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HomeMy WebLinkAbout2019 Timber Ridge Bozeman Request for assistance City of Bozeman Affordable Housing Support Application Low Income Housing Tax Credit Request for Support Project Name: Timber Ridge Apartments, LP Developer(s): Summit Housing Group, Inc. Non-profit partner (if applicable): HRDC IX Project Address: TBD Tschache Lane – at the corner of Thomas Drive and Tschache Lane Number of Buildings: 1 Number of Units: 40 -Senior Amount of Credits requested: $776,250 Affordability Period: 45 years Type of City of Bozeman request (grant, loan, grant sponsorship, or support letter): The developer requests a letter of support to the Montana Board of Housing (MBOH). The developer also requests $50,000 in funding from the Affordable Housing Fund ($1,250 per unit) to demonstrate to MBOH the City’s commitment to supporting affordable housing. This commitment and local support is a crucial component of MBOH’s evaluation criteria. Proposed Unit Mix: # baths # at 30% AMI or less # at 40% AMI or less # at 50% AMI or less # at 60% AMI or less Studio 1BR 1 bath 3 18 7 2BR 2 bath 2 7 3 TOTAL at rent level TOTAL # of Units 5 25 10 Proposed Rents: 30% AMI or less 40% AMI or less 50% AMI or less 60% AMI or less Studio 1BR 505 653 802 2BR 600 778 956 Narrative responses Provide a brief description of the proposed project. Include information regarding project location, number of units, type of units, development/unit amenities and any other information you would like the city to consider. Timber Ridge Apartments Project Information Timber Ridge Apartments is located at the eastern half of Lot 5 Block 8, West Winds Major Subdivision, Phases 2A and 2B, Plat J-445 which is at the corner of Thomas Drive and Tschache Lane. The proposed site is owned by Summit Housing Group, Inc., currently vacant and has all utilities and infrastructure in place. Considering the infrastructure and flat topography of the site, construction of proposed development will be cost effective. Additionally, the site is already zoned R-3 for multifamily and under the PUD and conditional use permit for the West Winds Major subdivision it has been specifically set aside for the development of affordable housing. All units will target Bozeman families and will consist of twenty-eight (28) one-bedroom units at 752SF and twelve (12) two-bedroom units at 909SF. The development will also contain a 1200SF community room which will include an office and computer room. The site is located less than half a mile from 19th Avenue which has numerous desirable services and off site amenities for the residents. These include:  Smith Food and Drugs  Streamline Bus Stop  Lowe's and Home Depot  Access to several convenience stores  Access to numerous retail stores  Access to numerous banking centers  Timber Ridge  Sage Learning Center  US Post Office Indoor Amenities Amenities are those elements in a home that are not essential but are provided to increase the efficiency, comfort, or aesthetic appearance of the apartments. Specific amenities include:  High efficiency windows  High quality flooring in living spaces and hallways  Carpeting in all bedrooms  ENERGY STAR Washer in each unit  Dryer in each unit  ENERGY STAR lighting  ENERGY STAR appliances  Low-Flow shower heads and toilet fixtures  Energy efficient HVAC systems  Handicap accessible units  Low VOC paint Additional Amenities As you walk through the site you will find indoor and outdoor amenities that will provide entertainment in a safe, secure, and natural environment. A list of additional amenities is below: Outdoor Areas  Picnic areas with Pavilions with gazebos  Playground  Community Garden Community Amenities  Computer room with high speed internet  Community room In the conceptual plan the project presents a rich communal environment that celebrate the moments of arrival, the transitions from collective activity to privacy, the discovery of common interest and chance encounters. The encouragement of social interaction and sense of place are achieved through architecture, site layout, interior and exterior amenities. Financing Summit Housing Group, Inc.’s finance team will be directly involved with the financing for the project from its inception. The team will be responsible for all financial analysis and coordination with the lender and equity investors, in addition to the development team to determine the most effective financing plan to move this project forward. Our finance team will update and sensitize project finance models so that as market conditions change, decisions can be made to adjust the plan accordingly. The financing team will negotiate all business points, terms and guarantees for the financing approach and will also provide the required due diligence to bring the project to closing. Once the project is closed and construction commences, the financing team will remain involved throughout the construction period. The finance team will work with the development team to monitor the phases of construction, conduct construction draws, and will communicate with lenders and equity providers to ensure that funding occurs as needed in order to keep the project moving forward. Financial Assumptions  Approximately $4,918,600 in hard construction costs with $280,360 in Contingency  Total annual operating expenses = $171,101 of which $14,258 or $300/unit is replacement reserve  The property will cover all resident water, sewer and waste disposal expenses  There is an on-site manager at Stoneridge Apartments that would be ready to take over lease-up activities and ongoing property management. Operations would also include a maintenance employee.  Financing assumes $6,675,082 in Tax Credit Equity, a $6,302,756 construction loan, a $1,595,401 permanent loan and $127,684 Deferred Developer Fee.  Federal Tax Credit Price of $0.86 per credit  Rent and expense growth rates are underwritten and 2% and 3 % respectively  7% vacancy rate Describe how the proposed project meets or exceeds the Green Building standards outlined in Appendix C of the City of Bozeman Affordable Housing Action Plan. Sustainable Design Sustainable design practices are utilized on all of Summit Housing Groups, Inc.’s communities. Whether the design calls for certain building materials, building components, building systems or even the building locations, we strive to utilize new technologies and building practices to ensure our communities have minimal impact on the environment. These sustainable building practices also create long term financial benefits for residents and the community as a whole. Our design will incorporate the following sustainable design and construction standards: All appliances and equipment will reduce energy consumption by installing only EnergyStar products. All lighting fixture will also be EnergyStar products and will have either compact florescent or other high-efficiency bulbs. Water heaters will carry an efficiency rating of .93 or better will be well-insulated to reduce heat loss. Water conservation devices will be installed through the community and will meet the following standards:  Showerheads — 3.0 gpm (gallons per minute) or less  Kitchen and bathroom faucets — 2.75 gpm or less  Toilets – 1.6 gallon per flush or less Additionally, the insulation of all hot water supply and heating pipes will carry an R-3 value or higher. Seal all exposed hot air duct joints and add insulating wraps with an R-3 value or higher. The design will assure good indoor air quality by designing the community using the following Green Building Standards:  Provide local mechanical exhaust ventilation to the outdoors in each bathroom and kitchen.  In addition, all bathroom ventilation fans shall be ENERGY STAR qualified unless multiple bathrooms are exhausted with a multi-port fan.  Conventional clothes dryers shall be vented to the outdoors. Electric condensing dryers are not vented and shall be plumbed to a drain according to the manufacturer’s instructions. Value Engineering Strategy The Construction Management Team will work to create value engineering options to further increase project cost savings that can be utilized toward project enhancements and site amenities without compromising the quality of the development. This effort will require a design/build approach during the early stages of the construction plans and specifications involving the architect, engineers and general contractor. Construction Phase Beyond the design phase and permitting, construction meetings will be held that will include the Owner, Architect and Contractor (OAC). OAC meetings are scheduled monthly. OAC meetings are an open forum for all field observations, requests for information, change order review, value engineering, material selections, trouble-shooting and interaction with all respective disciplines to achieve maximum efficiency during construction. Summit Housing Group, Inc. and the general contractor will utilize the OAC meeting as a tool to further enhance the construction process and maintain scheduled milestones. During the Construction Phase we will also coordinate the following meetings with the Development Team:  Manage monthly OAC meetings  Coordinate bank inspector reviews during construction  Conduct construction testing (i.e. concrete, soil, asphalt)  Coordinate with local building inspectors  Sustainable design meetings Asset Management The finance team will act as asset manager during lease-up until stabilization is achieved. We will organize the necessary documents to obtain cost certification, 8609 completion, and convert the construction loan to permanent financing. Additionally, during this time period the financing team will interface with property management to prepare an appropriate management plan for the project including pre-leasing and lease-up goals along with the marketing and lease-up budgets to support the overall plan. Summit Housing Group, Inc. has assembled a team of firms that are experts in their respective fields. Each partner has strong experience and relationships on a variety of projects resulting in partnerships that understand how its members work, what they require and how to ensure deadlines are met. This team is committed to the success of this project. Explain how the proposed project is in support of the City of Bozeman’s Affordable Housing plan and serves a target income group identified by the plan. The City of Bozeman’s previous affordable housing plan outlined goals to increase the supply of affordable housing units. The proposed development would add 38 senior units to Bozeman, further contributing to the supply of available units. A preliminary market assessment shows that Bozeman’s senior population is the fastest growing segment of Bozeman’s exploding population. From 2010-2018, Bozeman’s age 65+ population grew at a rate of 8.1% annually as compared to the growth rate for the general population of 2.9% for the same period. At this time, there is only one LIHTC project in Bozeman, with 60 units and no vacancies. There are also three HUD-rental assistance projects in the community, also with zero vacancies and long wait-lists. The mini-market study conducted for the application to MBOH indicates a need for 145 additional senior units in Bozeman. This site was designated for affordable housing, and with City financial support, it is our hope that the Board of Housing will invest in this community of great need. The following are the guiding principles for the City of Bozeman’s Affordable Housing Plan: All residents should have access to decent and affordable housing. Timber Ridge Apartments will provide residents with quality, safe, and decent housing at rates that are and will continue to be affordable. Successful delivery of affordable housing should not be measured only by sale prices and rents, but its performance in terms of minimizing energy use and maintenance costs. Summit Housing Group, Inc. uses sustainable design and high quality building products to ensure that residents and our communities as a whole minimize energy use and reduce ongoing maintenance cost. There is no single home price or rent benchmark that defines “affordable” housing.” Timber Ridge Apartments will provide units to Bozeman families that have an income level of 40%, 50% and 60% of the Area Median Income. The Low Income Housing Tax Credit Program does have guidelines and maximum rent levels that are based on the resident’s income level. When setting the rents we take into consideration not only the LIHTC Program maximum rent level, but also research the market place to ensure the rents can be obtained. Timber Ridge Apartments has on average an 13% market advantage over the current market rate rents. Affordability for residents of various incomes levels should be based on ability to pay, since affordability is a function of both housing costs and income. Similarly to the answer above our rent levels are not only set by LIHTC maximum rent levels but also consider what residents from specific income levels are able to pay for rent. Additionally, our sustainable design does help the financial burden considerably for the residents. The solutions to providing affordable housing should involve using diverse approaches and mechanisms. Summit Housing Group, Inc. continually looks to better the lives of its’ residents by looking at past developments and studying areas that could be improved upon, in respect to design, and to become more cost efficient, which in turn provides better quality housing and amenities for our residents. Sustainable design, efficient use of land, and innovative building practices are the key to providing quality affordable housing. The Low Income Housing Tax Credit is a particularly useful tool to provide affordable housing, as it utilizes a small local investment to leverage the investment of millions in Federal tax credits. Availability of housing for residents of all income levels is essential for attracting and retaining the employers that provide the jobs that are essential to the community’s prosperity. Summit Housing Group, Inc. could not agree more and are dedicated to providing quality housing at affordable rents to each community we develop an apartment complex. Timber Ridge Apartments will provide this quality housing. Economic viability is the lifeblood of any successful community and employment is one of the keys to growth and maintaining the community’s economic viability. Economic growth can be measured in part by the number of additional jobs created within a community. In the initial construction phases, Summit Housing Group, Inc. will create countless jobs as subcontractors construct the apartment complex. After completion, ongoing employment will be created through the operational phase of the developments. The ongoing operations from the developments will create jobs such as property managers, assistant property managers, maintenance staff, extermination, cleaning services, and repair contractors. Provision of Community and Supportive Services Programs benefiting residents with families: Through our partnership with HRDC, residents will receive a tailored social service plan to address specific social issues within the community. These services will empower residents, nurture family values, facilitate community partnerships, and foster a supportive environment that cultivates economic growth and stability. This service plan will advocate self-sufficiency by offering social, economic, and educational services to residents that will aid them in unlocking their potential for growth and prosperity. Some of the programs Summit Housing Group, Inc. has utilized in the past are: Adult Literacy; Computer Classes; English/Spanish instruction; GED preparation; Job Training/Preparation; Budgeting; Communication Skills; Conflict Resolution; Fire and Personal Safety Awareness; Substance Abuse; Tax Assistance; and Time and Stress Management. How will your firm ensure that the long-term management of the project will 1) provide adequate funding for project sustainability, and 2) be responsive to the needs of low-income residents? Summit Housing Group, Inc.’s internal underwriting standards are constantly adjusting to the market place based on tax credit pricing, interest rates, operational cost and construction cost. Since we own and manage all 1,646 of our units, we have the benefit of having detailed historical information on development cost and operational cost. This information allows us to accurately budget our development cost but also to conservatively set an operational budget and permanent debt amount so that the community will have continued financial health. The Montana Board of Housing and our Equity partners in the transaction will require both replacement reserves and operating deficit reserves. Timber Ridge Apartments, LP will accrue $300 per unit or $14,258 for replacement reserves annually and will be used to replace any broken or damaged building components. This reserve is in addition to the $550 per unit or $22,000 we budget annually for general repairs and maintenance. The operating deficit reserve consists of four months of operating expense, debt service and replacement reserves and will equal approximately $99,293. This operating deficit reserve is put in place to cover any shortfalls or expense overruns that might occur due to unforeseen circumstances. If the operating deficit reserve is utilized during a calendar year it must be replenished at year end at the owner’s expense. For each unit type: proposed rent, # of bedrooms, # of bathrooms, rent level (AMI targets) Income Level # of units Gross Max Rent Utility All. Mkt. Adj. Prop. Rent 1-BR @ 40% 3 593 88 505 2-BR @ 40% 2 712 112 600 TOTAL @ 40% 4 10.53% 1-BR @ 50% 18 741 88 653 2-BR @ 50% 7 890 112 778 TOTAL @ 50% 25 65.79% 1-BR @ 60% 7 890 88 802 2-BR @ 60% 3 1068 112 956 TOTAL @ 60% 9 23.68% Total LIHTC units 40 Mgrs. Unit 0 BR MGR unit TOTAL UNITS 40 List of development team, including relevant experience in developing/owning similar projects. Please attach resumes for key staff and firm principals. Developer: Summit Housing Group, Inc. 283 W. Front Street, Suite 1 Missoula, MT 59802 Ph: 406-541-0999 ext. 233 Fax: 406-541-0997 Contact: Rusty Snow rusty@summithousinggroup.com www.summithousinggroup.com Non-profit partners: HRDC IX, Inc. 32 South Tracy Bozeman, MT 59715 Ph: 406-585-4890 Contact: Tracy Menuez tmenuez@hrdc9.org www.thehrdc.org Architect: Encompass Architecture, PLLC 1535 Liberty Lane, Suite 110B Missoula, MT 59808 Ph: 406-880-2841 Contact: Jenn Clary Jenn@encompassdesigninc.com General Contractor: Oakwood Construction Co. 2380 Science Parkway Suite 101 Okemos, MI 48864 Ph: 517-347-1980 Fax: 517-347-0968 Contact: Bernie Aulgur oakwoodcompanies@gmail.com http://www.oak.cc Civil Engineer: JKC Engineering 111 West 2nd Street, Suite 420 Casper, WY 82601 Ph: 307-265-4601 Fax: 307-265-4672 Contact: Lewis James lewis@jkcengineering.com http://www.jkcengineering.com Property Management: Highland Property Management, Inc. 283 W. Front Street, Suite 1 Missoula, MT 59802 Ph: 406-541-0999 ext. 224 Fax: 406-541-0997 Contact: Casey Overland casey@highland-propertymanagement.com http://www.highland-propertymanagement.com/