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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/15/2018 - RESOLUTION 2018-048 AUTHORIZING THE ASSIGNMENT OFAgenda Item 12 Item # 12 Page 1 AGENDA ITEM SUMMARY May 15, 2018 City Council STAFF Sue Beck-Ferkiss, Social Sustainability Specialist Ingrid Decker, Legal SUBJECT Resolution 2018-048 Authorizing the Assignment of the City's Private Activity Bond Allocation for 2018 to the Colorado Housing and Finance Authority and Housing Catalyst to Finance the Rehabilitation or Construction of Affordable Housing Units. EXECUTIVE SUMMARY The purpose of this item is to support two local affordable housing projects by assigning the City’s 2018 Private Activity Bond allocation. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The State of Colorado Private Activity Bond (PAB) allocation program is established by the Colorado Private Activity Bond Ceiling Allocation Act, Section 24-32-1707, et seq., C.R.S. (Allocation Act). PABs are tax-exempt bonds that can be issued by eligible authorities. The proceeds of the sale of the bonds may be used for specific purposes as determined by the Internal Revenue Service. Permitted purposes include, but are not limited to, affordable housing development and rehabilitation. Historically, PAB financing has also been used by the City for economic and industrial development purposes. In 2018, the total amount available statewide is $588,751,170. Fifty percent of the state ceiling is allocated directly to statewide authorities and the other half is allocated directly to local governments based on population size. The City has been notified that, pursuant to section 24-32-1706 of the Allocation Act, its allocation of the state ceiling for 2018 is $8,553,248. (Attachment 1) This is merely the authority to take on debt and is not an allocation of funding. The City will not incur debt by assigning this allocation and this will not affect the City's credit rating. If a local government does not issue bonds or assign the bond cap to an eligible entity for a local project or projects by September 15 annually, the City allocation automatically reverts back to the state’s pool of available bond capacity. Historically, Fort Collins has assigned its annual allocation on a first come, first served basis. From 2009 through 2012, the Fort Collins allocation was not used locally and therefore reverted back to the state’s pool of available bond capacity. In 2013, 2014, and 2015 the City assigned its full allocation to the Fort Collins Housing Authority (FCHA), now HC, for the rehabilitation of affordable rental housing units. In 2016, the PAB was assigned to the Colorado Housing and Finance Authority (CHFA) for the benefit of two local affordable housing projects. CHFA’s 4% Low Income Tax Credit Program is a financing mechanism for the development and rehabilitation of affordable housing. CHFA requires these types of financing deals to include private activity bonds. Agenda Item 12 Item # 12 Page 2 As of 2018, the City implemented an application process for requesting the City’s allocation of PAB. The guidelines are set forth in the City’s General Financial Policies. Applications were due March 15. The City received two applications for qualifying affordable housing projects. The PAB committee, made up staff representatives from Social Sustainability, Economic Health and the Finance department, recommends splitting this year’s allocation to support both projects, with $8 million assigned to CHFA for the benefit of DMA Plaza and the remaining $533,248 assigned to Housing Catalyst. An application from DMA Plaza, Inc. sought $8 million in bond capacity. The proposed and allowable use of bond proceeds is the substantial rehabilitation of 124 units of affordable housing serving senior households with income from 30-60% of the area median income (AMI). (Attachment 2) The 4% Low Income Housing Tax Credit program being utilized to finance this project requires at least 50% of the development projects total budget to be financed through PABs. The location of this project can be seen on Attachment 3. This project has applied for and received state and federal tax credits. The PAB committee recommends assigning $8 million of the PAB allocation to the DMA Plaza rehabilitation. The second application was submitted by Housing Catalyst (HC) for the full $8,553,248 to begin accumulation of the PAB cap needed to fund up to two future affordable housing properties and or affordable rehabilitation projects in the next 3 years. (Attachment 4) This is an allowable use of PAB. These projects will use 4% Low Income Housing Tax Credits and will require PAB capacity. They will range from 60-100 rental units and will target incomes up to 60% AMI. The specific locations have not been finalized. Because this request is for future projects and DMA Plaza has been awarded tax credits and is ready to proceed, the committee recommends providing $533,248 to Housing Catalyst for future affordable housing projects. The intended uses of rehabilitating for preservation existing affordable rental housing units and constructing new units are permissible and beneficial uses of the City’s 2018 allocation, and support the outcomes sought by the City’s Affordable Housing Strategic Plan. For these developers to use the City’s allocation of PAB capacity, City Council must adopt a resolution assigning the 2018 PAB allocation to CHFA for DMA Plaza and to HC for future qualifying projects. Additionally, the use of the City’s allocation is evidence of local support for these affordable housing projects, which helps leverage other funding sources and is important to CHFA’s 4% Low Income Tax Credit Program. Also, the investment of tax credit equity will trigger a new affordability period for DMA Plaza. Both CHFA and HC have authority to issue bonds. In addition to assigning the past years PAB allocation to the FCHA (now HC) and CHFA, the City has used PAB allocation to finance multifamily low and moderate-income rental housing at Fox Meadow Apartments (2000) and Caribou Apartments (2002), and multifamily senior housing at Oakbrook Manor (2005). In these examples, the City’s allocation was assigned to CHFA who issued the bonds. Prior to that, the City was the issuer of multifamily housing revenue bonds for Bull Run (1997) and Courtney Park Apartments (1995). CITY FINANCIAL IMPACTS The Private Activity Bonds will be issued by CHFA and HC and will not be obligations of the City of Fort Collins. The debt service on the bonds will be repaid from revenue generated by the housing developments and does not constitute a debt of the City. This action will not affect the City's credit rating. The rehabilitation of 124 existing units will require goods and labor which will benefit the local economy. Additional new construction or rehabilitation by HC will also require goods and labor which will benefit the local economy. BOARD / COMMISSION RECOMMENDATION The Affordable Housing Board recommends that the City grants this request and that City Council adopt a resolution assigning the 2018 PAB Allocation to CHFA and HC. (Attachment 5) PUBLIC OUTREACH Since this is a new process for assigning the City’s PAB allocation, the City promoted the new process through press releases, the Social Sustainability web site and letters sent to stakeholders and partners to publicize the change in process. Agenda Item 12 Item # 12 Page 3 ATTACHMENTS 1. 2018 PAB Direct Allocations from State (PDF) 2. DMA Plaza Request (PDF) 3. DMA Plaza Location Map (PDF) 4. Housing Catalyst Request (PDF) 5. Affordable Housing Board memo, May 3, 2018 (PDF) 2018 Colorado Private Activity Bond Direct Allocations Statewide Pop. PAB Cap Available 5,607,154 $588,751,170.00 Local Issuers Population PAB Cap Local Issuers Population PAB Cap Denver 693,292 $36,397,830 Pueblo County 54,488 $2,860,620 Colorado Springs 460,953 $24,200,033 Eagle County 53,928 $2,831,220 Aurora* 361,967 $19,003,268 Commerce City 53,577 $2,812,793 Douglas County 218,326 $11,462,115 Parker 52,105 $2,735,513 Jefferson County 204,113 $10,715,933 Fremont County 47,487 $2,493,068 El Paso County 199,673 $10,482,833 Littleton* 46,992 $2,467,080 Fort Collins 162,919 $8,553,248 Northglenn* 38,905 $2,042,513 Lakewood 155,072 $8,141,280 Brighton* 38,805 $2,037,263 Weld County 139,181 $7,307,003 Englewood 34,007 $1,785,368 Thornton* 134,845 $7,079,363 Wheat Ridge 31,448 $1,651,020 Arapahoe County 134,824 $7,078,260 Delta County 30,471 $1,599,728 Arvada* 117,260 $6,156,150 Summit County 30,367 $1,594,268 Westminster* 113,181 $5,942,003 Fountain 29,581 $1,553,003 Adams County 112,771 $5,920,478 Lafayette 28,326 $1,487,115 Pueblo, City of 110,621 $5,807,603 Morgan County 28,148 $1,477,770 Centennial 109,439 $5,745,548 Montezuma County 26,906 $1,412,565 Boulder, City of 107,789 $5,658,923 Elbert County 25,169 $1,321,373 Greeley 104,557 $5,489,243 Routt County 24,679 $1,295,648 Longmont* 93,296 $4,898,040 Windsor* 24,572 $1,290,030 Larimer County 92,957 $4,880,243 Teller County 24,154 $1,268,085 Mesa County 86,102 $4,520,355 Montrose County 22,201 $1,165,553 Loveland 75,988 $3,989,370 Logan County 22,047 $1,157,468 Broomfield 66,252 $3,478,230 Erie* 21,972 $1,153,530 Grand Junction 64,629 $3,393,023 Louisville 20,643 $1,083,758 Boulder County 62,208 $3,265,920 Golden 20,460 $1,074,150 Garfield County 58,984 $3,096,660 Evans 20,223 $1,061,708 Castle Rock 57,289 $3,007,673 Montrose 19,220 $1,009,050 La Plata County 55,697 $2,924,093 Chaffee County 19,097 $1,002,593 $275,318,574.00 4,354,185 889,978 Population PAB Cap Minimum 19,048 $1,000,000 Total Local Issuers: 5,244,163 275,318,574 47% * denotes multi-county place Statewide Authorities: CHFA $284,375,585 48% CADA $10,000,000 2% Total Authorities $294,375,585 Statewide Balance 362,991 $19,057,011 3% TOTAL PAB 5,607,154 $588,751,170 100% Total Local Issuers: Page 1 of 1 ATTACHMENT 1 ATTACHMENT 2 S Mason St Remington St S CAovlleege W Mulberry St E Mulberry St M athews St Peterson St W Magnolia St W Olive St W Oak St Whedbee St E Magnolia St E Olive St E Oak St ÕZYXW ³I 300 Fort Collins, Remington CO 80524 St 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. City of The Fort City Collins makes for no its representation internal purposes or only, warranty dimensions, as to contours, its accuracy, property timeliness, boundaries, or completeness, or placement and of location in particular, of any its map accuracy features in thereon. labeling or THE displaying CITY OF FORT COLLINS PARTICULAR MAKES PURPOSE, NO WARRANTY EXPRESSED OF MERCHANTABILITY OR IMPLIED, WITH OR RESPECT WARRANTY TO THESE FOR FITNESS MAP PRODUCTS OF USE FOR OR THE UNDERLYING FAULTS, and assumes DATA. Any all responsibility users of these of map the use products, thereof, map and applications, further covenants or data, and accepts agrees them to hold AS the IS, City WITH harmless ALL from made and this against information all damage, available. loss, Independent or liability arising verification from any of all use data of contained this map product, herein should in consideration be obtained of by the any City's users having of these liability, products, whether or direct, underlying indirect, data. or consequential, The City disclaims, which and arises shall or not may be arise held from liable these for any map and products all damage, or the loss, use thereof or by any person or entity. Printed: May 02, 2018 Site 0 150 300 600 Feet © ATTACHMENT 3 March 14, 2018 Jacqueline Kozak-Thiel Chief Sustainability Officer City of Fort Collins P.O. Box 580 Fort Collins, CO 80522 RE: Request for assignment of 2018 Private Activity Bonding Authority Dear Ms. Kozak-Thiel: Housing Catalyst requests assignment from the City of Fort Collins’ 2018 Private Activity Bond (PAB) cap for the purpose of affordable housing development. As the primary developer and operator of affordable housing in Northern Colorado, Housing Catalyst intends to utilize this authorization to develop new affordable rental homes within the city of Fort Collins. As a quasi-governmental entity formed under the state housing statute, Housing Catalyst will be the direct issuer of bonds utilizing the PAB allocation. Therefore, the City of Fort Collins will not be required to provide assistance, nor incur any costs associated with the utilization of the authorized PAB cap. Housing Catalyst contact information for this request: Housing Catalyst 1715 W. Mountain Ave. Fort Collins, CO 80521 Principal Contact: Julie Brewen, CEO Phone: 970-416-2910 jbrewen@housingcatalyst.com Amount of Allocation Requested: $8,553,248 ATTACHMENT 4 Bond Counsel Firm: Gilmore & Bell, P.C. 15 West South Temple Suite 250 Salt Lake City, UT 84101 Principal Contact: Ryan Warburton Phone: 801-258-2726 rwarburton@gilmorebell.com Description of Applicant’s Local Projects: See Exhibit I Number of Years’ Entity has been doing business in State of Colorado: 47 years Certificate of Good Standing: Housing Catalyst was originally formed as the Housing Authority of the City of Fort Collins in 1971 under state statute. As a result, this legal entity does not maintain a corporate filing with the Colorado Secretary of State office and therefore is not required to maintain a Certificate of Good Standing under that entity. Description of Assets to be Purchased or Constructed: Housing Catalyst is requesting this allocation to begin accumulation of the PAB cap needed to fund up to two new affordable housing properties and/or affordable properties to be rehabilitated in the next 3 years. These properties will be affordable rental homes for families with incomes ranging from 0-60% Area Median Income (AMI). The specific properties for these developments have not yet been finalized. However, Housing Catalyst anticipates that each property will be similar in size and cost to our recent Redwood and Horsetooth projects, comprised of 72 homes and 96 homes respectively. The projects will be completed using 4% Low Income Housing Tax Credits, Private Activity Bonds, proceeds from public housing disposition under the Rental Assistance Demonstration program (RAD) and other available local and state-wide sources. Utilizing this same financing structure, the Redwood property required $12 million in PAB’s and the Horsetooth property required $13.5 million in PAB’s. Each new property developed by Housing Catalyst will require similar amounts of PAB cap, which is in excess of the single year allocation level available through the City of Fort Collins. This will require Housing Catalyst to accumulate PAB cap from multiple years and/or multiple allocating entities. Once the PAB cap is allocated to Housing Catalyst, it can be carried over or maintained for 3 years to allow for its utilization in an approved project. Explanation of how project aligns with City objectives: Housing Catalyst is the primary affordable housing provider, developer and operator in the City of Fort Collins in addition to being the designated public housing authority for the area. All projects of Housing Catalyst align with the objectives outlined in the City of Fort Collins 2015-2019 Affordable Housing Strategic Plan. Number of Housing Units and Target Demographics: Each property developed with allocated PAB cap is anticipated to range from 60-100 rental homes. Target populations will be individuals and/or families with income ranging from 0-60% of AMI. Statement from Bond Counsel of Project Eligibility: See Exhibit II If additional information is required please contact me. Sincerely, Duane Hopkins CFO cc: Julie Brewen, CEO Kristin Fritz, Director of Real Estate Development Exhibit I Local Projects Exhibit II Letter – Bond Counsel Social Sustainability 321 Maple Street PO Box 580 Fort Collins, CO 80522 970.221.6758 Every year, the City of Fort Collins receives an allocation of Private Activity Bond (PAB) capacity from the State of Colorado. The 2018 allocation is for $8,533,248 in bond capacity. Affordable housing rehabilitation and construction are appropriate uses for PAB capacity. The Affordable Housing Board has been informed DMA Plaza Inc has requested the assignment of $8 million of the 2018 PAB for the rehabilitation of 124 affordable housing units and Housing Catalyst has requested the assignment of the entire 2018 PAB capacity for the rehabilitation or construction of future affordable housing units. The AHB was also provided with the PAB committee’s recommendation to assign $8 million of the 2018 PAB allocation to CHFA for the benefit of DMA Plaza and to assign the remaining $533, 248 to Housing Catalyst for future qualifying projects. After staff presented these requests along with the PAB committee recommendation at the May 3, 2018 regular board meeting, the Affordable Housing Board discussed the matter and is now recommending that council approve the PAB committee’s recommendation to assign $8 million to CHFA for the benefit of DMA Plaza and $533,248 to Housing Catalyst for future projects. MEMORANDUM DATE: May 3, 2018 TO: Mayor and City Councilmembers CC: Darin Atteberry, City Manager FROM: Affordable Housing Board Diane Cohn, Chairperson RE: SUPPORT FOR ASSIGNMENT OF THE CITY’S 2018 PRIVATE ACTIVITY BOND ALLOCATION ATTACHMENT 5 -1- RESOLUTION 2018-048 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE ASSIGNMENT OF THE CITY’S PRIVATE ACTIVITY BOND ALLOCATION FOR 2018 TO THE COLORADO HOUSING AND FINANCE AUTHORITY AND HOUSING CATALYST TO FINANCE THE REHABILITATION OR CONSTRUCTION OF AFFORDABLE HOUSING UNITS WHEREAS, the City of Fort Collins is authorized and empowered under the laws of the State of Colorado (the “State”) to issue revenue bonds for purposes including the financing of multi-family rental housing projects for low- and moderate-income persons and families; and WHEREAS, the Internal Revenue Code of 1986, as amended (the “Code”), restricts the amount of tax-exempt bonds (“Private Activity Bonds” or “PAB”) which may be issued in the State (the “State Ceiling”); and WHEREAS, pursuant to the Code, the Colorado legislature adopted the Colorado Private Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes (the “Allocation Act”), providing for the allocation of the State Ceiling among various State and local governmental units, and further providing for the assignment of such allocations from such governmental units to any entity or person with the authority to issue bonds; and WHEREAS, pursuant to an allocation under Section 24-32-1706 of the Allocation Act, the City has received a direct allocation of the 2018 State Ceiling for the issuance of Private Activity Bonds in the aggregate principal amount of $8,553,248 (the “2018 Allocation”); and WHEREAS, if the City does not issue bonds or assign its annual allocation to another entity by September 15 of each year, its allocation is relinquished to the statewide balance; and WHEREAS, the City received two applications for the 2018 Allocation; one from Housing Catalyst (“HC”) and one from the Colorado Housing and Finance Authority (“CHFA”); and WHEREAS, the City’s PAB Committee reviewed the applications and recommends splitting the 2018 Allocation by assigning $8,000,000 of it to CHFA and $533,248 to HC, pursuant to Section 24-32-1706 of the Allocation Act; and WHEREAS, CHFA intends to use its portion of the 2018 Allocation to issue PABs for financing the rehabilitation of DMA Plaza Apartments, an affordable housing project serving senior households (the “CHFA Project”); and WHEREAS, HC is accumulating the PAB allocation needed to fund up to two future affordable housing construction or rehabilitation projects in the next three years, the specifics of which have not yet been finalized (the “HC Projects”), and its portion of the 2018 Allocation would be used for this purpose; and -2- WHEREAS, CHFA and HC have each expressed their willingness to attempt to issue Revenue Bonds in an amount equal to or greater than the portions of the 2018 Allocation assigned to them herein; and WHEREAS, the City has determined that the 2018 Allocation can be utilized most efficiently by assigning it to CHFA and HC to issue Private Activity Bonds for financing the CHFA Project and HC Projects; and WHEREAS, the City has determined that such assignments to CHFA and HC will advance the City’s objective of increasing the availability of adequate affordable housing for low- and moderate-income persons and families within the city; and WHEREAS, the Council wishes to assign the 2018 Allocation to CHFA and HC, which assignments are to be evidenced by an Assignment of Allocation between the City and each recipient. NOW, THEREFORE, BE IT RESOLVED 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 assignment to the Colorado Housing Finance Authority of $8,000,000 of the City’s 2018 Allocation for the CHFA Project as described herein is hereby approved. Section 3. That the assignment to Housing Catalyst of $533,248 of the City’s 2018 Allocation for the HC Projects as described herein is hereby approved. Section 4. That the Mayor is hereby authorized to execute a separate Assignment of Allocation with each recipient on terms and conditions consistent with this Resolution, 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 Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 15th day of May, A.D. 2018. _________________________________ Mayor Pro Tem ATTEST: _____________________________ City Clerk