary,the
City shall use its best efforts to secure from the State of Colorado such an allocation authorizing the
issuance of the Bonds from the State of Colorado private activity bond limit.
Section 7. That all resolutions or part thereof concerning the subject matter hereof in conflict
with the Resolution are hereby repealed to the extent of such conflict. 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 Federal
Income Tax laws existing on the date of the issuance of the bonds. 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 unenforceability of such
section, paragraph, clause or provision shall not affect any of the remaining provisions of this
Resolution.
Section 10. 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 19th day of January,
A. D. 1999.
Mayor
ATTEST:
• City Clerk
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CITY OF FORT COLLINS
• AFFORDABLE HOUSING BOARD
Meeting Minutes
(Specific to discussion involving Concorde Capital)
December 3, 1998
Bob Browning, Vice Chair
Ken Waido, Staff Liaison
Chuck Wanner, City Council Liaison
The meeting of the Affordable Housing Board was called to order by Chairman
Bob Browning, beginning at 4:10 p.m., at 281 North College Avenue, Fort
Collins, Colorado. Board members present included: Bob Browning, Kay Rios,
Bruce Croissant, David Danforth, Isabel Garity, Joanne Greer, Stacy Overton,
and Mickey Willis. Staff present: Ken Waido and Ann Wafts. City Council
Liaison present: Chuck Wanner. Others present: Joe Frank, Greg Byrne, Alan
Krcmarik, Krista Moberly, Lou Stitzel, and Betty Malone.
The following excerpt of minutes relates solely to the presentation by Concorde
Capital.
Concorde Capital
• Phil Brown reported for Concorde Capital, a developer of affordable housing
based on Columbus, Ohio, presently building in Colorado Springs. Mr. Brown
requested the Board's recommendation of City Council approval to induce
Private Activity Bonds for a 150-unit project at the corner of Conifer and
Redwood. Following are the salient portions of the discussion:
Concorde Capital is a smaller company than some of the developers who have
entered the Fort Collins market. Concorde has done rehabs and SROs at the
30-40 percent AMI bracket. That AMI level is generally difficult to serve, and
Concorde is willing to work with local nonprofits to help address that situation.
Their philosophy is to build value housing that provides the most space for the
least amount of money. Mr. Brown distributed a packet with information on
Concorde.
Concorde is currently studying market rates and AMI levels for Fort Collins.
Since they are based in the Ohio State area, they are familiar with the impact
that student housing has on market rates. Mr. Brown's preliminary indication
was a market rate of $700-800 for a two- or three-bedroom unit.
In response to questions, Mr. Krcmarik noted that the City has $2.7 million of
Private Activity Bond allocation for 1999. If City Council were to induce this
project, then the developer would go to the State for additional bond and tax
Affordable Housing Board
Meeting of January 7, 1998
Excerpt related specifically to Concorde Capital
Page 2
credit financing. At 25 percent equity on a $14.2 million project, the amount of
bond financing needed from the State would be close to $8 million.
Board members and Staff discussed that the City inducement would be needed
to leverage the project; and that no other viable applicants were under
consideration.
In response to questions by Board members, Mr. Brown stated that Concorde
was interested in Fort Collins as the kind of smaller, close-knit market that they
were accustomed to, and enjoyed, dealing with. Concorde has ties to Colorado
financing institutions. The proposed project is planned for ranch and townhome
units. Ranch units are attractive to senior residents. Concorde desires a mix of
housing types and residents.
Concorde originally had planned a project in Fort Collins but could not proceed
due to site and planning approval difficulties. At that point, through discussions
with Ms. Watts, they were further encouraged to proceed with affordable housing
in Fort Collins.
In response to questions by Board members, Staff members stated that this
appeared to be the best proposal yet made for the bond inducements. If the
project does not proceed, the inducements would revert to the City for use in
another project, should one occur. Although the deadline is in September, the
inducements can be carried forward for an ongoing project. Cooperative efforts
with CHFA provide another possible avenue should the project be delayed.
In response to questioning by Mr. Krcmarik and Ms. Watts, Mr. Brown noted that
HUD has designated parts of Fort Collins as "difficult-to-develop' and as
"qualified census tracks." This project's site has both designations. If a Private
Activity Bond allocation from the City and State were received, these
designations would increase the project's eligible basis for tax credits by 30
percent. Therefore Concorde could receive more equity for the project from
investors. This particular incentive is what allows private development to
address AMI levels below 60 percent.
In response to questions by the Board, Mr. Brown stated that he believed the
term of affordability to be at 20 years. Due diligence is being performed on the
13-acre site; no site plan has yet been prepared. The site plan will be developed
by March due to State deadlines. Ms. Watts noted that a conceptual review
meeting would be held on January 251" and she invited any interested Board
members to attend.
Affordable Housing Board
Meeting of January 7, 1998
Excerpt related specifically to Concorde Capital
Page 3
•
Discussion was held over the viability of Private Activity Bond financing for rehab
projects. Although it is an eligible use, the State is not interested in that type of
participation at this time. CHFA is looking at other ways to stimulate rehab
activity.
Comments by Board members: Combining market-rate and affordable units is a
desirable strategy, where the affordable units are supported by the market-rate
units. The project appears to be a good one in concept.
Moved by Ms. Rios, seconded by Ms. Greer: To recommend approval of the
issuance of Private Activity Bonds for the proposed 150 unit project to be
developed by Concorde Capital, Inc. near the corner of Conifer and Redwood
Streets in northern Fort Collins. Motion approved unanimously.
(End of discussion concerning Concorde Capital.)
•