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Home My WebLink About054 - 03/19/2013 - AUTHORIZING REVISIONS TO THE MASTER COVENANT FOR THE AFFORDABLE HOUSING UNITS IN THE PROVINCETOWNE C ORDINANCE NO. 054,2013 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING REVISIONS TO THE MASTER COVENANT FOR THE AFFORDABLE HOUSING UNITS IN THE PROVINCETOWNE CONDOMINIUMS DEVELOP4NT WHEREAS, on October 6, 1992, the City Council adopted Resolution 92-185, adopting an Affordable Housing Policy that defined "affordable housing" as housing that cay/be purchased or rented by people whose income is less than 80% of the city's median income, and where the occupants pay not more than 30% of their gross income for housing costs, i eluding utilities; and WHEREAS, on October 3, 1995,the City Council adopted Resol Lion 95-141, authorizing the City to issue a Request for Proposal (RFP) for the sale and develo7ent of a 339-acre parcel of land that the City had acquired in the early 1990s when Special Improvement District Bonds were not paid (the "Provincetowne Property"); and WHEREAS, the City's objectives for the sale of the Pwvmcetowne Property were to: (1) satisfy the City's responsibilities to the SID bondholders and recover as much of the City's costs as possible; (2) retain ownership of lands needed for public pdposes such as natural areas and park sites; and (3) create an affordable housing demonstration project without the City being the developer; and WHEREAS,the RFP, issued in November]995. stated that the development project had to produce a "meaningful quantity" of housing affordable to those living below 80% of the median family income for Fort Collins and those living/below 60% of the median family income, and had to demonstrate affordable housing concepts and methods intended to make affordable housing more acceptable to neighboring residents; and/ WHEREAS, on April 2, 1996, as a result of the RFP,the City entered into an Agreement of Purchase and Sale with Pridemark D7elopment Company,LLC("Pridemark"),which set a purchase price of$1,800,000 for approximately 170 acres of the Provincetowne Property(the"Development Property"), and obligated Pridemark to designate at least 30% of the residential units in the development as affordable housing sing units; and WHEREAS,on Apr'il 16, 1996,the City Council passed Ordinance No.41, 1996,authorizing the sale of the Devel op Property to Pridemark; and WHEREA�, December 18, 1997, Pridemark acquired the first two parcels of the Development Prpperty, and the City and Pridemark entered into a Memorandum of Agreement (MOA)by which Pridemark agreed that in any development agreement it entered into with the City concerning y portion of the Development Property,it would obligate itself to develop at least 30% of the uni as housing affordable to individuals earning 80% or less of the median family income POSTPONED INDEFINITELY ON FIRST READING MARCH 19, 2013 of residents of the City so that they can spend not more than 30%of their income on housing costs; and WHEREAS, Pridemark further agreed in the MOA that not less than two-zirdsof the affordable units it built on the Development Property would be restricted by co�.8nant, deed or contract to remain affordable for at least 25 years from the date each unit/was certified for occupancy, and the remaining one-third of the affordable units would be similarly restricted for either 5 years or 25 years depending on available financing; and WHEREAS, on March 20, 1998, the Agreement of Purchas and Sale was assigned to Kaufman and Broad Home Corporation (K-B), which had acquired Dridemark; and m WHEREAS, as each additional parcel of the Developent Property was acquired by K-B, K-B entered into an MCA with the City similar to the one de gibed above; and i WHEREAS, K-B built the required affordable ho sing units as part of the Provincetowne Condominiums development(the "Development"); and WHEREAS, on May 17, 2001, at K-B's requ�t, the City and K-B amended all the MOAs to state that the affordable units in the Development had to be priced so that residents would spend not more than 38% of their income on housing4nstead of 30%; and WHEREAS,each affordable unit was old subject to a Master Covenant,enforceable by the City, governing the occupancy and resale of the unit (the "Master Covenant"); and WHEREAS,the Master Covenant says that an affordable unit can only be sold to an"Eligible Buyer,"meaning a person, familypr household whose gross annual income is no more than 80%of the area median income for Fort Collins, and whose proposed monthly housing expenses, including mortgage payments and utilities, will not exceed 38% of their income; and WHEREAS, the �Iaster Covenant also sets a maximum purchase price for which an affordable unit can be sold,based on the amount that an Eligible Buyer would be able to finance,and requires that affordable units be owner-occupied; and WHEREAS' in 2006 the U.S. Department of Housing and Urban Development (HUD) reviewed the Master Covenant and requested certain changes to it in order to make it consistent with HUD regulations regarding enforcement of covenants and termination of covenants in the event of a foreclosure/and �YYHEREAS,after getting HUD approval on a Revised Master Covenant(the"2006 Revised Master ovenant"), the City sent copies of it to owners of affordable units in the Development and advised them that they should execute the new covenant before trying to sell their units; and WHEREAS,approximately 69 units in the Development are currently restricted by either the /Master Covenant or the 2006 Revised Master Covenant(the "Covenants"); and l/ POSTPONED INDEFINITELY ON FIRST READING -2- MARCH 19, 2013 WHEREAS, over the past year, several realtors and owners of affordable units in the Development have complained to City staff that the Eligible Buyer requirement in the Coxnants has made it difficult, if not impossible, for them to find buyers for their units when they needed or wanted to sell, and have requested that the Covenants on their individual units Xbe released or modified; and WHEREAS, City staff and the Affordable Housing Board have revieZede Covenants and considered the unit owners' concerns and are recommending that the Covenants be revised to eliminate the Eligible Buyer requirement; and WHEREAS, if the Eligible Buyer requirement is eliminated,the method for calculating the maximum purchase price allowed for an affordable unit would also have to be changed; and WHEREAS, staff is recommending that the maximum purchase price be set at 95% of the Area Median Purchase Price, as published quarterly by the National Association of Home Builders, but not to exceed the then-current amount of the FHA loan limit for one unit in Latimer County;and WHEREAS, staff and the Affordable Housing Board considered the idea of releasing the Covenants entirely, but felt that it was important4o retain the owner-occupancy requirement of the Covenants; and WHEREAS, a copy of the Revised/ster Covenant, dated March 13, 2013 and showing proposed changes compared to the 2006 Revised Master Covenant, is on file in the office of the City Clerk and available for public inspection: and WHEREAS, although CityCouncil authorization was not required for the City to be a party to the Covenants, City Council approval of the recommended changes to the,Covenants is being requested because: (1) the City Coun/iloriginally approved the sale of the Development Property to Pridemark based/on the requirement that the Development include an affordable housing component, and that affordable housing component would be substantially changed,byt e proposed revisions to the Covenants; and (2) the ity's rights under the Covenants to restrict the use and resale of the affordable units constitute an interest in real property owned by the City,and the City would/be giving up part of that interest by removing the Eligible Buyer requirement from/the Covenants; 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. L POSTPONED INDEFINITELY ON FIRST READING -3- MARCH 19,2013 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 modifying the Covenants to remove the Eligible Buyer requirement and change the.method for calculating the maximum purchase price for a Provincetowne condominium unit is in the best interests of the City. Section 2. That the City Manager is hereby authorized to execute Revised Master Covenants for Provincetowne that reflect the changes described in this Ordinance, along with such other modifications to the terms and conditions of the Covenants as the City Manger,in consultation with the City Attorney; determines are necessary or appropriate t�rotect the interests of the City. Introduced, considered favorably on first reading, and ordered published this 19th day of March, A.D. 2013, and to be presented for final passage ont e 16th day of April, A.D. 2013. /ATTEST: Mayor City Clerk Passed and adopted on final eading on the 16th day of April, A.D. 2013. Mayor ATTEST: / City Clerk POSTPONED INDEFINITELY ON FIRST READING -4- MARCH 19, 2013