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HomeMy WebLinkAboutCAHAB memo Foothold Page 1 Community Affordable Housing Advisory Board Memorandum REPORT TO: Chair Thane and Board Members FROM: Tanya Andreasen, Community Housing Program Manger SUBJECT: Request from Foothold Housing Solutions for $39,915 to offset the cost of design services for the production of three or four publicly available at no cost pre- engineered Accessory Dwelling Unit (ADU) plan sets. MEETING DATE: November 6, 2020 AGENDA ITEM TYPE: Action RECOMMENDATION: Staff recommend that the request by Foothold Housing Solutions (“Foothold”) should not be funded at this time. RECOMMENDED MOTION: Having reviewed and discussed the application materials, applicant’s presentation, and staff recommendations, I move that CAHAB recommend the City Commission deny the grant request of Foothold Housing Solutions at this time. DISCUSSION: Foothold Housing Solutions1 submitted a grant application for $39,915 to offset the cost of design services for the production of three or four publicly available at no cost pre-engineered Accessory Dwelling Unit (ADU) plan sets. Staff considered the application materials and the applicant’s October 14, 2020 presentation to CAHAB on its funding request. This funding request aligns with the CAHAB approved Community Housing Fund Philosophy (see Community Housing Fund Allocation Process and Priorities) as it will use the funds to assist in the creation of more affordable housing units in Bozeman. The Community Housing Fund Allocation Process (Exhibit A) identifies Innovative Projects or Ideas as one of CAHAB’s funding priorities. It states that “Funding may be provided, if available, for projects, processes, or procedures that demonstrate a significant return on investment that advances the creation of Community Housing in Bozeman”. The Community Housing Action Plan (Action Plan) presents a slate of actions that address a range of needs associated with the development and preservation of affordable homes. One of these actions is to “[m]ake pre-engineered ADU designs available for free – only a building permit needed to construct”. This request for funding does support that action item from the Action Plan. 1 At the time of Foothold’s application and presentation to CAHAB, it had not formally organized as a business entity with the Montana Secretary of State. The City of Bozeman cannot issue grant funds to an organization, agency or company that does not have the demonstrated organizational capacity to administer the funds as proposed (please see Community Housing FAQ – “Who is eligible to apply” on the Community Housing Fund Application Portal). Representatives of Foothold have indicated to staff they have submitted the required documents to register with the State as a limited liability corporation and the registration should be effective on November 2, 2020. Page 2 By providing free and publicly available plan sets for affordable ADUs, home owners and developers may save money in construction costs and could increase the likelihood that individual home owners build ADUs on existing lots in Bozeman. In turn, this may increase the likelihood that homeowners will provide ADU rentals at lower rates to renters by saving the home owner and developer money during the design and construction process. With any innovative and new idea, there are undetermined outcomes and no guarantee of the applicant’s intended outcome. However, the applicant gave examples of this effort being successful in other communities. The applicant’s October 14, 2020 presentation and follow up clarification letter to CAHAB is included in the packet materials for this meeting. Using CAHAB’s recommended Community Housing Fund Proposal Scoring Methodology, CAHAB’s composite score was 31.5 points. The minimum points for a funding request application without dwelling units in the project to qualify for review is 30 points. Staff also scored the application, giving it 30 points. CAHAB composite score and staff score align closely. Acknowledging that the funding application scores of CAHAB members and staff are sufficient for consideration and potentially a positive recommendation to the City Commission for approval, staff recommend that this request not be funded at this time. The total grant request is substantial, considering the final product will be either three or four ADU designs. There may be other architects or design firms interested in providing pre-designed ADUs for public use, potentially at a lower cost to the City. Montana State University (MSU) School of Architecture students engaged with the City in 2018 to design plans for ADU’s for public use. Should the City decide to pursue pre-designed ADUs in support of the City Community Housing Action Plan, staff recommends advertising the City’s interest in this type of design project as a request for proposals, or engage MSU students in future affordable ADU design projects through the Community Engaged and Translational Scholarship (CATS) collaborative agreement. ALTERNATIVES: 1. Approve the proposed motion 2. Approve the proposed motion with modifications as specified by the Board 3. Other action as determined appropriate by the Board FISCAL EFFECTS: The fiscal year 2021 budgeted fund balance after all proposed and recommended funding and expenditures remains at over $766,514 (includes only Commission approved grants and appropriations) on the date this memorandum was written. Page 3 Report Complied on 10/30/2020 Page 4 Exhibit A: City of Bozeman Community Housing Fund Allocation Process & Priorities Community Housing Fund Philosophy: The intent City of Bozeman Affordable Housing Fund is to create more housing units in Bozeman through investment that provides a demonstrably significant return on the investment of the funds provided from the Community Housing Fund. In order to provide the greatest impact possible, funds may be accumulated over several years. Funds may be used to support projects large or small, as long as the impact of the project on Community Housing is significant and provides a valuable return on investment for the Bozeman Community. The following describes the allocation process and priorities for the City of Bozeman’s Community Housing Fund. Available Funding Determination: Prior to each fiscal year, Community Development Department and CAHAB will review the following information to determine available funding from the Workforce Housing Fund for the coming fiscal year: Available Funds & Projected Revenues: 1. Carry-Over Fund Balance: a. Remaining uncommitted funds from previous fiscal year. 2. Additional General Funds budgeted for Community Housing Fund For Coming Fiscal Year. Projected Expenditures: 1. Projected Contracted Services: 2. Community Housing Fund Obligations & Projections: a. Community Housing Manager salary & expenses. b. Committed consulting services. c. Anticipated consulting services not yet awarded. d. Commission-approved projects from prior year not yet expended. e. Commission-approved projects for next fiscal year. f. CAHAB recommended projects for next fiscal year. Available Funds: 1. Projected revenues minus projected expenses = available funds for the coming fiscal year. Fund Allocation Process: During the City’s budget development cycle the Community Development Department and CAHAB will collaborate in the preparation of the budget revenue and expense line items to be submitted for inclusion as a part of the City’s Community Housing Fund for the upcoming Fiscal Year. Allocation of funds will be based on the priorities detailed below and each request will be evaluated using the Workforce Housing Fund Proposal Scoring Methodology. Proposals for the use of unallocated funds will be reviewed by CAHAB and City Staff as they are received using the Community Housing Fund Proposal Scoring Methodology and may be recommended to the City Commission for funding during the current fiscal year. Fund Allocation Priorities: The City of Bozeman will use the following criteria to allocate available funds from the Community Housing Fund. When multiple projects are before CAHAB projects scoring the highest in the Community Housing scoring process will be given priority. Page 5 1. Down-Payment Assistance & Impact Fee Reimbursement Funds: Each fiscal year, based on anticipated requirements for down payment assistance, impact fee reimbursement, and Community Housing strategies for the coming fiscal year, an amount will be budgeted, if available funds exist, from the Community Housing Fund to ensure there is adequate funding for units developed under the city’s inclusionary zoning ordinance. At the discretion of the City Commission this set aside may be changed at any time during the fiscal year when it is determined that the need for down payment assistance or impact fee reimbursement will not require these funds, the need for down payment assistance or impact fee reimbursement is greater than anticipated, or the goal of increasing affordable housing would be better served by using the funds in some other manner. 2. Low-Interest Loans or No-Interest Loans: Low or no interest loans will be offered, if funds exist, to projects that provide or facilitate the provision of housing affordable to those making less than 80% of the area median income. The city’s preference is to offer such loans in lieu of non-reimbursable project funding whenever possible in order to ensure the long-term viability of the fund. Loan stipulations would include the following: a. Funding would require that the property be deed restricted for the term of the loan plus five years. b. Loans will be made available for not more that 50% of the total project cost. c. Interest rates for general projects would be equal to the current interest rate available to the City when financing capital projects. d. Example; the owner of a house could borrow funds for an ADU at a lower than market rate and the program would get a deed restricted unit. 3. Low-Income Tax Credit or Deed Restricted Grants: Grant funding may be made available, if funds exist, for low income tax credit projects or other deed restricted housing projects serving those making less than 70% of the area median income at a one to one match. a. Additional funding may be made available through low-interest loans as described above. 4. Land Acquisition for Community Land Trust: Grant or loan funding will be made available, if such funds exist, for the acquisition of land that has the necessary restrictions to ensure the affordability of dwelling units in perpetuity. 5. Grants for Infrastructure: Grant or loan funding will be made available, if such funds exist, for the design and / or construction of infrastructure that would provide a direct benefit to the creation of affordable housing. 6. Housing Preservation: Grant or loan funding will be made available, if such funds exist, for such other projects that demonstrate a significant positive impact on the creation or preservation of affordable housing. 7. Innovative Projects or Ideas: Funding may be provided, if available, for projects, processes, or procedures that demonstrate a significant return on investment that advances the creation of Community Housing in Bozeman.