Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/10/2012 - HOUSING AUTHORITY FEE WAIVER POLICYDATE: July 10, 2012 STAFF: Diane Jones Pre-taped staff presentation: available at fcgov.com/clerk/agendas.php WORK SESSION ITEM FORT COLLINS CITY COUNCIL SUBJECT FOR DISCUSSION Housing Authority Fee Waiver Policy. EXECUTIVE SUMMARY For many years, the City has waived fees for Housing Authority projects under a state law that exempts housing authorities from fees and taxes, and a local ordinance that defines the particular fees that are to be waived. For the most part, the projects for which fees were waived by the City have been relatively small. In 2011, the Housing Authority partnered with CARE Housing, a non-profit agency, on an affordable housing project in the Provincetown subdivision. While the interest of the Housing Authority in the project was small (technically a .001% partner but guaranteed up to $1.4 million of unanticipated costs), a waiver of City fees for the CARE Housing Provincetown Project was requested and granted by the City Council. The fee waiver totaled $557,378. Council asked staff to examine the fee waiver policy for the Housing Authority and provide some options for future projects, especially those in which the Housing Authority has only a minor interest. This work session is to review the options staff has considered and to discuss with City Council a recommended approach. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Are there other options that Council thinks should be considered? 2. Does Council concur with the recommended direction and next steps? BACKGROUND / DISCUSSION The mission of the Fort Collins Housing Authority is to provide and promote safe and affordable housing, economic opportunity and a living environment free from discrimination. The Housing Authority administers its own Public Housing and Housing Choice Voucher (HCV) programs, manages the Public Housing units owned by the Wellington Housing Authority, and operates the Larimer County Housing Authority’s HCV program. The Housing Authority also manages the non-subsidized affordable housing properties owned by Villages, Ltd. and the low- income senior apartments located in the historic Northern Hotel. July 10, 2012 Page 2 In 2011, the Housing Authority partnered with CARE Housing, a non-profit agency, on an affordable housing Low Income Housing Tax Credit (LIHTC) project in the Provincetowne subdivision. The project is an 85-unit, $14.9 million townhome rental housing project intended to serve families earning 30%-50% of the Area Median Income (AMI). The project had private investors who had been awarded federal housing tax credits. Because the IRS rules for the LIHTC program required the private investor to be a 99% owner, the Housing Authority had a very small ownership interest in the project - .001% interest - but also guaranteed up to $1.4 million of unanticipated costs. The Council approved the waiver of $557,378 in City fees for CARE Housing/Provincetowne Project. In waiving the fees, the City Council asked for options for future projects, especially those in which the Housing Authority has only a minor interest. Issue As noted above, under the Colorado statutes and the City of Fort Collins ordinances and resolutions dating back to 1988 (Resolution 1988-081, Ordinance No. 051, 1996, Resolution 1996-073, Ordinance No. 065, 1999), Housing Authority projects have historically been exempted from taxes and fees. While the state law does not specify particular exemptions, the City ordinance does specify the particular fees from which Housing Authority projects are exempt. The most recent local legislative action (Ordinance No. 065, 1999) exempts housing authority projects from: • Appeal fees • Building Permit fees • Development Review fees • Parkland fees • Plan check fees • Street Oversizing fees • Vested property right fees • Zoning variance fees • Community Parkland Capital Improvement Expansion Fee • Library Capital Improvement Expansion Fee • Police Capital Improvement Expansion Fee • Fire Protection Capital Expansion Fee • General Government Capital Improvement Expansion Fee • Fee in Lieu of School Site Dedication For the most part, the projects for which these fees have been waived have been relatively small projects with minimal fees. This is because for the last decade and due to market conditions, the Housing Authority has focused on substantial renovation and preservation of affordable housing rather than new construction. The City and the Housing Authority disagree as to whether the exemption from taxes and fees (as referred to in the State statutes) applies only to projects that are wholly owned by the Housing Authority or also applies to projects in which the Housing Authority holds a minority interest. The reason that this difference of opinion has become significant is that, when fees are waived by the City, other sources of funds must generally be identified to pay those fees. Otherwise, other fee payers would be required to make up the difference needed to cover the costs of the infrastructure July 10, 2012 Page 3 or services funded by the fees and would wind up paying a disproportionate share of those costs. For the CARE Housing/Provincetown Project, the fees were covered out of the General Fund. Council requested additional discussion of this issue before other affordable housing projects in which the Housing Authority has an ownership interest are presented to Council for possible fee waivers. A staff team that included Karen Cumbo-Director of Planning, Development and Transportation, Joe Frank- Director of Social Sustainability , Mike Beckstead-Chief Financial Officer, Steve Roy- City Attorney, Paul Eckman-Deputy City Attorney, Carrie Daggett-Deputy City Attorney, and Diane Jones-Deputy City Manager, was formed to address the issue. Options Identified and Considered Staff has had extensive discussions with the Fort Collins Housing Authority about how best to deal with this issue. Several approaches were initially identified: A. Use Community Development Block Grant (CDBG) and HOME Funds to Cover the Fees. At one point in the discussions, the Housing Authority suggested that the fee waivers focus on Permanent Supportive Housing projects which target the chronically homeless, thereby concentrating on the most vulnerable people in the community.1 It is likely that there would be an application for this type of housing project and subsequent fee waiver no more than once every two years. These funds are somewhat restricted, but CDBG funds can be used to cover some site specific development fees and HOME can cover some impact fees. While both sources can be used to cover some select fees, neither can be used to cover waived fees. Financing can also be structured so federal grants and tax credits cover a greater share of project development and construction and thereby enabling other elements of project financing to cover the fees. B. Affordable Housing/Human Services Tax or Fee. Some communities assess a human services/affordable housing sales tax (e.g., a .45 % in Aspen). The fact that Fort Collins’ voters approved a .85-cent sales tax increase in November 2010 and given that the economic recovery remains slow and challenging, a tax request and approval is relatively remote. An affordable housing fee on other new development is also likely to be met with resistance. 1Homeward 2020 is a local initiative to make homelessness in Fort Collins rare, short-lived and non-reoccurring within a 10-year period. One of the strategies to end homelessness in Fort Collins is to provide permanent supportive housing for those who need it. Supportive housing combines housing with services that help people who face the most complex challenges to live with stability, autonomy and dignity. Toward this end, the Fort Collins Housing Authority is working to provide a Permanent Supportive Housing facility in our community. July 10, 2012 Page 4 C. Defer Fees to the End of the First Financing Period. Another option staff considered was the idea of deferring development and impact fees for a period of time. For affordable housing projects that are financed by another party (other than the Housing Authority) and where the ownership is transferred after a period of time (for example, the tax credit period of 15 years), the fees would then be paid by the new owner. LIHTC projects are owned by a partnership in which the tax credit investors typically hold 99% ownership in order to receive the benefit of the credits and the non-profit partner owns 1% since it does not have a tax liability and would not benefit from the tax credits. This ownership structure, as well as the details of ownership at the end of the tax credit period, are negotiated and documented in the formation of the partnership documents. Some of the questions and concerns with this option include: (a) if the project is not transferred from a partnership to the Housing Authority, who would pay the fees, e.g., would the City (General Fund) be required to pay them; (b) since impact fees help fund the needed public facilities that support the project (such as street oversizing, parks, water and wastewater) and if such fees are delayed for an extended period of time, would there be adequate resources to “front” the cost of providing expanded public facilities to accommodate the development? D. Make the Fee Waivers Optional, According to Established Criteria An option suggested by the Housing Authority is to modify Ordinance No. 065, 1999 which exempts the Housing Authority from paying a list development review and impact fees. The suggestion is to change the language of the ordinance from “the City shall exempt the Housing Authority from payment of any of the following fees” to “the City may exempt the Housing Authority from payment of any of the following fees.” In order to evaluate which projects would be seriously considered for such exemption, staff worked with the Housing Authority and is suggesting that each Housing Authority project would be reviewed with two general criteria as guidelines for exempting projects from prescribed development review and development impact fees. In other words, applications for fee waivers would be limited to: 1. projects that are constructed for the homeless or disabled (in accordance with the HUD definition); and/or 2. projects that are constructed for occupants whose income falls within 0% to 30% AMI (Adjusted Median Income) Board and Commission Outreach The issue and the options were presented to the Affordable Housing Board (June 7, 2012) and the Community Development Block Grant (CDBG) Commission (June 14, 2012). The minutes from the Affordable Housing Board and an excerpt from the CDBG Commission are attached. The Affordable Housing Board discussion focused on: asking if there were sources other than the General Fund to cover fees that might be waived; supported pro-rating waivers for only that portion July 10, 2012 Page 5 of the project that met the criteria (Option D); and questioning if the commitment of the City (for waiving and covering fees) was sufficient. The Board has provided a written response to Council (Attachment 6). The CDBG Commission discussion focused on: suggesting fee waivers for the Housing Authority only apply to projects in which the Authority has a greater percentage of participation; suggesting that the City waive fees for all affordable housing projects; fee waivers for Housing Authority projects discourages others from competing; Option D helps to “level the playing” field as the Housing Authority would only seek and be provided fee waivers under the criteria cited; and perhaps the suggested language of “may” is too open-ended. The Commission’s conclusion was a preference for Option D and would like to see fee waivers extended to other non-profit developers (of affordable housing). Recommendation City and Housing Authority staff disagree as to whether the Colorado Revised Statutes do, in fact, exempt projects that are only partially owned by housing authorities from paying local development and impact fees. Rather than press this issue, staff has worked to formulate a mutually acceptable proposal to address the concerns of City Council. City staff and the Housing Authority staff are recommending Option D above. The specifics of the proposal are: A. Housing Authority requests for the waiver of development and impact fees would be limited to housing projects that are targeted for the most vulnerable population in the City. The Housing Authority defines its most vulnerable target population as: (1) the homeless or disabled (in accordance with the HUD definition, and (2) those that fall within 0% to 30% AMI (Adjusted Median Income). If only a portion of a project qualified for a waiver, the waiver would be pro-rated accordingly. B. Each proposed waiver would be presented to the City Council for consideration and would be discretionary with the Council. If, in Council’s judgment, a particular waiver would create an undue financial hardship for the City, the Council would not be obligated to waive the fees for that project. C. To cover the waived fees, two strategies would be employed: 1. Priority would be given by the CDBG Commission and City Council to use CDBG and HOME funds to pay the development and impact fees (to the extent permissible under HUD guidelines). 2. If CDBG and/or HOME funds cannot be used to cover the fees, or the use of these funds is not approved by City Council, then the City’s General Fund would be utilized to cover such fees. D. The development and impact fees that would be subject to the fee waivers would be the following (these would not change from what is in the current City ordinance): July 10, 2012 Page 6 • Appeal fees • Building Permit fees • Development Review fees • Parkland fees • Plan check fees • Street Oversizing fees • Vested property right fees • Zoning variance fees • Community Parkland Capital Improvement Expansion Fee • Library Capital Improvement Expansion Fee • Police Capital Improvement Expansion Fee • Fire Protection Capital Expansion Fee • General Government Capital Improvement Expansion Fee • Fee in Lieu of School Site Dedication Next Steps If City Council concurs with this direction, staff will work on amending the current City ordinance and prepare an Intergovernmental Agreement between the City and the Housing Authority. The Intergovernmental Agreement would be presented to the Housing Authority Board. The ordinance amendment along with the proposed IGA would then be presented to City Council at a regular meeting. ATTACHMENTS 1. Resolution 1988-081 2. Ordinance No. 051, 1996 3. Resolution 1996-073 4. Ordinance No. 065, 1999 5. Affordable Housing Board minutes, June 7, 2012 6. Affordable Housing Board memo 7. Community Development Block Grant (CDBG) Commission minutes, June 14, 2012 8. Powerpoint presentation ATTACHMENT 1 ATTACHMENT 2 ATTACHMENT 3 ATTACHMENT 4 CITY OF FORT COLLINS AFFORDABLE HOUSING BOARD DRAFT MEETING MINUTES 281 N. College Ave. Fort Collins, Colorado June 7, 2012 4 to 6 p.m. Chair: Dan Byers Staff Liaison: Ken Waido 970-221-6753 City Council Liaison: Lisa Poppaw Board Members present: Ben Blonder, Dan Byers, Jeff Johnson, Troy Jones, Wayne Thompson Board Members absent: Karen Miller, Mike Sollenberger Advance Planning Department Staff present: Ken Waido; Beth Rosen, Affordable Housing Administrator Council Members present: None Other Staff present: Diane Jones, Deputy City Manager; Ingrid Decker, Assistant City Attorney; Kate Jeracki, Note Taker Guests: Marilyn Heller, League of Women Voters; Julie Brewen, Fort Collins Housing Authority; Bill Renke, CARE Housing; Kristen Candella, Fort Collins Habitat for Humanity; Ray Roth, citizen [FEE WAIVER SEGMENT EXCERPT] FORT COLLINS HOUSING AUTHORITY FEE WAIVERS UPDATE — Diane Jones, Deputy City Manager and Director, Policy, Planning and Transportation, presented a working paper on fee waivers for the Fort Collins Housing Authority. The Housing Authority’s minimal participation in the Provincetowne project as a partner with the nonprofit CARE Housing resulted in the waiver of $557,000 in infrastructure-related fees, and this amount had to be made up from the General Fund. While there are questions about whether current statutes apply to projects not wholly owned by the Housing Authority, City Council has asked for additional options for future projects, especially those in which the Housing Authority has only a minor interest. Jones presented four options: A. Use Community Development Block Grant and HOME funds to cover the fees. ATTACHMENT 5 2 The Housing Authority suggested that the fee waivers focus on permanent supportive housing projects that target the chronically homeless. HUD prohibits the use of CDBG funds for impact fees; HOME funds can be used to pay individual or fractional impact fees on specific projects only, not all affordable housing. B. Affordable Housing/Human Services tax or fee Other communities assess such a tax, but the possibility of passage of a tax increase at this time is relatively remote. C. Defer fees to the end of the first financing period The fees would not be assessed until the ownership is transferred, for example, after the tax credit period of 15 years, and the new owner would pay them. However, if the ownership is not transferred, would the fees still come out of the General Fund? Would deferment provide enough money upfront to expand public facilities to accommodate the development? D. Make the fee waivers optional, according to established criteria Under this option, the existing ordinance would be changed from “the City shall exempt the Housing Authority from payment of any of the following fees” to “the City may exempt the Housing Authority from payment of any of the following fees.” Each Housing Authority project would be reviewed with two general criteria as guidelines for exemption: • Projects that are constructed for the homeless or disabled and/or • Projects that are constructed for occupants whose income is less than 30 percent of adjusted median income. Staff is recommending Option D. Julie Brewen said FCHA also supports this option as win-win to serve the most vulnerable members of the community. Jones asked for input from the Affordable Housing Board to be presented at the City Council worksession on July 10. Troy Jones asked if there were any other possible sources of funding other than the General Fund to cover the infrastructure costs paid for by the waived fees. Diane Jones said no. Ken Waido said financing can be structured so federal grants and tax credits cover other parts of a project. Beth Rosen also pointed out that fees management is the biggest administrative burden of any project. Ben Blonder supported restricting waivers to projects serving those with less than 30 percent AMI. Dan Byers questioned making the waivers completely discretionary for City Council. He was concerned about projects with minimal ownership by FCHA, like Provincetown. Blonder said under these new restrictions, Provincetowne might have had a hard time getting the waivers that were granted. Jeff Johnson asked about leaving the 3 term “partnership” undefined; Brewen said the draft is silent on the issue of percentage of FCHA participation. Blonder asked if the waivers could be pro-rated—for example, if 10 percent of a project’s units were for less than 30 percent AMI or homeless or disabled, only 10 percent of the fees could be waived. Diane Jones confirmed that to be the case. Troy Jones asked when in the lifecycle of the project would developers know which fees will be waived? Diane Jones said projects that meet the criteria will be flagged and put into the city’s budget process as soon as they are identified. A BFO offer could include a minimum/maximum dollar amount for waivers, contingent upon approval by Council. Dan Byers said the way the option is worded is a small commitment from the City. He suggested taking out “discretionary.” He would like the Board to formulate a response to Council in writing, and will initiate an email discussion with members before the July 10 worksession, since the Board’s next meeting has been rescheduled to July 12. Housing Authority Fee Waiver Affordable Housing Board Comments June 7, 2012 The Affordable Housing Board (AHB) heard a presentation by Diane Jones, Deputy City Manager, regarding the City’s review of Fee Waivers for the Fort Collins Housing Authority (FCHA) at its June7, 2012 regular meeting. Following are the AHB’s comments related to the City’s recommendation on this issue: 1. The City’s ordinance allowing for certain Fee Waivers for projects owned by the FCHA has been appropriate and has encouraged the establishment of affordable housing in Fort Collins. 2. Due to the size of the fee waiver ($577,000) requested for the Provincetowne project, which the FCHA had a small ownership interest in, the City has subsequently conducted a review of the fee waiver ordinance. This review has suggested several options for modifying and further clarifying the application of the fee waivers for FCHA owned projects. 3. After considering these options with the FCHA, the City has made a recommendation to clarify when the fee waivers would be granted based on the following terms: a. The waiver, if granted, would be limited to projects targeting the homeless or disabled, and those that fall within the 0 – 30% AMI range. If only a portion of the project qualified under these terms, the waiver would be pro‐rated accordingly. b. The waiver would be discretionary if, in Council’s judgment, a particular waiver would create undue hardship for the City. c. The waived fees would need to be covered by the City’s General Fund, since CDBG/HOME funds cannot be used to cover waived fees. Some non‐waived fees could possibly be covered by federal funds. 4. The AHB has read and discussed the City’s review and recommendation and has the following comments: a. Any interpretation or clarification of the State statutes and the City’s Ordinance should further clarify that the waiver be applied uniformly to any project owned by the FCHA, regardless of that percentage ownership. ATTACHMENT 6 b. Limiting the fee waiver to projects targeting the homeless, disabled, or those that target the 0 – 30% AMI population is a very limited scope that would substantially reduce the fee waivers the City would be asked to consider. This determination by the City could be interpreted by some as a reduction in the City’s commitment to encourage affordable housing in our community. c. If the City were to adopt this new clarification of the Ordinance, with its reduced scope as outlined in point 3 above, the AHB would strongly recommend that the fee waiver not be considered discretionary. Making the fee waiver discretionary would seem to be contrary to the purpose and intent of the City’s review of this Ordinance, which was to clarify when the waiver would be granted. Making the waiver discretionary could also cause hardship and undue expense for the FCHA when initiating projects since it may inhibit their ability to plan for all anticipated costs of the project. Further, the new limited scope being recommended for the waiver should substantially lessen any fee waiver requests such that they would not be expected to generate an undue hardship on the City. If the City continues to have a concern over the exposure that these waived fees could present, and the dollar impact on the City’s General Fund, one suggestion our board had would be to consider a hard dollar cap for waived fees that any one project would not exceed. With a hard dollar cap, both the City and the FCHA could plan appropriately for upcoming projects. Thank you for considering the review and comments of the AHB. COMMUNITY DEVELOPMENT BLOCK GRANT COMMISSION REGULAR MEETING 281 N. COLLEGE AVENUE, FORT COLLINS June 14, 2012, 6:30 P.M. COMMISSION MEMBERS PRESENT: Kay Rios, Chair Jamaal Curry Anita Basham Margaret Long Robert Browning Emily Sander Catherine Costlow COMMISSION MEMBERS ABSENT: STAFF MEMBERS PRESENT: Gordon Coombes Heidi Phelps Kristin Stephens Sharon Thomas VISITORS PRESENT: Bill Reinke, Executive Director, CARE Housing Kristin Candella, Incoming Executive Director, Fort Collins Habitat for Humanity Ray Roth, Citizen [FEE WAIVERS SEGMENT EXCERPT] Diane Jones, Deputy City Manager and Director, Policy, Planning and Transportation, presented a working paper on fee waivers related to the Fort Collins Housing Authority. The Housing Authority’s minimal financial percentage participation in the Provincetowne project, as CARE Housing’s non‐profit partner resulted in the waiver of $557,000 in infrastructure‐related fees. That amount needed to be made up from the City’s General Fund. While there are still questions about whether current State statutes apply to projects not wholly owned by the Housing Authority, City Council has asked for additional options for future projects, especially those in which the Housing Authority has only a minor interest. Ms. Jones presented four options: A. Use Community Development Block Grant and HOME funds to cover the fees. The Housing Authority suggested that the fee waivers focus on permanent supportive housing projects that target the chronically homeless. The U.S. Department of Housing and Urban Development (HUD) prohibits the use of CDBG funds for impact fees. HOME funds can be used to pay individual or fractional impact fees on specific projects only, but may not be used on some other community‐wide development fees. Neither federal funding stream may be used to “backfill” waived fees. ATTACHMENT 7 CDBG Commission Regular Meeting June 14, 2012 Fee Waivers Segment Excerpt 2 B. Affordable housing/human services tax or fee Other communities assess such a tax, but the possibility of passage of a tax increase at this time is relatively remote. C. Defer fees to the end of the first financing period The fees would not be assessed until the ownership is transferred‐‐for example, after the tax credit period of 15 years has passed, and the new owner would pay them. However, if the ownership is not transferred, would the fees still come out of the General Fund? Would deferment provide enough money upfront to expand public facilities to accommodate the development? D. Make the fee waivers optional, according to established criteria Under this option, the existing ordinance would be changed from “the City shall exempt the Housing Authority from payment of any of the following fees” to “the City may exempt the Housing Authority from payment of any of the following fees.” Each Housing Authority project would be reviewed with two general criteria as guidelines for exemption: projects that are constructed for persons who are homeless or have disabilities and/or projects that are constructed for occupants whose income is less than 30 percent of Area Median Income (AMI). City and Housing Authority staff are recommending Option D. Ms. Jones asked for input from the CDBG Commission to present to Council’s July 10 work session. Catherine Costlow suggested that waivers only apply to projects with a greater percentage of Housing Authority participation. Otherwise, developers might partner with the Authority just to get the Low Income Housing Tax Credits, when applicable. Ms. Jones said that might be possible, but the question remains as to how to manage the waivers. Kay Rios pointed out that while State law says housing authorities are exempt from fees and taxes, it is up to the City to enumerate which fees. Bob Browning suggested the City should waive fees for all affordable housing projects, not just the ones involving the Housing Authority. Ms. Jones said State law singles out housing authorities. It’s a matter of City finances to collect fees. Ms. Rios pointed out that fee waivers give Housing Authority projects a significant leg up on other projects that come before the Commission in the City’s Competitive Process for funding. While she understands that it is not financially feasible to exempt all affordable housing projects, the advantage given to the Authority discourages other projects from competing. Even if the waivers were optional, Ms. Rios believes the Housing Authority would always get them, no matter what. She asked where the list of fees to be waived, as specified in the existing ordinance, came CDBG Commission Regular Meeting June 14, 2012 Fee Waivers Segment Excerpt 3 from. Ms. Rios wondered whether the Council could pick and choose which fees to waive. Ms. Jones was unsure, but noted that in the past, fee waivers have been all or nothing. She confirmed that under Option D, waivers would only be granted to projects within the parameters specified. Margaret Long said she liked that restriction, because projects for persons who are homeless, have a disability and/or are very low‐income, are the most difficult for investors, since they have the least potential for profit. It makes sense to level the playing field somewhat between the Housing Authority and other developers. Ms. Long added that she doesn’t like deferring fees, because after 15 years of inflation, what are you really getting? Emily Sander said Option D was good because the actual percentage of Housing Authority participation isn’t the issue. She wanted to know if the waivers would always be granted to projects meeting the criteria. Ms. Jones said the language was “may,” and Council could deny them if the City were in dire financial straits. Jamaal Curry was concerned that the language was too open‐ended. Mr. Browning was concerned that eventually the definitions would expand back to where the Housing Authority is exempt from everything again. Ms. Rios thought limiting the exemptions was a good place to start. She was comfortable with waivers being limited to specific types of projects, and not specific types of fees. Ms. Jones pointed out that Council can waive fees, but that doesn’t preclude the Housing Authority from asking for additional project support from the Competitive Process (CDBG, HOME, or Affordable Housing Fund dollars) in the future. The Commission agreed with her recap of the discussion: Option D is preferred, in order to level the playing field between the Housing Authority and other developers of affordable housing. The Commission would like to see fee waivers extended to other nonprofit developers as well, if feasible. 1 1 Housing Authority Fee Waiver Diane Jones July 10, 2012 2 Housing Authority Fee Waiver • Colorado State statute and City ordinance exempt Housing Authority projects from fees and taxes • In the past, Housing Authority projects were relatively small and the exemptions modest ATTACHMENT 8 2 3 Issue • In 2011, Housing Authority partnered with CARE Housing on the Provincetowne project • Financing was from private investors with Low Income Housing Tax Credits • The private investors could only own a 99% share—partnered with the Housing Authority. • With Housing Authority’s minor interest (.001%) an exemption from City fees was requested and approved by City Council 4 Issue • City Council approved the waiver in the amount of $557,378 • When fees are waived, other sources must be identified to pay the fees—frequently the General Fund covers the fees • Unclear whether the statutory intent is to waive City fees for projects in which the Housing Authority has a partial vs. a whole interest • Council asked staff to review the issue and explore other options 3 5 Options Staff considered a variety of ideas and identified four possible options: •Option A: Use CDBG and Home Funds to Cover the Waived Fees •Option B: Special Affordable Housing or Human Services Tax or Fee 6 Options • Option C: Defer Fees to the End of the Financial Period • Option D: Limit Fee Waivers to Certain Types of Projects 4 7 Outreach Reviewed the issue and options with two City boards: •Affordable Housing Board Asked if there are sources other than the General Fund to cover the fee waivers Supported pro-rating fees or waivers for only that portion of a project that meets the criteria 8 Outreach • Community Development Block Grant (CDBG) Commission: Waive City fees for Housing Authority projects where the Authority holds a major interest Support Option D helps to “level the playing field” among competing affordable housing projects Extend Option D for all affordable housing projects 5 9 Recommendation • City staff and the Housing Authority support Option D • Key elements of Option D are: Amend the City’s ordinance from “shall exempt” to “may exempt” the Housing Authority from City development and impact fees City would consider exemptions for projects that met two criteria: projects for homeless or the disabled projects for occupants with incomes that range from 0% to 30% of the Adjusted Median Income (AMI) 10 Next Steps • If Council concurs with the direction presented, next steps are: Prepare amendment of the City ordinance and present to Council at a regular meeting Prepare an intergovernmental agreement (IGA) between the City and the Housing Authority based on the elements of Option D and present to Council at a regular meeting