HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/02/1999 - RESOLUTION 99-16 ADOPTING THE PRIORITY AFFORDABLE AGENDA ITEM SUMMARY ITEM NUMBER: 21
DATE: February 2, 1999
FORT COLLINS CITY COUNCIL STAFF:
Ann E. Watts
SUBJECT:
Resolution 99-16 Adopting the Priority Affordable Housing Needs and Strategies Report.
RECOMMENDATION:
Staff and the Affordable Housing Board recommend adoption of the Resolution.
FINANCIAL IMPACT:
The "Priority Affordable Housing Needs and Strategies"report discusses a variety of ways that the
City can be smarter in using its funding for affordable housing. Regardless of whether any
• additional funds become available,those strategies should help the City be more effective at meeting
the housing needs of its low-income citizens.
The report analyzes the number of affordable housing units needed in Fort Collins. It concludes that
just over 4,400 units would be required to meet the community's need for affordable housing from
1999 to 2008. City Council has a range of funding choices, framed by two options -- to add no
funding to affordable housing, or to add enough to potentially meet the need in the next 10 years.
In 1999,the City's existing resources should be enough to fund 285 units. If no additional funding
is made available by the City for new units.then approximately 2,874 units could be funded by 2008.
That would leave the community in need of about 1,542 units. On the other hand, if enough City
funding was added to increase the number of units funded by 10% each year, the City could
potentially fund 4,542 units(126 more than it needs)by 2008. These two options are illustrated by
the charts on the following page.
For both charts, the federal sources of funding for new unit production include 60% of the City's
1999-2000 CDBG allocation and 90%of its 1999-2000 HOME allocation. It also includes 90%of
estimated "program income," or payments to be made on loans from those federal programs. Any
growth in the "Federal Funding" column is attributable to growth in program income. The local
source of funding for new unit production includes the current balance of the Affordable Housing
Ftmd ($478,083 at the end of 1998), funds currently budgeted for the Affordable Housing Fund
($283,000 in 1999), less funds to support the Larimer Home Improvement and Impact Fee Rebate
Programs. It does not include City funds for staff who work on affordable housing planning and
programs.
•DATE: February 2, 1998 2 ITEM NUMBER: 21
The Larimer Home Improvement Program (LHIP) has received $22,500 annually from the
Affordable Housing Fund, and the report proposes continuation of that funding.
'...Sumrery of Units that Could be Funded with no Increase to aty Cmtributim
UNITS FEDERAL aTY REBATES
_--
TOFUND FUNDM . _FUNDING &116
1998 n/a 778,09 4AW11 ,
1999 285 14S 000 283,000 283', 0,
2000 310 14�7 900 2ffi 000 100�
2001 308 1424,000 - 283,000 _ 22�500 . _----
-2002 30; 1,471900 283,000
2003 296 1507300 283,000
2004 289 1,542700 283,000 23,5fl�ji
2005 281 1,578,200 28S.1W
2006 _-_274 - 1,6li,600 283000
200 267 1,649.100 283,000 -- —
2008 261 1,684,600 1 283,000
� yx [
TOTAL 2 874 li 334 300 3 3�083 $ 11k110
Staff and the Affordable Housing Board support ending the Impact Fee Rebate program in favor of
establishing a competitive process. However, there are 11 qualified projects that have received
preliminary approval from the Planning and Zoning Board. These projects need Impact Fee Rebate
program funds to remain feasible. To be fair to those projects, $816,410 from the Affordable
Housing Fund should be set aside for these Rebates.
To meet the proposed funding goals for New Units,Rebates,and LHIP,the City would need to make
an ongoing appropriation of about $21,400 to the Affordable Housing Fund in 2000 and an
additional $179,900 in 2001. Each year thereafter, it would need to make ongoing appropriations
ranging from $235,800 to $624,400.
Summary of Funding Neededto Reach 16-year Goals for Newwt Productim
YEAR #NEW UNITS FEDERAL I CITYFUNDING REBATESi'
1OFUND FUNDING TOTAL$ ADDITIONAL$ &iHQ? j`
1
190 n/a ---- —.- — 478,083 - - - 478,083'
1999 285 1.-415.000 283,000 0 283,000
2000 314 1.437.900 304,390 21,390 100327,";=
2001 345 1.4-21-1.000 484,300 179,910 11500 's
079-- 1.471.900 726,141 235.841 2SOD,,s
2003 4l7 1.507.300 1,011,298 —291,lib
2004 459 1.542.700 1351,753 340,455 22 500 j;
_ _
2005 505 1.575200 1,748 867 397,114 2�SOD,E'a'
1.6L.600 2,211,439 462SP_ 22,500 :m,
2007 61f 1.6-19.f00 _ 2,749,116 — -537,T6 2250D
-- — - 62 --
�08 672 1.654.600 3,373,583 624,405 2't,500,;
,.
TOTAL 4542 $ 15334300 $ 14,716.029 -_ 3 1,041,410'
DATE: February 2, 1998 3 ITEM NUMBER: 21
The report also proposes investigation of the feasibility of a Land Banking Program for Affordable
• Housing. A team of City staff and community leaders has developed the program concept, and is
preparing to begin a detailed financial feasibility analysis. The team's preliminary budget request
is for$500,000 per year in 2000, 2001 and 2002.
BACKGROUND:
The goal of the"Priority Affordable Housing Needs and Strategies"study is to help the City be more
strategic in getting housing assistance to the people who need it most. It is also about using City
resources smarter, to get the most "bang for the buck." The study began with an investigation of
what kind of affordable housing exists in this community,what kinds are needed,and what the most
urgent need is. It includes an assessment of existing financial resources that support affordable
housing, both public and private. The report also contains a description of the roles of various
players in the affordable housing community within Fort Collins, including a comprehensive
analysis of current City roles,responsibilities and programs. Finally, it presents recommendations
from staff and the Affordable Housing Board for the City's future roles, responsibilities, and
programs, including specific and measurable goals, objectives and strategies for meeting its
affordable housing needs. The strategies would be effective regardless of whether additional funding
is made available. However, if the goals and objectives are not fully funded,the numbers of units
to be funded should be recalculated.
The strategies can be summarized as follows:
1. Use the City's subsidy dollars to help affordable housing projects leverage funding from
other sources.
2. Award an average of$5,000 per unit to projects from CDBG,HOME,program income, and
the City's Affordable Housing Fund.
3. Use 60% of CDBG, 90% of HOME, and 90% of program income dollars for awards to
affordable housing projects.
4. Replace the Impact Fee Rebate program with a competitive process.
5. Award approximately 70% of the City's subsidy dollars to projects that will provide
affordable rental housing for very low-income households(at or below 50%of AMI). Equal
priority should be given to two types of project - (1)those that would build new units; and
(2)those that would preserve existing affordable rental projects.
6. Award Private Activity Bond financing to projects that will provide affordable rental housing
for low-income households (between 50% and 60% of AMI).
7. Award approximately 30% of the City's subsidy dollars to homeownership programs or
projects. The vast majority would be awarded to potential first-time homebuyers through
. the existing Homebuyer's Assistance Program.
DATE: e ruary 2, 1998 4 ITEM NUMBER: 21
8. All projects that receive funding must commit to keeping their units affordable for a
minimum of 20 years. The highest priority should be given to projects that will commit to
permanent affordability.
9. Award most funding as loans, not grants.
10. The City needs to actively solicit private developers to work in Fort Collins, and assist
existing developers to increase their capacity to create more affordable units.
11. Funding targets must remain flexible,to allow CDBG and HOME program dollars to be fully
utilized.
Conclusions —Fort Collins' Priority Affordable Housing Needs:
• Rental Housing. This community's highest priority needs to be producing new rental units
affordable to households earning below 50%of AMI. In 1997,there were approximately 2,230
of these very low-income family or elderly households paying over 30%of their income for rent.
This community also needs to maintain a supply of multifamily rental units that are affordable
for people earning 50%to 80%of AMI. In 1997, there were approximately 710 of these low-
income family or elderly households paying over 30%of their income for rent.
• For Sale Housing. This community needs to continue to help first time homebuyers earning
below 80% of AMI to get into affordable homeownership. In 1997, there were approximately
960 of these low-income family households(eaming between 50%and 80%of AMI)that could
become first time homebuyers with downpayment or closing cost assistance.
• Housing Production. This community needs to be more proactive in identifying and securing
sites for future affordable housing development,it needs to examine any regulator-barriers and
consider reforming them,and it needs to be supportive of proposed developments in their quest
for identifying development subsidies. In addition, it needs to preserve its existing affordable
housing stock.
There are a number of assumptions underpinning staffs estimate of the number of affordable
housing units needed in Fort Collins. It is based on data from HUD,which has run projections from
the 1990 census to estimate the 1997 need. In order to compensate for the impact of student
households, the need was restricted to only family and elderly households. This gives a very
conservative estimate of units needed. The estimate of very-low income households who currently
need affordable rental housing (2,230) is much higher than the potential pool of first time
homebuyers (960). To account for growth in the need for affordable housing into the future, an
annual growth factor of 3%has been added to the 1997 figures. Therefore,the goal for funding units
becomes 3,087 for rental housing and 1,329 for homeownership assistance. The numbers are split.
70% renter to 30% potential homebuyers, so staff proposes that the City's financial resources be
allocated proportionately.
DATE: February-2, S ITEM NUMBER: 21
Strategies for meeting Fort Collins' Priority Affordable Housing Needs:
. 1. Use the City's subsidy dollars to help affordable housing projects leverage funding from
other sources. The fundamental role of the City in affordable housing production is to provide
enough funding to projects, early in their planning process, so that their developers can
approach other funding sources with concrete evidence that the City supports project.
Leveraging public and private, national, state and local funding sources is the key.
2. Award an average of 55,000 per unit to projects from CDBG,HOME,program income,
and the City's Affordable Housing Fund. Staff estimates that an average $5,000 per unit
subsidy would be enough to leverage other funding sources. Actual awards should vary based
on the relative merits of different project proposals. For example, relatively more funding
should be awarded to projects serving lower incomes. In addition,the amount per unit should
increase over time as construction costs and sale prices increase. These figures need to be
reevaluated periodically. The value of incentive programs like priority processing,
development review fee waiver, and impact fee delay would not be included in the $5,000.
3. Use 60% of CDBG, 90% of HOME, and 90% of program income dollars for awards to
affordable housing projects. This is essentially a continuation of existing practice,from over
the past 5 years.
4. Replace the Impact Fee Rebate program with a competitive process. Currently the City's
Affordable Housing Fund is being used to provide impact fee rebates or offsets. This program
• was designed as an administrative mechanism to refund some of the Impact Fees paid by
affordable housing projects,using General Fund dollars. It is a simple way to counter charges
that the City's impact fees are too high. However,it does not allow the City any flexibility to
fund either the projects that best meet its priorities or the projects that most need its assistance.
This report proposes eliminating that program in favor of a competitive process.
5. Award approximately 70% of the City's subsidy dollars to projects that will provide
affordable rental housing for very low-income households (at or below 50% of AMI).
Equal priority should be given to two types of projects: (1) those that would build new
units; and (2)those that would preserve existing affordable rental projects. There are a
number of existing subsidized apartment complexes that are affordable to very low-income
households that are in danger of being lost to the affordable housing stock. The preservation
of those units should be as important as building new units.
6. Award Private Activity Bond financing to projects that will provide affordable rental
housing for low-income households (between 50% and 60% of AMI). This category of
renters is also in need of help, but to much less an extent than those earning below 50% of
AMI. Although rents that are affordable to people earning 60%of AMI are close to the City's
current average rents, new units cannot be built at that rent level without assistance of some
kind. Private Activity Bonds (PABs) are designed to produce such units.
7. Award approximately 30%of the City's subsidy dollars to homeownership programs or
projects. The vast majority would be awarded to potential first-time homebuyers
through the existing Homebuyer's Assistance Program. This will result in a reduction of
the amount of funding that is currently available to help first-time homebuyers. While the City
DATE: February 2, 1998 6 ITEM NUMBER: 21
recognizes the value of homeownership, the number of very low-income renters who need
affordable housing is so overwhelming that it should give the highest priority, and the vast
majority of its resources, to serving that population.
8. All projects that receive funding must commit to keeping their units affordable for a
minimum of 20 years. The highest priority should be given to projects that will commit
to permanent affordability. Housing affordability is not a short-term problem. Therefore,
in order to receive City subsidies or incentives,housing projects must commit to keeping their
units affordable for a minimum of 20 years. Those that commit to longer periods should
receive preference. The highest priority and level of support should be given to those that
commit to permanent affordability. Most builders of for-salehomeswill consider this standard
too difficult to meet. It will effectively eliminate their interest in applying for City subsidies.
However,those that can assure the ongoing affordability of the homes they sell may be able
to access the 30% of subsidy dollars set-aside for homeownership.
9. Award most funding as loans,not grants. Loans enable the City to recycle funding that can
be used for future affordable housing projects. Only not-for-profit organizations that promise
permanent affordability should receive grants. For-profit rental developers may receive low-
interest loans, with terms that can be negotiated on a case-by-case basis. Homebuyer
Assistance is already being provided as a no-interest loan, due on sale of the home.
10. The City needs to actively solicit private developers to work in Fort Collins, and assist
existing developers to increase their capacity to create more affordable units. The City's
direct roles in affordable housing do not include acting as a developer. Therefore it needs to
work in partnership with the private sector, both for-profit and not-for-profit.
11. Funding targets must remain flexible,to allow CDBG and HOME program dollars to be
fully utilized. Some options include:
a. Set aside some funding for specific types of mid-year projects.
b. Make small awards to assist low-income rental units (50 to 60% of AMI), but only if
there are not enough feasible projects that will serve 50% AMI or less.
C. More than 30%of total funds available could be awarded to homeownership programs
or projects, but only if there are not enough feasible projects that will serve renters
earning 50% AMI or less.
d. Private Activity Bonds could be used for low-interest mortgage loans, if there are no
feasible rental projects to use them.
e. Program income and Affordable Housing Fund dollars could be held for future funding
rounds.
Previous Council Actions:
The 1997-99 Staff Work Plan calls for an Affordable Housing Needs Study to be completed in the
summer of 1998. The first phase of the "Priority Affordable Housing Needs and Strategies" report
was presented to City Council at its study session on June 9, 1998. Based on that information, City
Council approved Resolution 98-125 Establishing Affordable Housing Priorities at its August 18,
1998 meeting.
February 2, 1998 7
DATE: I I ITEM NUMBER: 21
The second phase of the report,with enhanced"Goals and Strategies,"was presented to City Council
• at its study session on October 27, 1998. Since then, staff and the Affordable Housing Board have
worked together to revise the"Goals and Strategies"and prepare them for adoption by City Council.
Citizen Participation:
After the October Study Session,the draft report was widely distributed to the following groups of
interested parties:
• U.S. Dept. of Housing& Urban Development,Denver Office
• Colorado Division of Housing
• Colorado Housing Finance Agency
• Latimer County Commissioners
• Fort Collins CDBG Commission
• Affordable Housing Coalition of Latimer County
• Larimer County Office on Aging, Senior Attainable Housing Committee
• Not-for-profit developers
• For-profit developers
• Realtors
Public comments were reviewed by staff and the Affordable Housing Board,and incorporated into
the document as appropriate. A summary of the comments and responses has been added to the
report, in Appendix 4. The same people have been mailed copies of the "Final Draft" of the report,
so that they might be prepared to comment on it at the upcoming City Council meeting.
Affordable Housing Board Recommendation:
The Affordable Housing Board has been closely involved inthe development of the study,especially
"The City of Fort Collins' Role" and the "Goals and Strategies..." chapters. Since the October 27th
Study Session, the Board has held 6 meetings to review and debate the document. At a special
meeting on January 14th, 1999, the Board voted to support adoption of the study by City Council.
Attached is a memo from Bob Browning, Chairman, explaining the Board's position.
RESOLUTION 99-16
. OF THE CITY COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING THE PRIORITY AFFORDABLE HOUSING NEEDS AND
STRATEGIES REPORT
WHEREAS, the 1997-1999 staff work plan calls for an affordable housing needs study to
be completed in the summer of 1998; and
WHEREAS,the first phase of the Priority Affordable Housing Needs and Strategies Report
was presented to the City Council at its study session on June 9, 1998 and, based upon the
information contained therein, the Council, by Resolution 98-125, established certain affordable
housing priorities at its August 18, 1998 meeting; and
WHEREAS, subsequent to the adoption of Resolution 98-125, the second phase of the
Priority Affordable Housing Needs and Strategies Report (with enhanced "Goals and Strategies")
was presented to the City Council at its study session on October 27, 1998; and
WHEREAS, the staff, the Affordable Housing Board and other interested groups have
worked diligently to revise the "Goals and Strategies" as contained in the Priority Affordable
Housing Needs and Strategies Report and have recommended that the Council adopt said report;and
• WHEREAS,the purpose of the Priority Affordable Housing Needs and Strategies Report is
to assist the City in being more strategic in obtaining housing assistance for the persons who are in
the greatest need of such assistance,and the City Council has determined that it is in the best interest
of the welfare of the citizens of the City that said report be adopted.
NOW, THEREFORE,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that the Priority Affordable Housing Needs and Strategies Report dated February 2, 1999,
attached hereto as Exhibit "A" and incorporated herein by this reference, be and hereby is adopted.
Passed and adopted at a regular meeting of the City Council held this 2nd day of February,
A.D. 1999.
Mayor
ATTEST:
City Clerk
Community Planning and Environmental Services
Advance Planning Department
City of Fort Collins
MEMORANDUM
DATE: January 19, 1999
TO: Mayor Azzn and City Council Members
Mr. John Fishback
FM Bob BrowAffordabk Housing Board
RE: Board Review of"Priority Affordable Housing Needs and Strategies"Document
The Board has reviewed the Needs and Strategies document over the past several months and forwards it to
you with a recommendation for approval. Part of the Board's review was to solicit and incorporate, where
appropriate, comments from individuals knowledgeable of affordable housing within the community. The
Board believes that most community concerns were incorporated into the document
The Board recognizes, and wants to emphasize, that this document is a "first step" towards addressing the
•affordable housing needs of the City.Numbers and projections made in the document are oftentimes based on
data contained in the 1990 census and there is no doubt that the 2000 census figures could alter some
projections The Board believes, however, that the basic strategies presented in the document are sound-,
changed data from the 2000 census could,most assuredly, alter the cost and magnitude of the situation, but
not the basic solutions to the problem
The recommendation of the Board for approval of the document was not unanimous. One Board member feels
strongly that the document does not go far enough - that the proposed level of participation by the City
towards an affordable housing solution is grossly insufficient and that increased emphasis need be placed on
bome ownamhip projects Another Board member argued that the strategies themselves will impose arbitrary
restrictions on the ability of the marketplace to solve Ft. Collie housing needs. Indeed, time may prove both
opinions accurate.As previously stated however,the Board acknowledges unanimously that this is a first step
document and strongly urges that it be reviewed and updated, if necessary, in conjunction with future City
budget cycles.
Finally,detailing the Ckys affordable housing priontiess,and devising its needs and strategics are certainly Steps
in the right direction. The next logical step in the process is the devebpmcut of an implementation document
to insure that all City,and City-managed affordable boil finds(CDBG,HOME, Affordable Housing Fund,
Private Activity Bonds,etc)are allocated in accordance with established priorities and with cost cffzctivmess
as a prime concern. Without such a document, much of the efforts expended thus far will be virtually
meaningless.The Board has stared its Willingness to awm-c respo;lsmiuT,J for the preparation of this document
• should Council desire it to do so.
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FAX (970)224-6111 • TDD(970)224-6002 • E-mail: aplanningCci.fort-collins.co.us