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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 01/07/2014 - SECOND READING OF ORDINANCE NO. 185, 2013, AUTHORIAgenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY January 7, 2014 City Council STAFF Beth Rosen, CDBG/HOME Program Administrator SUBJECT Second Reading of Ordinance No. 185, 2013, Authorizing the Release of Restrictive Covenants on Property at 405 Linden Street Owned by the Fort Collins Housing Authority. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on December 17, 2013, authorizes the release of the Agreement of Restrictive Covenants Affecting Real Property for the property located at 405 Linden Street, currently owned by the Fort Collins Housing Authority. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, December 17, 2013 (w/o attachments) (PDF) 2. Ordinance No. 185, 2013 (PDF) Agenda Item 16 Item # 16 Page 1 AGENDA ITEM SUMMARY December 17, 2013 City Council STAFF Beth Rosen, CDBG/HOME Program Administrator SUBJECT First Reading of Ordinance No. 185, 2013, Authorizing the Release of Restrictive Covenants on Property at 405 Linden Street Owned by the Fort Collins Housing Authority. EXECUTIVE SUMMARY The purpose of this item is to obtain authorization from City Council to release the Agreement of Restrictive Covenants Affecting Real Property for the property located at 405 Linden Street, currently owned by the Fort Collins Housing Authority. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION On October 1, 2001, the Fort Collins Housing Authority received a grant of $174,931 in Community Development Block Grant funding to rehabilitate 11 buildings (41 dwelling units), of affordable rental housing. At the completion of the rehabilitation, a Restrictive Covenant was placed on all 41 units, requiring the units provide affordable rental housing for twenty years. This covenant is scheduled to be released on October 1, 2023 (20 years from project completion). The subject property of this request, 405 Linden Street, received $8,400 in funding to cover the cost of siding and a roof replacement. As part of the Fort Collins Housing Authority’s long-term plan to sell single family homes and strategically reinvest the funds and leverage the funds into more cost effective, multi-family housing, it is asking the City to release the covenant on 405 Linden Street, which would enable the Authority to sell the property and repay the $8,400 to the CDBG program. A buyer has been found. To date, five single family homes encumbered by this covenant have been sold and the covenant released. See Attachment 1, a memo from Julie Brewen, Executive Director of the Fort Collins Housing Authority, for more information about the request. Staff has worked closely with the leadership of the Fort Collins Housing Authority to both understand its long- term strategic plan, and identity ways to mitigate the loss of affordable rental housing. As a condition of this request, the Fort Collins Housing Authority has agreed to provide a comparable 3-bedroom replacement unit within the next five years. This must be a new affordable housing unit, rather than the designation of current unit. FINANCIAL / ECONOMIC IMPACT The approval of this request will initially result in the loss of one, 3-bedroom, affordable rental unit in the city. However, the repayment of $8,400 in Community Development Block Grant funding will return to the City’s Competitive Process and be available to fund future affordable housing. If allocated towards housing, these funds could leverage an additional $225,000 in affordable housing funding towards future affordable housing development. ATTACHMENT 1 Agenda Item 16 Item # 16 Page 2 Approval of this request will lessen financial burden experienced by the Fort Collins Housing Authority related to the operation of single family homes and free up capital to be reinvested into future affordable housing. BOARD / COMMISSION RECOMMENDATION The Affordable Housing Board recommends adoption of the Ordinance on First Reading. At a public meeting held on December 5, 2013, the Affordable Housing Board voted to recommend the release of Agreement of Restrictive Covenants Affecting Real Property with the requirement that the Fort Collins Housing Authority provides a comparable 3-bedroom placement unit to the affordable housing inventory within the next five years. ATTACHMENTS 1. FCHA Request to Release Restrictive Covenant (PDF) 2. Location Map (PDF) 3. 405 Linden picture (DOC) 4. 2013 12 05 Affordable Housing Board Minutes DRAFT (DOCX) - 1 - ORDINANCE NO. 185, 2013, OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE RELEASE OF RESTRICTIVE COVENANTS ON PROPERTY AT 405 LINDEN STREET OWNED BY THE FORT COLLINS HOUSING AUTHORITY WHEREAS, on October 1, 2001 the City and the Fort Collins Housing Authority (“Authority”) entered into a Recipient Contract, through which the Authority received a grant from the City of $174,931 in Community Development Block Grant (CDBG) funds to rehabilitate affordable rental housing units in Fort Collins; and WHEREAS, the Authority used $8,400 of the CDBG funds to replace the roof and siding on a single-family house at 405 Linden Street owned by the Authority (the “Property”); and WHEREAS, the terms of the Recipient Contract, as amended in May 2003, require the Authority to restrict the benefitted housing units to households with income equal to or less than 50% of the area median income for not less than twenty years; and WHEREAS, the Recipient Contract gave the City the right to require a deed of trust or other security interest in properties improved using the CDBG funds and to require, in addition to or in lieu of a deed of trust, a deed restriction on such properties to protect the City’s interest in the funds provided under the Recipient Contract; and WHEREAS, on October 1, 2001, the Authority and the City also entered into an Agreement of Restrictive Covenants Affecting Real Property (the “Covenant”), which placed a twenty-year affordability requirement on multiple properties owned by the Authority and improved with CDBG funds under the Recipient Contract, including the Property; and WHEREAS, the Covenant gives the City the right to enforce the terms and conditions of the Covenant should the Authority ever fail to comply with them; and WHEREAS, the terms of the Recipient Contract do not require the Authority to repay the CDBG funds, and neither the Recipient Contract nor the Covenant allows for the Covenant to be released if the Property is sold or the funds are repaid before the twenty-year affordability period expires; and WHEREAS, as part of the Authority’s long-term plan to sell single family homes and reinvest the funds into more cost-effective multi-family housing, the Authority is asking the City to release the Covenant with respect to the Property, so that the Property can be sold for redevelopment; and WHEREAS, as a condition of releasing the Covenant, the Authority has agreed to repay the $8,400 of CDBG funds invested in the Property and to provide a comparable 3-bedroom replacement unit within the next five years; and - 2 - WHEREAS, the City’s right under the Covenant to restrict the use of the Property constitutes an interest in real property owned by the City that the City would be giving up by releasing the Covenant; and WHEREAS, Section 23-111 of the City Code states that the City Council is authorized to sell, convey or otherwise dispose of any interest in real property owned in the name of the City, provided that the City Council first finds, by ordinance, that such sale or other disposition is in the best interests of the City; and WHEREAS, the repayment to the City of $8,400 in CDBG funds will allow the City to make those funds available for future affordable housing projects; and WHEREAS, the Affordable Housing Board reviewed the Authority’s request at the Board’s regular meeting on December 5, 2013 and voted to recommend the release of the Covenant so long as a replacement unit is provided. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby finds that releasing the Covenant on the Property on the terms and conditions described herein is in the best interests of the City. Section 2. That the City Manager is hereby authorized to execute such documents as are necessary to release the Covenant and to document the Authority’s obligation to provide a replacement three-bedroom unit within five years on terms and conditions consistent with this Ordinance, along with such other terms and conditions as the City Manager, in consultation with the City Attorney, determines are necessary or appropriate to protect the interests of the City or effectuate the purposes of this Ordinance. Introduced, considered favorably on first reading, and ordered published this 17th day of December, A.D. 2013, and to be presented for final passage on the 7th day of January, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk - 3 - Passed and adopted on final reading on the 7th day of January, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk