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COUNCIL - AGENDA ITEM - 11/07/2017 - FIRST READING OF ORDINANCE NO. 142, 2017, WAIVING
Agenda Item 9 Item # 9 Page 1 AGENDA ITEM SUMMARY November 7, 2017 City Council STAFF Sue Beck-Ferkiss, Social Sustainability Specialist Ingrid Decker, Legal SUBJECT First Reading of Ordinance No. 142, 2017, Waiving Certain Fees for Housing Catalyst's Village on Horsetooth Affordable Housing Project and Appropriating Prior Year Reserves in Various City Funds to Pay Specified Fees. EXECUTIVE SUMMARY The purpose of this item is to determine whether development fee waivers in the amount of $352,319 will be provided to Housing Catalyst for its Village on Horsetooth affordable housing project pursuant to City Code, the Land Use Code and an Intergovernmental Agreement between the City of Fort Collins and the Fort Collins Housing Authority dated July 3, 2013, and to make an appropriation to reimburse any waived capital expansion fees. This matter was heard by the Council Finance Committee. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION The Fort Collins Housing Authority, doing business as Housing Catalyst (HC), is a Fort Collins, mission-driven real estate developer that designs, builds and serves affordable communities in Northern Colorado. HC owns and operates a variety of properties located throughout Fort Collins and serves over 1,700 households in need of affordable housing. HC also manages the affordable housing properties owned by Villages, Ltd. HC is an experienced developer and property manager with a good history of running quality developments in Fort Collins. The purpose of this item is to present HC’s waiver request for $352,319 of certain permissible impact fees for the portion of the Village on Horsetooth development that targets households earning no more than 30% area median income. (AMI) HC is seeking the waiver of certain development and capital improvement expansion fees for the Village on Horsetooth affordable housing project as allowed by City Code, the Land Use Code, and an Intergovernmental Agreement between the City of Fort Collins and the Fort Collins Housing Authority dated July 3, 2013. The Village on Horsetooth is a 96-unit affordable housing community at 1506 West Horsetooth Road in Fort Collins. (Attachment 1) The project has received all its building permits and is currently under construction. HC purchased this property from the City’s Affordable Housing Land Bank Program. Of the 96 units that the Village on Redwood will deliver, 43 (or 45% of the total development) will be dedicated to households making no more than 30% of the area median income (AMI). The request from HC is attached. (Attachment 2) The total of the waiver eligible fees for the project is $782,929. The request is for 45% of that, $352,319, to be waived. See figure below for breakdown of fees. Agenda Item 9 Item # 9 Page 2 Fee Type Total Fees Collected 45% Waiver Amount Development Review $38,435 $17,296 Building Fees $79,826 $35,922 Capital Improvement Expansion Fees $649,654 $292,345 Utilities - Stormwater Review Fee $15,014 $6,756 TOTAL $782,929 $352,319 The capital expansion fees are further broken down as follows: Capital Expansion Fees Total Fees Collected 45% Waiver Amount General Government $46,328 $20,848 Police $19,004 $8,552 Fire $38,114 $17,151 Street Oversizing $225,784 $101,603 Community Parkland $147,056 $66,175 Neighborhood Parkland $173,368 $78,016 TOTAL $649,654 $292,345 The 2017 income limits published by the U. S. Department of Housing and Urban Development for 30% of the Fort Collins AMI is $16,150 for a household of 1 and $24,600 for a household of 4. Households at this income level are some of the City’s most vulnerable residents. The 43 units at the Village on Horsetooth fit the definition and are eligible for fee waivers as established by City Code, the Land Use Code, and the Intergovernmental Agreement. (Attachment 3) The City has established affordable housing production goals in the 2015-2019 Affordable Housing Strategic Plan (AHSP). The need for financial support for these goals to be met is also stated in the Plan as well as in City Plan’s Policy LIV 8.3 Offer incentives to “offset the costs of City’s impact fees” and the City Strategic Initiative NLSH 1.1 Improve access to a broad range of quality housing that is safe, accessible, and affordable The annual production goal set by the AHSP is 188 units. This project’s 96 units are 51 % of the City’s goal. Since the City does not develop housing, development partners are relied on to bring this necessary housing product to the community. This project will increase the inventory of affordable rental units which are one of the strategies listed in the AHSP. Under Colorado Statutes and City of Fort Collins ordinances and resolutions dating back to 1988, projects of housing authorities are exempt from taxes and some fees. For many years, the City waived building permit and development review fees and some capital expansion fees for housing authority projects. Historically they had been small amounts. 2013 Waiver policy change In March 2013, City Council amended its policies on fee waivers for affordable housing to allow for more discretion in determining the kinds of housing authority sponsored projects for which City fees should be waived. This was after a large waiver was granted to a project that was being developed primarily by CARE Housing with the housing authority having only a very small interest. By adopting Ordinance No. 37, 2013, City Council limited the types of projects for which HC could ask for waivers. These projects are constructed for: • persons experiencing homelessness • disabled persons, Agenda Item 9 Item # 9 Page 3 • or for households whose income is no greater than 30% of the area median income (AMI) of all City residents. Furthermore, these waivers will be granted at the discretion of City Council upon a determination that the proposed waiver will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought. This change also limited waiver eligibility to only the housing authority. City Council is currently considering changing this policy to allow all developers of units targeting households making no more than 30% AMI to be eligible to apply for these discretionary waivers. Funding for this $26.5 million project is a combination of city and state grants (including Disaster Relief funds), Low Income Housing Tax Credit financing, owner equity and conventional financing. Current pro formas rely upon these fee waivers to complete the project’s funding. The Affordable Housing Board (AHB) and the Council Finance Committee (CFC) support this waiver request. The City’s waiver policy has greatly limited the types of projects that qualify for waivers. This policy recognizes that households earning no more than 30% AMI cannot afford market rate housing in our City at this time. The average rent is currently over $1,200 a month. A one-person household at 30% AMI would need to pay 89% of their income to pay the average rent. A four-person household would need to pay 59% of their income to afford the average market rate. Ideally, renters would never pay more than 30% of their income on housing. Developers need public subsidy to produce housing that this demographic can afford. CITY FINANCIAL IMPACTS While Housing Catalyst delayed payment of most fees, some fees have already been paid to the City. Because of that an accurate accounting will need to determine the exact amount still owed by HC. The total waiver amount is $352,319. Of that amount, the Capital Expansion Fees of $292,345 will be reimbursed. Staff recommends that 25% of the current balance of the Affordable Housing Capital Fund, $112,500, be used to reimburse the capital expansion fees with the balance of that amount coming from General Fund reserves. BOARD / COMMISSION RECOMMENDATION The Affordable Housing Board and the Council Finance Committee support granting this waiver request. (Attachments 4 and 5) PUBLIC OUTREACH While extensive public outreach was done on the issue of waivers for the City’s Housing Affordability Policy Study and the Affordable Housing Strategic Plan, outreach beyond the AHB meeting and the CFC meeting has not been conducted specifically on this request. ATTACHMENTS 1. Location map (PDF) 2. Housing Catalyst Fee Waiver Request (PDF) 3. Intergovernmental Agreement- City Fee Waiver (PDF) 4. Affordable Housing Board minutes, October 5, 2017 (draft) (PDF) 5. Council Finance Committee minutes, October 16, 2017 (draft) (PDF) W Horsetooth Rd Seneca St Chelsea Ct Avon Ct Dudley W ay Glasgo w Ct Imp e rial Dr Heidi Dr Churchill Ct Hic k ok Dr Seneca St Thames Ct West m inster St Sanford Dr Pembro k e S t Oregon Trl Eng l ish Ct Car m ela Ct Patterson P l Enfield St Birmingham D r W e stmi n ster Ct La r edo Ln Ambrosia Ct Crescent Dr Royal Dr Capitol Dr Kunz C t Big Be n Dr Sam Houston Cir September 15, 2017 Sue Beck‐Ferkiss, Social Sustainability Specialist Office of Social Sustainability 22 Laporte Avenue Fort Collins, CO 80521 Re: Village on Horsetooth Development Fee Waivers Dear Mrs. Beck‐Ferkiss, On behalf of Housing Catalyst, I am writing this letter to formally request: $304,667.79 in certain fee waivers for the above referenced project under the City of Fort Collins City Council Ordinance: No. 037, 2013 and the associated intergovernmental agreement. $55,468.31 in certain fee reimbursement for the above referenced project under the City of Fort Collins City Council Ordinance: No. 037, 2013 and the associated intergovernmental agreement. To assist in this fee waiver and reimbursement request, I have enclosed the following information: 1. Schedule of units that will be at or below 30% of the Fort Collins/Loveland adjusted median income (43 units). 2. Schedule of waived fees. 3. Fee amounts due for development fee waiver values. 4. Village on Horsetooth Development timeline. Thank you for your time and attention to this request. Please contact me if you require additional information. Sincerely, Julie J. Brewen Executive Director ATTACHMENT 2 Project Overview Village on Horsetooth is a 96‐unit affordable housing community being constructed at 1506 W. Horsetooth Rd on Fort Collins. Of the 96 total units, 43 units (45% of the total development) will be dedicated to households at the 0‐30% Area Median Income level. Target Population Number of Units Area Median Income * 43 units 0‐30% AMI 53 units 51‐60% AMI 96 units total Eligible for Fee Waivers Waived Fees Schedule 1. Development Review Fees Project Development Plan w/ Subdivision Plat Planning – Sign Posting Planning – APO Label Fee Final Development Plan w/ Subdivision Plat Transportation Development Review ‐ Residential Transportation Development Review – Commercial Transportation Development Review – Project Development Plan Transportation Development Review – Area to be developed Transportation Development Review – ROW Vacation Transportation Development Review – Final Plan Planning – Minor Amendment Transportation Development Review – Minor Amendment 2. Building Permit Fees Building Permit Fee w/ Subs Building Plan Check Fee 3. Capital Improvement Expansion Fees Residential Capital Improvement Expansion (Fire) Commercial Capital Improvement Expansion (Fire) Residential Capital Improvement Expansion (Government) Commercial Capital Improvement Expansion (Government) Residential Capital Improvement Expansion (Police) Commercial Capital Improvement Expansion (Police) Residential Street Oversizing Fee Commercial Street Oversizing Fee Residential Capital Improvement Expansion (Community Parkland) Residential Capital Improvement Expansion (Neighborhood Parkland) Village on Horsetooth ‐ All 10 Buildings Fee Amount Paid by Housing Catalyst Deferred Waiver Request (45%) Housing Catalyst to pay 12/01/17 City of Fort Collins to reimburse Housing Catalyst Building Permit Fee w/Subs $ 79,825.55 $ 79,825.55 $ ‐ $ 35,921.50 $ ‐ $ 35,921.50 Fire Capital Exp. (Res) $ 38,114.15 $ ‐ $ 38,114.15 $ 17,151.37 $ 17,151.37 $ ‐ General Govt. Capt. Exp. (Res) $ 46,327.93 $ ‐ $ 46,327.93 $ 20,847.57 $ 20,847.57 $ ‐ Larimer County Reg. Road (Res) $ 21,944.00 $ ‐ $ 21,944.00 $ 9,874.80 $ 9,874.80 $ ‐ Parkland: Community $ 147,056.00 $ ‐ $ 147,056.00 $ 66,175.20 $ 66,175.20 $ ‐ Parkland: Neighborhood $ 173,368.00 $ ‐ $ 173,368.00 $ 78,015.60 $ 78,015.60 $ ‐ Plan Check Fee $ 38,434.55 $ 38,434.55 $ ‐ $ 15,239.42 $ ‐ $ 15,239.42 Police Capital Exp. (Res) $ 19,003.62 $ ‐ $ 19,003.62 $ 8,551.63 $ 8,551.63 $ ‐ Poudre School District (5 or more Units) $ 88,920.00 $ 88,920.00 $ ‐ $ ‐ $ ‐ $ ‐ * Sewer Dev. Review $ 4,786.00 $ 4,786.00 $ ‐ $ 2,153.70 $ ‐ $ 2,153.70 Sewer PIF $ 275,330.00 $ ‐ $ 275,330.00 $ ‐ $ ‐ $ ‐ * Stormwater Dev. Review $ 5,441.83 $ ‐ $ 5,441.83 $ 2,448.82 $ 2,448.82 $ ‐ Stormwater PIF $ 22,764.56 $ ‐ $ 22,764.56 $ ‐ $ ‐ $ ‐ * Street Oversizing: Res‐Multi $ 225,784.00 $ ‐ $ 225,784.00 $ 101,602.80 $ 101,602.80 $ ‐ Water Dev. Review $ 4,786.00 $ 4,786.00 $ ‐ $ 2,153.70 $ ‐ $ 2,153.70 Water Meter $ 6,943.10 $ 6,943.10 $ ‐ $ ‐ $ ‐ $ ‐ * Water PIF $ 177,234.16 $ ‐ $ 177,234.16 $ ‐ $ ‐ $ ‐ * Water Right $ 373,801.91 $ ‐ $ 373,801.91 $ ‐ $ ‐ $ ‐ * Total $ 1,749,865.36 $ 223,695.20 $ 1,526,170.16 $ 360,136.10 $ 304,667.79 $ 55,468.31 *Not eligible for City of Fort Collins Fee Waiver Eligible City Fees and Waiver Schedule Village on Horsetooth Development Timeline Low Income Housing Tax Credit (LIHTC) Award ‐ April 2016 Project Development Plan Approval – September 2016 Building Permit submitted to City of Fort Collins – November 2015 LIHTC Partnership Closing – July 31, 2017 Construction Start – August 1, 2017 Fee Waiver Request – September 2017 Deferred Fees Due – December 1, 2017 Construction Complete – October 2018 Lease‐up Complete – September 2019 Construction – Permanent Loan Conversion – October 2019 ATTACHMENT 3 6 | P a g e of properties for low-income residents. Scheduled work session in November for direction on what staff should pursue and to help council make decision. Seven departments on task force from all different angles in the city. Non-financial incentives might be the best. Talked about putting these funds directly into Competitive Process, but that would be putting these funds to normal use and not doing something special with it. Six ideas to consider: 1. Mentioned in Affordable Housing Strategic Plan (AHSP). Fee waiver backfill. City Attorney’s Office says there is risk to City if we do not continue to backfill at traditional high rate. Council could decide not to backfill but typical practice to assume otherwise. 2. Mentioned in AHSP. Land Bank parcel purchase. 3. Direct or flexible subsidy. Two parts: 1) code based provision—subsidy per unit based on % of affordable units. 2) could ask from Council and be discretionary 4. Social innovation grant. Direct subsidy as closing the gap to support innovation—largely green building ideas but not all. 5. Land demonstration project. Affordable housing with other City goals met as well. 6. Adaptive reuse demonstration project. Same as above but with reuse component. Going to Council Finance Committee in October: Fee waiver Horsetooth, Affordable Housing Capital fund, new procedures for private activities bond (on agenda for November AHB) Comments/Q&A • Diane: Is there an option to do part of two different ideas? o Sue: This question will be posed to Council. We will see what direction they give us. _________________________________________________________________________________ AGENDA ITEM 4: Request from Housing Catalyst for Fee Waivers for the Village on Horsetooth: Sue Beck-Ferkiss—Social Sustainability Department Village on Horsetooth has 43 units at 30%, which is 45% of the project. They have paid some, but they are requesting $360,136 in fee waivers. Does not include * items (see doc in meeting packet). For the Fee Waiver Expansion being considered by City Council, we don’t want to offer fee waivers retroactively, so the request must be submitted ahead of time. The request should be made before a certificate of occupancy is issued to assure this change is applied to new development proposals. ______________________________________________________________________________ AGENDA ITEM 5: Business—no discussion _________________________________________________________________________________ AGENDA ITEM 6: Fee Work Group Discussion—Diane Cohn—no discussion Meeting Adjourned: 6:23 Next Meeting: November 2 Jen motioned to support the fee waiver request for the 30% units for Housing Catalyst for the Village on Horsetooth. Curt seconded. Passed unanimously. Affordable Housing Board October 5, 2017 ATTACHMENT 4 Council Finance Committee October 16, 2017 (DRAFT) 1 Housing Affordability Task Force - Policy Recommendation - Capital Fund Sue Beck-Ferkiss Dean Klingner EXECUTIVE SUMMARY The voters approved an Affordable Housing Capital Fund (AHCF) as part of the Community Capital Improvement Program (CCIP) to be used for the capital costs of one or more affordable housing community. Over ten years the fund will accumulate $4 million. Staff is offering suggested strategies for the use of this fund for Council Finance Committee direction and feedback. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Which Strategies do you support? • Fee Waiver backfill • Land Bank Program • Direct subsidy • Social innovation grant • Affordable Housing Demonstration Project 2. Is there feedback on the fee waiver backfill strategy? BACKGROUND In 2015, the voters approved the Affordable Housing Capital Fund (AHCF) as part of the dedicated sales tax initiative for City capital projects. The approved language states: This project will fund capital costs of development or rehabilitation of one or more public or private housing projects designated specifically for low-income individuals or families. The AHCF funds accumulate over time according to the following schedule: 2016 $200,000 2017-2018 $250,000 2019-2020 $400,000 2021-2015 $500,000 The current fund balance is $450,000. It will accumulate a total of $4 million over 10 years. Staff was asked to look at the best way to use this fund to incentivize one or more affordable housing projects. This task was given to the Internal Housing Task Force (Task Force) which is a multi - departmental group with representatives from over 10 City departments including: City Manager’s Office, Communications and Public Involvement Office, Economic Health Office, Environmental Services, Engineering, Finance, Planning, Social Sustainability, Utilities - Community Engagement, Utilities – Finance, and Utilities – Water. Other departments expertise is also tapped as needed. While this group has many deliverables, options for the best use of the AHCF is the current focus of their work. This group was created in recognition of the ATTACHMENT 5 Council Finance Committee October 16, 2017 (DRAFT) 2 importance of the issue of affordable housing to our community and the fact that many City departments are involved in this type of development. In analyzing the approved language, staff focused on the capital costs purpose and the low- income target population. We looked at trying to maximize the productions of units while at the same time leaving flexibility to respond to future opportunities that present while also striving for innovation. That said, $4 million does not really go far in the production of affordable housing units that often cost more than $200,000 per unit to construct and not much less to rehabilitate units for preservation. With that in mind, the AHCF must be seen as a leveraging tool and something to add to the way the City is already supporting affordable housing projects. To further illustrate that point, here are examples of recent projects total development costs: Community Total cost Units City investment Source of investment Redtail $12.5 M 60 $1.68M CDBG/HOME $1,085,856 AHF (City) $229,416 Fee Waivers $288,000 Legacy $14.7 M 60 $717,000 CDBG/HOME $688,261 AHF (City)$28,890 Horsetooth $26.5 M 96 $2.25 M+ HOME $1.1M AHF (City) $1.1M Fee Waivers pending $360,136 Discounted land 20% Oakridge Crossing $22 M 110 PAB allocation State allocation Community Development Block Grants (CDBG) and HOME funding is federal funding from the federal department of Housing and Urban Development. The Affordable Housing Fund (AHF) is City general funds. Waivers are typically reimbursed with general funds too. The Private Activity Bond support is assigning tax free debt capacity and not actual funding. Recent rehabilitation projects have had similar big budgets. An example of a large acquisition and rehab project is the Village on Shields. Total cost for this was $64 million for 285 units. The City provided $3.14 million using CDBG, HOME and the AHF for this project. A small rehabilitation project was the Village on Matuka. To renovate 20 units it costs $1.1 million of which the City invested $380,000 of CDBG. Council Finance Committee October 16, 2017 (DRAFT) 3 Fee waivers are an incentive provided by City code at the discretion of City Council. Currently they are only available to the Housing Authority for the production of units targeting households with income of no more than 30% area median income (AMI) which is currently about $16,150 for a single person or $24,600 for a family of 4. However, the City is considering expanding the eligibility of this incentive to all developers of units for this income. That would require additional City resources because the City’s custom is to reimburse City departments for capital expansion fees that are waived. This has typically come from General Fund Reserves. An expansion of this incentive may require additional funding sources. Staff is recommending that this expansion be applied only to developments who have not yet received their certificate of occupancy to ensure we are using the incentives to bring on new units and not reimburse developers for units that have already been delivered. The last 4 projects that received waivers and backfill of CEFs were: 1. In 2011, $509,896 was backfilled for CARE Housing’s Provincetowne 2. In 2014, $288,000 was backfilled for Redtail Ponds 3. In 2017, $100,708 was backfilled for Village at Redwood 4. Pending request for $308,907 to backfill for Village at Horsetooth. In considering the best use of the AHCF, the Task Force considered many things including: Immediacy – How quickly do we want to use these funds? Number of investments – One project or multiple? Flexibility – How do we respond to funding or innovation opportunities? Metrics for success – Just more units or innovation factor? Target population – The Lowest wage earners or more of the housing spectrum? In addition to regular monthly meetings, the Task Force conducted two focused sessions on the best use of the AHCF. We also convened a developer’s focus group to get industry input early in the process and to test our ideas. The following strategies are a result of this work to date. We looked at existing programs as ways to deploy these funds quickly, and also propose some ideas for new programs that may take some time to develop. Lastly, since the funds come in over time, strategies requiring more money may have to wait until more funds accumulate. Staff identified the following optional strategies for consideration: 1. Fee Waiver Backfill: Existing program that could use funds quickly Targets households making no more than 30% AMI. Responds to assist developers already bringing affordable housing projects and relies on those projects coming forward. Total contribution to project limited to waivable fees. Since total fees not more than 9% of cost, impact small. 2. Land Bank Program: Existing program that could use fund quickly if land is identified and would serve incomes in the affordable ranges. Currently capped at 50% AMI average for rental Council Finance Committee October 16, 2017 (DRAFT) 4 and 60% AMI for Home Ownership. Pending recommendations may increase to full affordable range or up to 80% AMI. Program specifies limit what may be constructed. Relies on developer’s response to City issued Request for Proposals Offers discounted land value, impact small to overall costs. 3. Direct Subsidy: New program with parameters to be determined. Time would be required to develop. Possible two prong approach with the City code providing specific amounts per unit in income ranges up to a maximum amount or the ability to ask Council for more than the amounts per unit if that is what is required. For instance, $15,000 per 30% AMI unit, $10,000 per 40% AMI unit and $5,000 per 50% AMI unit or a discretionary ask of Council for $4 million to close a funding gap in one development. Could target lower incomes, for example up to 60% AMI. Responds to assist developers already bringing affordable housing projects and relies on those projects coming forward. Total contribution to each project would depend on whether Council approved a large amount for one project or if the City code small per unit investments were sought. 4. Social Innovation Grant: New program with parameters to be determined. Time would be required to develop. Possibly a competition approach for innovation in addition to affordable housing units. This could be innovation in an existing affordable housing concept and assist a developer bringing housing to the market, or it could be a new concept that traditional funding sources could not support. Could serve the affordable housing income ranges and possibly include mixed income options. Total contribution to development costs would depend on how much of the fund is offered. 5. Affordable Housing Demonstration project: New program with parameters to be determined. Time would be required to develop. Concept is that the City would purchase land or a building for adaptive reuse to be offered to a partner for an affordable housing development that would meet the goals of several City programs in addition to providing affordable housing. For instance, it could need to meet the City’s Climate Action goals and/or include Nature in the City. More flexible than the Land Bank Program. Could serve affordable ranges and possibly include mixed income if the City desires. Would require a substantial portion of the AHCF. Total contribution to the project would be in the range of 15-25%. Council Finance Committee October 16, 2017 (DRAFT) 5 Staff recommendations are preliminary as direction is sought from Council. Staff recommends using the AHCF for capital expansion fee backfills in combination with General Fund Reserves until a BFO offer is funded for fee waiver backfills. Staff would like to reserve some portion of the AHCF to respond to future opportunities. Discussion / Next Steps; Ken Summers; I am comfortable considering e just utilized funds for backfill for fee waivers Backfill of fee waivers – backfilling ahead of income coming in from Affordable Housing Fund ($450K) $4M comes in over 10 years – we need to keep alternatives in mind - not let those go by the wayside - every project is going to have those requests – give us available funds to address those Ross Cunniff; I agree with Ken Summers - stay the course on this - innovation always comes with risk – not a negative – tried and true in early years of capital expansion tax - the dollar amounts are relatively low - Like 1-10 leverage magnifier - we don’t have other ideas flushed out to meet that kind of benchmark - Using it in this targeted way makes sense – support the idea of expanding applications beyond just Housing Catalyst - meet requirements as they apply Land Bank was a possible option - yellow flag - I expect in the next 5 years we will be forced to be more innovative on how we address – we aren’t there yet Mayor Troxell; supportive of comments made I like the things you are exploring - continue down that path Mike Beckstead; As we move into BFO next spring – conversation we had about a BFO offer - setting up a tiered system - we talked to Sue about getting in front of what is coming - see if we can get 30 months in advance – understand what is coming – use that for BFO offer - that is the kind of dialog on how we operationalize this policy – as a blend of available funding – we are out in front of it – having dialog Sue Beck-Ferkiss; we are moving forward November 7 th with the eligibility of fee waivers - 30% units only for projects that are not completed - time standard - they don’t yet have their certificate of occupancy Ross Cunniff; yes, unfunded backlog Village on Horsetooth Fee Waiver Request Sue Beck-Ferkiss EXECUTIVE SUMMARY The Fort Collins Housing Authority, doing business as Housing Catalyst (HC), has requested that certain development and capital improvement expansion fees be waived for qualifying units at Council Finance Committee October 16, 2017 (DRAFT) 6 the Village on Horsetooth. In March 2013, City Council limited the types of projects for which fee waivers may be requested and made these waivers discretionary. Eligible projects are those constructed for homeless or disabled persons, or for households whose income falls at or below 30% of the area median income of all City residents. HC is requesting fee waivers in the amount of $360,136 for the 43 qualifying units at the Village on Horsetooth. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does the Council Finance Committee (CFC) support granting the fee waiver request? 2. If so, does the CFC support a waiver of fees and backfilling or waiver without a backfill? 3. If CFC desires the Capital Expansion Fees to be backfilled, should this funding come from the General Fund or the Affordable Housing Capital Fund or from both? BACKGROUND/DISCUSSION HC is seeking the waiver of certain development and capital improvement expansion fees for the Village on Horsetooth affordable housing project as allowed by City Code, the Land Use Code, and an Intergovernmental Agreement between the City of Fort Collins and the Fort Collins Housing Authority dated July 3, 2013. The Village on Horsetooth will deliver 96 units, of which 43 will be targeted to households making no more than 30% of the area median income (AMI). The request from HC is attached as attachment 1. Under Colorado Statutes and City of Fort Collins ordinances and resolutions dating back to 1988, projects of housing authorities are exempt from taxes and some fees. For many years, the City waived building permit and development review fees and some capital expansion fees for housing authority projects. Historically they had been small amounts. In March 2013, City Council amended its policies on fee waivers for affordable housing to allow for more discretion in determining the kinds of housing authority sponsored projects for which City fees should be waived. This was after a large waiver was granted to a project that was being developed primarily by CARE Housing with the Housing Authority having only a very small interest. By adopting Ordinance No. 37, 2013, City Council limited the types of projects for which HC could ask for waivers. These are projects that are constructed for homeless or disabled persons, or for households whose income is no greater than 30% of the area median income of all City residents. Furthermore, these waivers will be granted at the discretion of City Council upon a determination that the proposed waiver will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought. This change also limited waiver eligibility to only the Housing Authority. Earlier this summer, staff was directed to bring forward for Council consideration, a change that would allow all developers who produce units targeting households making no more than 30% to request discretionary affordable housing fee waivers. That is now scheduled for November 7, 2017. Council Finance Committee October 16, 2017 (DRAFT) 7 The Village on Horsetooth is a 96 unit affordable housing community being constructed at 1506 W. Horsetooth Road in Fort Collins. See attachment 2 for map of location. Of the 96 total units, 43 units, equaling 45% of the total development, will be dedicated to households making no more than 30% AMI. HC is seeking the waiver of certain fees for those 43 qualifying units. The total of these fees for the project is $1,749,865 (including $608,994 not eligible for City fee waivers). The request is for 45% of eligible fees, $360,136, to be waived. This amount includes a request to waive a Larimer County capital expansion fee which is under review. If determined ineligible, the request moving forward will be reduced by about $10,000. The 2017 income limits published by the U. S. Department of Housing and Urban Development for 30% of the Fort Collins AMI is $16,150 for a household of 1 and $24,600 for a household of 4. Households at this income level are some of the City’s most vulnerable residents. These units fit the definition and are eligible for fee waivers as established by City Code, the Land Use Code, and the Intergovernmental Agreement (attachment 3). Funding for this $26.5 million project is a combination of city and state grants, Low Income Housing Tax Credit financing, owner equity and conventional financing. Current pro formas rely upon these fee waivers to complete the project’s funding. The City has established affordable housing production goals in the 2015-2019 Affordable Housing Strategic Plan (Plan). The need for financial support for these goals to be met is also stated in the Plan. The annual production goal for this 5 year plan is 188 units. This project will deliver 96 units which is 51 % of the City’s annual goal. Since the City does not develop housing, development partners are relied upon to bring this necessary housing product to the community. This project will increase the inventory of affordable rental units which is one of the strategies listed in the Plan. It is recommended that any capital expansion fees waived be subject to backfill by the City to reimburse city departments for fees if this waiver is granted, as has been the City’s custom to date. Traditionally backfill of capital expansion fees occurred and has come from General Fund reserves. Alternatively, funds for this request could come from the Affordable Housing Capital Fund that was approved by the voters as part of the City Capital Improvements Program. This fund will accumulate $4 million over ten years. Of that amount, $200,000 was scheduled for 2016, $250,000 for 2017 and $250,000 for 2018. The Affordable Housing Board supports this waiver request. The City’s waiver policy has greatly limited the types of projects that qualify for waivers. This policy recognizes that households earning no more than 30% AMI cannot afford market rate housing in our City at this time. The average rent is currently over $1,200 a month. A one person household at 30% AMI would need to pay 89% of their income to pay the average rent. A four person household would need to pay 59% of their income to afford the average market rate. Ideally, renters would never pay more than 30% of their income on housing. Developers need public subsidy to produce housing that this demographic can afford. Staff also supports granting this waiver request. Council Finance Committee October 16, 2017 (DRAFT) 8 We pulled the forecast back and things are coming in consistent with the forecast. Discussion / Next Steps; Updated Waiver Request presented; Ross Cunniff; two thumbs up Ken Summers; occupation chart is very interesting - the waiver request is a good program and I am supportive Mayor Troxell; two thumbs up Bring back as an appropriation to Council on November 7 th Work session scheduled on November20th -1- ORDINANCE NO. 142, 2017 OF THE COUNCIL OF THE CITY OF FORT COLLINS WAIVING CERTAIN FEES FOR HOUSING CATALYST’S VILLAGE ON HORSETOOTH AFFORDABLE HOUSING PROJECT AND APPROPRIATING PRIOR YEAR RESERVES IN VARIOUS CITY FUNDS TO PAY SPECIFIED FEES WHEREAS, Housing Catalyst (“HC”), also known as the Fort Collins Housing Authority, was formed by the City Council in 1970 pursuant to the authority contained in Section 29-4-101, et seq. of the Colorado Revised Statutes, for the purpose of providing affordable, safe and sanitary housing in the City that is within the means of families of low or moderate income; and WHEREAS, by adoption of Ordinance No. 065, 1999, the City Council exempted from the imposition of the City’s capital improvement expansion fees the land development projects of housing authorities formed pursuant to the provisions of Section 29-4-101, et seq., and specified various other City fees from which such projects are also to be exempted; and WHEREAS, the financial impact of such fee waivers on the City can be substantial, depending upon the size of the project that is exempted, and whether the lost fee revenues need to be replaced by the City; and WHEREAS, on March 19, 2013, the City Council adopted Ordinance No. 037, 2013 (the “2013 Ordinance”), which made amendments to the City Code and Land Use Code limiting the types of projects for which HC could request fee waivers, and specifying that those waivers are to be granted at the discretion of City Council upon a determination that proposed waivers will not jeopardize the financial interests of the City or the timely construction of capital improvements to be funded by the fees; and WHEREAS, the 2013 Ordinance also authorized and directed the Mayor to enter into an intergovernmental agreement between the City and HC documenting HC’s intent to limit future fee waiver applications to affordable housing projects that meet the criteria established by such Ordinance (the “Intergovernmental Agreement”); and WHEREAS, the Intergovernmental Agreement was executed on July 3, 2013; and WHEREAS, the 2013 Ordinance states that the City Council can waive, by ordinance, fees that would otherwise be imposed for an affordable housing project wholly or partially owned by a housing authority only if the City Council determines that: (1) the proposed project is intended to house homeless or disabled persons, as such terms are defined by the Department of Housing and Urban Development (HUD), or households with an annual income that does not exceed 30% of the area median income (AMI) for the applicable household size in the Fort Collins-Loveland metropolitan statistical area, as published by HUD; and (2) the proposed waiver will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought; and -2- WHEREAS, HC is seeking the waiver of certain development and capital improvement expansion fees for the Village on Horsetooth, a 96-unit affordable housing community being constructed at 1506 West Horsetooth Road in Fort Collins (the “Project”); and WHEREAS, HC is constructing the Project on property it acquired from the City as part of the City’s Affordable Housing Land Bank Program; and WHEREAS, the City has established affordable housing production goals in the 2015- 2019 Affordable Housing Strategic Plan (Plan) with an annual production goal for this five-year plan of 188 units; and WHEREAS, the Project will deliver 96 units, 51% of the City’s annual goal for new affordable housing units; and WHEREAS, 43 of the Project units (or 45% of the total development) will be dedicated to households making no more than 30% of AMI; and WHEREAS, HC is therefore requesting waivers totaling $352,319, which represents 45% of the total waivable Project fees based on the number of units eligible for such fee waivers; and WHEREAS, the Project is partially owned by HC, as HC is the sole member of a limited liability company that has a .009% ownership interest in a limited liability, limited partnership that owns the Project; and WHEREAS, the Project fits the definition of a project eligible for fee waivers under the City Code and Land Use Code as amended by the 2013 Ordinance, and the Intergovernmental Agreement; and WHEREAS, City Finance staff has determined that waiver of these fees will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which the waiver is sought; and WHEREAS, HC has already paid certain building permit and development review fees, for the Project, and if the City Council approves the waiver request City staff proposes offsetting the amount that would be due as a refund to HC against the remaining Project fee amounts still due from HC; and WHEREAS, if City Council grants the fee waivers, staff is requesting the appropriation of $292,345 from General Fund reserves and the Community Capital Improvement Fund to cover the capital improvement expansion fees waived, as follows: General Fund $179,845 Community Capital Improvement Fund $112,500 Total $292,345 and -3- WHEREAS, Article V, Section 9, of the City Charter permits the City Council to appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated; and WHEREAS, City staff have determined that the appropriations as described herein are available and previously unappropriated in the various funds. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby finds that 45% of the Project is intended to house households with an annual income that does not exceed 30% of the area median income for the applicable household size in the Fort Collins-Loveland metropolitan statistical area, as published by HUD. Section 3. That the City Council further finds that the fee waiver requested by HC will not jeopardize the financial interests of the City or the timely construction of the capital improvements to be funded by the fees for which a waiver is sought. Section 4. That the City Council hereby approves the waiver of $352,319 in fees that were previously paid to the City or would otherwise be payable to the City upon the issuance of building permits for the Project, consisting of: Development Review Fees $ 17,296 Building Fees 35,922 Capital Improvement Expansion Fees 292,345 Utilities - Stormwater Review Fee 6,756 Total $ 352,319 Section 5. That there is hereby appropriated for expenditure from reserves in the General Fund the sum of ONE HUNDRED SEVENTY-NINE THOUSAND EIGHT HUNDRED FORTY-FIVE DOLLARS ($179,845) to cover a portion of the waived Capital Improvement Expansion Fees for the Village on Horsetooth Affordable Housing Project. Section 6. That there is hereby appropriated for expenditure from reserves in the Community Capital Improvement Fund the sum of ONE HUNDRED TWELVE THOUSAND FIVE DOLLARS ($112,500) to cover a portion of the waived Capital Improvement Expansion Fees for the Village on Horsetooth Affordable Housing. -4- Introduced, considered favorably on first reading, and ordered published this 7th day of November, A.D. 2017, and to be presented for final passage on the 21st day of November, A.D. 2017. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 21st day of November, A.D. 2017. _________________________________ Mayor ATTEST: _____________________________ City Clerk 1506 W Horsetooth Fort Collins, Road CO Land 80526 Bank Property CITY GEOGRAPHIC These and were map OF not products FORT designed and INFORMATION COLLINS or all intended underlying for general data SYSTEM are use developed by members MAP for use of PRODUCTS the by the public. 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