HomeMy WebLinkAbout11-24-20 City Commission Packet Materials - C5. Grant w HRDC for Darlinton Manor and Boulevards Apts
City Commission Memorandum
REPORT TO: Mayor and City Commission
FROM: Martin Matsen, Community Development Director
Tanya Andreasen, Community Housing Program Manager SUBJECT: Authorize the City Manager to sign a grant agreement with
Human Resource Development Council IX (HRDC) for the reimbursement of construction costs associated with the preservation of Darlinton Manor and Boulevards Apartments as affordable rental homes MEETING DATE: November 24, 2020 AGENDA ITEM TYPE: Consent
RECOMMENDATION: Staff recommends the City Commission approve a
grant of $500,000 for the reimbursement of construction costs associated with the preservation of Darlinton Manor and Boulevards Apartments as affordable rental homes to HRDC from the Community Housing Fund. Approval of this Consent item is contingent on the City Commission’s approval of Resolution 5220, Budget Amendment for the Community Housing Fund, which will be considered as an Action item at this same meeting.
STRATEGIC PLAN: Initiative 4.5 A Well-Planned City, Housing and Transportation Choices: “Vigorously encourage, through a wide variety of actions, the development of
sustainable and lasting housing options for underserved individuals and families and
improve mobility options that accommodate all travel modes”. BACKGROUND: One of three objectives that guide the work of the Community Housing Action Plan is to “[s]trive to produce community housing at a rate that matches
the spectrum of community housing needs, while also preserving what we have through a
target of no net loss of existing community housing stock.” Producing new affordable housing stock is complicated and expensive, and so is preserving existing affordable homes. Some federal subsidies sunset after a certain number of years, creating a situation where housing that was affordable for that term is in danger of converting to market rate
housing or redeveloped for other uses.
In this case, both buildings serve very low income community members, and were purchased by HRDC with the intention of preserving them as affordable homes. Darlinton Manor serves low-income seniors and people with disabilities. Residents pay 30% of their
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income towards rent in 88 of 100 apartments. HRDC intends to ensure the remaining 12
units are affordable by adding place-based Section 8 vouchers to those rentals. There are
41 subsidized rental homes in The Boulevards Apartments, serving low-income people with disabilities and seniors. Tenants pay 30% of their income towards rent. Due to their desirable locations near downtown Bozeman, apartments in both buildings were at real risk of converting to market rate homes. As explained in their request, HRDC is working
to convert the current federal subsidy contract, which requires annual renewal, to a 20-
year Housing Assistance Payment Contract. HRDC combined both Darlinton Manor and Boulevards renovation projects into the same Low Income Housing Tax Credits application, approved by the Montana Board of Housing in November. The project was also awarded $1 million from the Housing Trust Fund.
Due to the nature of the layered financing strategy necessary to close on the properties and secure its lending package, the applicant seeks City Commission review and decision on its funding request before the end of the calendar year. The applicant submitted a letter to be included in this memorandum iterating this need, and a renewal of the request
(Attachment A). The applicant’s cover letter and funding application with supporting
materials are attached to this memorandum as Exhibit B of the grant agreement, and provide additional detail on the Low Income Housing Tax Credit and Housing Trust Fund applications for the acquisition and rehabilitation of these two properties, including the crucial need for local financial participation.
This application request was presented at CAHAB’s meeting on September 9, 2020, and was discussed by the board on October 14, 2020. Using CAHAB’s recommended Community Housing Fund Proposal Scoring Methodology, CAHAB and staff scored the application (see Attachment C for Staff Memorandum to CAHAB). CAHAB composite
score and staff score aligned closely, and supported the favorable recommendation to the
City Commission to fully fund the grant request to preserve 141 subsidized rental homes in the existing Boulevards Apartments and Darlinton Manor.
UNRESOLVED ISSUES: None
ALTERNATIVES: As suggested by the Commission FISCAL EFFECTS: The full payment of $500,000 will reduce the estimated
FY21 ending fund balance of the Community Housing Fund to $266,514.
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Attachments: Applicant letter: expedited City Commission Consideration Grant Agreement & Exhibits HRDC Boulevards Darlinton Staff Memo to CAHAB October 14, 2020
Report compiled: 11/8/2020
Community Housing Funding- 120
Actual FY20
Current Budget
FY21
Budget FY21 w/
Grant
Recommendation
Beginning Balance 1,194,515 1,684,895 1,684,895
Revenues:
General Fund Transfer - - -
Tax Revenue 620,245 388,224 388,224
Intergovernmental 26,270 - -
Interest Earnings 19,991 5,000 5,000
Loan Principal Repayments 187 1,000 1,000
xCash-in lieu 448,028 130,000 130,000 X
Other Revenue - - -
Total Estimated Revenues:1,114,720 524,224 524,224
Expenditures:
Administrative Costs 223,708 232,605 232,605
**Housing projects grants/loans 265,000 1,010,000 1,510,000
ayment Assistance/Impact fee Reimbursement 135,633 200,000 200,000
Total Proposed Expenditures:624,341 1,442,605 1,942,605
Ending Fund Balance 1,684,895 766,514 266,514 X
x Revised due to cash in lieu came in FY20
**
Warming Center Funding still out-standing 270,000 270,000
Arrow Leaf GMD Grant 500,000 500,000
HRDC Willow Springs 240,000 240,000
HRDC Darlington Boulevards 500,000
Remaining for grant requests X
**Housing projects grants/loans 1,010,000 1,510,000
X Cash in lieu is not guaranteed and only an estimate and should not be appropriated until received
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November 6, 2020
Bozeman City Commission
PO Box 1230
Bozeman, MT 59771
Dear Mayor and Commissioners:
HRDC and Good Housing Partnership seek City support to assist with the preservation and
rehabilitation 141 subsidized rentals in the Boulevards Apartments and Darlinton Manor.
Preservation of subsidized rentals is a critical strategy to meeting the objectives of the City’s
Community Housing Action Plan.
We have asked the City to review this funding request in November in order to allow for closing
before year end 2020 to maintain our syndication and lending package. This request of funds from
the City represents the final key in completing the underwriting package for our tax credit syndicator
and lenders. The Housing Tax Credits were approved by the Montana Board of Housing at their
November meeting, and the project has been provided with an award of $1 million from the Housing
Trust Fund. Our August 28, 2020 request for funds explains each project, its schedule and financing
sources in detail.
The Boulevards Apartments a 41-unit subsidized building is in the heart of downtown, just across the
street from HRDC’s Bozeman offices. The building serves very low-income people with disabilities and
elderly members of our community. The proximity to HRDC housing counselors, service navigators
and other supportive services, along with a subsidy that ensures that tenants only pay 30% of their
income toward rent, has helped many tenants exit long-time homelessness and achieve housing
stability. Unfortunately, this prime downtown location, and the nature of the annually-renewing
mod-rehab subsidy placed the building at high redevelopment risk. In August 2019, HRDC worked
with the property owner to acquire the building using a temporary financing structure, with the long-
term intent to apply for Low Income Housing Tax Credits (LIHTC) to acquire and rehabilitate the
apartments. HRDC is also working with HUD’s Rental Assistance Demonstration (RAD) program to
convert the annually-renewing mod-rehab contract to a 20-year Housing Assistance Payment
Contract. To assist with the RAD conversion and LIHTC process, HRDC is partnering with a national
expert in RAD conversions, Good Housing Partnership (GHP). The RAD conversion will both preserve
the subsidy for the units, while extending the contract period beyond the current annual period,
making market conversion difficult. The LIHTC will also allow for a substantial renovation of the
building. Built in 1914, the apartments need extensive systems and accessibility upgrades, in addition
to full renovation of the units.
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Darlinton Manor is a 100-unit subsidized property targeted to low-income seniors and people with
disabilities. HRDC’s subsidiary corporation, Darlinton Apartments, Inc. acquired this property in July
2020. This property currently has a HUD Housing Assistance Payment contract, which guarantees that
residents only pay 30% of their income toward rent, on 88 of the 100 units. HRDC plans to add place-
based Section 8 Housing Vouchers to the remaining units to expand subsidy to all 100 units. While
the scope of work needed at Darlinton Manor is not as extensive as the Boulevards, the units are in
need of renovation and ADA upgrades.
Preservation of subsidized rental homes is a critical community priority and highly complex.
Managing financing, construction, rehabilitation and compliance requires a skilled, experienced
team. Both HRDC and GHP have extensive experience in this field, as evidenced by the award of both
Housing Tax Credits and Housing Trust Fund dollars, in addition to securing a syndicator and lender at
a time when many projects are experiencing difficulty doing so.
As this community continues to grow and address the impacts of COVID-19 on our most vulnerable
citizens, the preservation of affordable housing like the Boulevards and Darlinton Manor is critical. At
this time, only 5% of the City’s rentals are affordable to households earning less than 60% AMI,
however 45% of renters fall below this income level, and only 1% of units are affordable to very low
income households earning less than 30% AMI. Our community is already in an extreme housing
crisis; the loss of these units would be staggering, and the subsidy irreplaceable. Preserving these
homes is the most cost-effective strategy for ensuring that our most vulnerable community members
are able to maintain housing affordability. We sincerely hope that the City of Bozeman will agree to
assist with this effort.
Sincerely,
Heather Grenier
President/CEO
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August 28, 2020
Ms. Tanya Andreasen
Community Housing Program Manager
City of Bozeman
20 E Olive Street
Bozeman, MT 59715
Dear Ms. Andreasen:
HRDC and Good Housing Partnership seek City support to assist with the preservation and
rehabilitation 141 subsidized rentals in the Boulevards Apartments and Darlinton Manor.
Preservation of subsidized rentals is a critical strategy to meeting the objectives of the City’s
Community Housing Action Plan.
The Boulevards Apartments a 41-unit subsidized building is in the heart of downtown, just across the
street from HRDC’s Bozeman offices. The building serves very low-income people with disabilities and
elderly members of our community. The proximity to HRDC housing counselors, service navigators
and other supportive services, along with a subsidy that ensures that tenants only pay 30% of their
income toward rent, has helped many tenants exit long-time homelessness and achieve housing
stability. Unfortunately, this prime downtown location, and the nature of the annually-renewing
mod-rehab subsidy placed the building at high redevelopment risk. In August 2019, HRDC worked
with the property owner to acquire the building using a temporary financing structure, with the long-
term intent to apply for Low Income Housing Tax Credits (LIHTC) to acquire and rehabilitate the
apartments. HRDC is also working with HUD’s Rental Assistance Demonstration (RAD) program to
convert the annually-renewing mod-rehab contract to a 20-year Housing Assistance Payment
Contract. To assist with the RAD conversion and LIHTC process, HRDC is partnering with a national
expert in RAD conversions, Good Housing Partnership (GHP). The RAD conversion will both preserve
the subsidy for the units, while extending the contract period beyond the current annual period,
making market conversion difficult. The LIHTC will also allow for a substantial renovation of the
building. Built in 1914, the apartments need extensive systems and accessibility upgrades, in addition
to full renovation of the units.
Darlinton Manor is a 100-unit subsidized property targeted to low-income seniors and people with
disabilities. HRDC’s subsidiary corporation, Darlinton Apartments, Inc. acquired this property in July
2020. This property currently has a HUD Housing Assistance Payment contract, which guarantees that
residents only pay 30% of their income toward rent, on 88 of the 100 units. HRDC plans to add place-
based Section 8 Housing Vouchers to the remaining units to expand subsidy to all 100 units. While
the scope of work needed at Darlinton Manor is not as extensive as the Boulevards, the units are in
need of renovation and ADA upgrades.
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Combining the LIHTC application for acquisition and rehabilitation of the Boulevards and Darlinton
allows for the scale required to apply through the non-competitive 4% LIHTC program. Under the
non-competitive program, all applications meeting threshold requirements are funded. This results in
a more rapid tax credit commitment, and allows HRDC to forgo the risks of the competitive funding
process.
While the LIHTC 4% application process is non-competitive, the constraints of the program limit the
percentage of seller note and deferred developer fee allowed. Additionally, the rehabilitation
proposes $1 million in funding from the Housing Trust Fund, which is a competitive funding process.
One critical component of HTF application ranking is local financial participation. As such, the loss of
funds from the City would adversely impact both the LIHTC and HTF applications and the feasibility of
the project in general, possibly risking loss of subsidized units in our community.
The Community Housing Needs Assessment notes that the community is already in desperate need
of additional housing units for people at all income levels. An estimated 1,460 units are needed just
to meet current demand; to meet the needs of Gallatin County’s growth rate, over 3,000 below-
market rate units are needed. As this community continues to grow, the preservation of affordable
housing like the Boulevards and Darlinton Manor is critical. At this time, only 5% of the City’s rentals
are affordable to households earning less than 60% AMI, however 45% of renters fall below this
income level, and only 1% of units are affordable to very low income households earning less than
30% AMI. Our community is already in an extreme housing crisis; the loss of these units would be
staggering, and the subsidy irreplaceable. Preserving these homes is the most cost-effective strategy
for ensuring that our most vulnerable community members are able to maintain housing
affordability. We sincerely hope that the City of Bozeman will agree to assist with this effort.
Sincerely,
Tracy Menuez
Associate Director
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Online Community Housing Fund Application
1. Organization Seeking Funding
Organization Name Human Resource Development Council of District IX, Inc.
Address 32 South Tracy
Contact Name Not answered
Contact Phone Number (406) 585-4890
Contact Email Address tmenuez@thehrdc.org
2. Project
Information
Project Name Boulevards/Darlinton Preservation
Location of Project 6 W. Babcock and 606 N. 5th
Project Description
The proposed project will rehabilitate and preserve 141 subsidized rental units in Bozeman.
The two properties, The Boulevards Apartments, and Darlinton Manor are described in detail
below.
The Boulevards Apartments provide 41 units of subsidized housing in the heart of
downtown, just across the street from HRDC’s Bozeman offices. The building serves very
low-income people with disabilities and elderly members of our community. The proximity
to HRDC housing counselors, service navigators and other supportive services, along with a
subsidy that ensures that tenants only pay 30% of their income toward rent, has helped
many tenants exit long-time homelessness and achieve housing stability. Unfortunately, this
prime downtown location and the nature of the annually-renewing mod-rehab subsidy
placed the building at high redevelopment risk. In August 2019, HRDC worked with the property owner to acquire the building using a temporary financing structure, with the long-
term intent to apply for Low Income Housing Tax Credits to acquire and rehabilitate the
apartments. Additionally, HRDC is working with HUD’s Rental Assistance Demonstration
(RAD) program to convert the annually-renewing mod-rehab contract to a 20-year Housing
Assistance Payment Contract. The RAD conversion will both preserve the subsidy for the
units, while extending the contract period beyond the current annual period, making market
conversion difficult. The building, constructed in 1914, is in desperate need of rehabilitation.
Like many older buildings, it needs improvements to systems, accessibility upgrades, and full
renovation.
Darlinton Manor is a 100-unit subsidized property targeted to low-income seniors and
people with disabilities. HRDC’s subsidiary corporation, Darlinton Apartments, Inc. acquired
this property in July 2020 through a right of first refusal. This property currently has a HUD
Housing Assistance Payment contract, which guarantees that residents only pay 30% of their
income toward rent, on 88 of the 100 units. HRDC plans to add place-based Section 8
Housing Vouchers to the remaining units to expand subsidy to all 100 units. While the scope
of work needed at Darlinton Manor is not as extensive as the Boulevards, the units are in
need of renovation and ADA compliance upgrades.
Combining the LIHTC application for acquisition and rehabilitation of the Boulevards and
Darlinton allows for the scale required to apply through the non-competitive 4% LIHTC
program. Under the non-competitive program, all applications meeting threshold
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requirements are funded. This results in a more rapid tax credit commitment, and allows
HRDC to forgo the risks of the competitive funding process. In total, the properties have a
combined acquisition cost of $12.5 million with rehabilitation demands of approximately
$7.5 million.
The Affordable Housing needs assessment notes that the community is already in desperate
need of additional housing units for people at all income levels. An estimated 1,460 units are
needed just to meet current demand; to meet the needs of Gallatin County’s growth rate,
over 3,000 below-market-rate units are needed. As this community continues to grow, the
preservation of subsidized housing is critical. At this time, only 5% of the City’s rentals are
affordable to households earning less than 60% AMI, however, 45% of renters fall below this
income level. Only 1% of units are affordable to very low-income households earning less
than 30% AMI. Our community is already in an extreme housing crisis; the loss of these units
would be staggering, and the subsidy irreplaceable.
Project Timing 2021-2022
Which Community
Housing Action Plan
Strategy/Action Item
Does This Project
Address?
Preservation of Subsidized Rentals
# of Affordable Dwelling
Units to be
Generated/Renovated
141
Area Median Income %
Targeted
less than 60% AMI
Project Partners (if
applicable)
Good Housing Partnership
3. Indicate how this project ensures permanent or long term affordability
[×] Deed Restriction Please Explain
Both properties will be subject to renewed HUD Housing Assistance Payment (HAP) contracts, with a 20-
year term, and a 41-year Land Use Restriction Agreement (LURA) for the Low Income Housing Tax Credit
Program. The LURA is filed as a deed restriction on the property.
Page 2
4. Project Funding (Please attach budget at the end of the application)
Total Project Budget $29,525,127
5. Primary Project Funding Sources
1. Permanent Debt
$ Amount $16,277,508
2. Tax Credit Equity
$ Amount 7,380,932
3. Seller Note/other sources (please see budget)
$ Amount 5,866,687
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Amount Requested From
Community Housing Fund
$500,000.00
6. Which Project Elements Will Funds Be Used For? (attach line item budget if needed)
1. Rehabilitation
$ Amount $500,000.00
2. Not answered
$ Amount Not answered
3. Not answered
$ Amount Not answered
7. Type of Funding Requested
(○) Grant
8. If you selected Grant, would you consider a Loan if Grant was not available?
(○) Yes
9. Would you accept 50% of your requested amount?
(○) Yes
10. Would you accept 25% of your requested amount?
(○) Yes
11. Could the Grant / Loan be split among multiple years?
(○) Yes
12. When would the funds requested need to be received in order to optimize the benefit of the funds
requested for the project?
06/30/2021
13. Have you received community housing funding assistance in the past 5 years?
(○) Yes
Page 3
14. Additional Information
What is the level of
urgency behind the
funding request?
High level
If Community Housing
Funds are not allocated
to this project, how does
impact the project?
While the LIHTC 4% application process is non-competitive, the constraints of
the program limit the percentage of seller note and deferred developer fee
allowed. Additionally, the rehabilitation proposes $1 million in funding from
the Housing Trust Fund, which is a competitive funding process. One critical
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component of HTF application ranking is local financial participation. As such,
the loss of funds from the City would adversely impact both the LIHTC and HTF
applications and the feasibility of the project in general, possibly risking loss of
subsidized units in our community.
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Milestone Date
Acquire Interest in Darlinton Jul-20
Submit Tax Credit and Bond Applications
Darlinton and Blvd Aug-20
HTF, City Funds, Risk Share Loan
Submit Application for HTF Sep-20
Submit Application for City Funds Aug-20
Request to MBOH for Risk Share Loans Sep-20
Order Third Party Reports
Appraisals
Environmental
Phase 1/Radon
Lead/Asbestos
Rent Comparability Studies
Market Studies
Survey
Design and Engineering
Architectural Drawings
Engineering
Scope Finalization Aug-20
Plan Check Submission Sep-20
Permit Nov-20
Contractor
Select Contractor Sep-20
Finalize Scope Oct-20
Review subcontractor Bids Sep-20
Finalize Schedule of Values Oct-20
Finalize Construction Contract Oct-20
Finance and Legal
Select Investor and Lender Aug-20
Due Diligence Process Aug-Oct 2020
Underwriting Aug-Oct 2020
Partnership Oct-20
Loan Documents Oct-20
Bond Documents Oct-20
HUD Documents Oct-20
HTF Documents
Risk Share Loan Documents
HUD Process
Submit Applications for MUTM Aug-20
Submit Application for Mod/Rehab Aug-20
Complete HUD Legal Review Sep-20
Receive HUD Approval Oct-20
Close on the Financing Nov-Dec-20
Issue Notice to Proceed Dec-20
Construction Mobilization Dec-20
Begin Unit Renovations/Relocation Jan-21
Construction Completion Mar-22
Temporary Certificate of Occupancy Jan-22
Certificate of Occupancy Mar-22
Stabilization - 90/90 Test Jul-22
Process 8609
Final Cost Cert May-22
Submit PIS Application to MBOH May-22
Receive 8609 Aug-22
Blvd/Darlinton Schedule
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Uses
Acquisition 12,500,000
Rehabilitation 7,484,750
Furnishings 245,217
Contingency 741,000
Relocation 775,500
Architect and Engineering 381,000
Construction Financing Fees and Interest 2,186,511
Permanent Financing Costs 318,177
Legal 130,000
Reserves 760,776
LIHTC Syndication Costs 462,679
Permitting 61,304
Developer Fee 3,478,213
TOTAL USES 29,525,127
Construction Sources
Construction Loan 21,000,000
LIHTC Equity 1,845,233
Developer Note 2,568,948
Housing Trust Fund 1,000,000
City of Bozeman 500,000
Deferred Developer Fee 2,610,946
TOTAL CONSTRUCTION SOURCES 29,525,127
Permanent Sources
Permanent Loan 16,277,508
LIHTC Equity 7,380,932
Developer Note 2,568,948
Housing Trust Fund 1,000,000
City of Bozeman 500,000
Rehab NOI 571,852
Deferred Developer Fee 1,225,887
TOTAL PERMANENT SOURCES 29,525,127
Boulevards/Darlinton Budget
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Boulevards Apartments and
Darlinton Manor Preservation
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The Boulevards
6 West Babcock
41 units (39 subsidized S8MR)
3 studio, 36 one bedroom, 2 two bedroom
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Darlinton Manor
606 North 5th
100 units (85 subsidized PBS8)
32 Studio, 68 one bedroom
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•Both buildings are elderly/disabled designated
•Very low, often fixed incomes
•Boulevards: 41 units (39 with current subsidy)
•Darlinton: 100 units (85 with current subsidy)
•Acquisition rehab process would add 17 subsidized units
•Subsidies ensure that residents pay 30% of income toward rent
Current Residents
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Where does preservation fit in?
Darlinton/Blvds
Arrowleaf/Perennial
Willow Springs
Warming Center
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About 38% of Bozeman’s low-income renters earn below 30% of AMI
Bozeman Housing Needs
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Scope of work -Boulevards
•Electrical rewiring/systems upgrades
•Sprinkler system install
•New elevator
•Windows
•Roof
•Accessibility upgrades
•Units
•Appliances •Cabinets•Flooring•Fixtures
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Scope of work -Darlinton
•Windows
•Roof
•Accessibility upgrades
•Units
•Appliances
•Cabinets
•Flooring
•Fixtures
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Budget
Uses
Acquisition 12,500,000
Rehabilitation 7,484,750
Furnishings 245,217
Contingency 741,000
Relocation 775,500
Architect and Engineering 381,000
Construction Financing Fees and Interest 2,186,511
Permanent Financing Costs 318,177
Legal 130,000
Reserves 760,776
LIHTC Syndication Costs 462,679
Permitting 61,304
Developer Fee 3,478,213
TOTAL USES 29,525,127
Construction Sources
Construction Loan 21,000,000
LIHTC Equity 1,845,233
Developer Note 2,568,948
Housing Trust Fund 1,000,000
City of Bozeman 500,000
Deferred Developer Fee 2,610,946
TOTAL CONSTRUCTION SOURCES 29,525,127
Permanent Sources
Permanent Loan 16,277,508
LIHTC Equity 7,380,932
Developer Note 2,568,948
Housing Trust Fund 1,000,000
City of Bozeman 500,000
Rehab NOI 571,852
Deferred Developer Fee 1,225,887
TOTAL PERMANENT SOURCES 29,525,127
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Milestone Date
Acquire Boulevards Jul-19
Extend Boulevards subsidy contract Oct-19
Acquire Interest in Darlinton Jul-20
Submit Tax Credit and Bond Applications Aug-20
HTF, City Funds, Risk Share Loan
Submit Application for HTF Sep-20
Submit Application for City Funds Aug-20
Request to MBOH for Risk Share Loans Sep-20
Order Third Party Reports June - August 2020
Design and Engineering June - August 2020
Scope Finalization Aug-20
Plan Check Submission Sep-20
Permit Nov-20
Select Contractor Sep-20
Finalize Schedule of Values Oct-20
Finalize Construction Contract Oct-20
Finance and Legal
Select Investor and Lender Aug-20
Due Diligence/Underwriting Aug-Oct 2020
LIHTC Partnership, Loan, Bond and HUD docs complete Oct-20
HUD Process
Submit Applications for MUTM and RAD Aug-20
Complete HUD Legal Review Sep-20
Receive HUD Approval Oct-20
Close on the Financing and LIHTC Nov-Dec-20
Issue Notice to Proceed Dec-20
Construction Mobilization Dec-20
Begin Unit Renovations/Relocation Jan-21
Construction Completion Mar-22
Blvd/Darlinton Schedule
Schedule
Questions?
Thank you!
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Community Housing Advisory Board Memorandum
REPORT TO: Chair Thane and Board Members
FROM: Tanya Andreasen, Community Housing Program Manager
SUBJECT: Request from HRDC for $500,000 for the reimbursement of
construction costs to renovate and rehabilitate Darlinton Manor and The Boulevards
Apartments.
MEETING DATE: October 14, 2020
AGENDA ITEM TYPE: Action
RECOMMENDATION: It is the recommendation of staff that the request should be
funded at the requested level of $500,000. The completion and approval of a grant
agreement is required before presentation to the City Commission.
SUGGESTED MOTION: Having reviewed and discussed the funding request from
HRDC, I move to recommend City Commission approval of an amount not to exceed
$500,000.
BACKGROUND:
This funding request aligns with the CAHAB approved Community Housing Fund
Philosophy as it will use the funds to preserve 141 subsidized rental homes in the existing
Boulevards Apartments and Darlinton Manor.
One of three objectives that guide the work of the Community Housing Action Plan is to
“[s]trive to produce community housing at a rate that matches the spectrum of community
housing needs, while also preserving what we have through a target of no net loss of
existing community housing stock”. Producing new affordable housing stock is
complicated and expensive, and so is preserving existing affordable homes. Some federal
subsidies sunset after a certain number of years, creating a situation where homes that
were affordable for that term are in danger of converting to market rate homes or
redeveloped for other uses.
In this case, both buildings serve very low income community members, and were
purchased by HRDC with the intention of preserving them as affordable homes. Darlinton
Manor serves low-income seniors and people with disabilities. Residents pay 30% of their
income towards rent in 88 of 100 apartments. HRDC intends to ensure the remaining 12
homes are affordable by adding place-based Section 8 vouchers to those homes. There
are 41 subsidized rental homes in The Boulevards Apartments, serving low-income
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people with disabilities and seniors. Tenants pay 30% of their income towards rent. Due
to their desirable locations, apartments in both buildings are at real risk of converting to
market rate. As explained in their request, HRDC is working to convert the current federal
subsidy contract, which requires annual renewal, to a 20-year Housing Assistance
Payment Contract. HRDC is combining both Darlinton Manor and Boulevards projects in
the same Low Income Housing Tax Credits (LIHTC) application.
The applicant’s cover letter and funding application are attached to this memorandum,
and provide additional detail on the Low Income Housing Tax Credit and Housing Trust
Fund applications for the acquisition and rehabilitation of these two properties, including
the crucial need for local financial participation.
This application request was presented at CAHAB’s meeting on September 9, 2020.
Using CAHAB’s recommended Community Housing Fund Proposal Scoring
Methodology, CAHAB and staff scored the application. CAHAB’s composite score was
58.8 points (42.5 average points for the first section, and 16.3 for the second). The total
possible points for a funding request application with dwelling units in the project is 42
points. The overall percentage score for this proposal from five CAHAB members is
140%. Staff also scored the application, giving it 58 points (40 in the first section and 18
in the second) and an overall score of 138%. CAHAB composite score and staff score
align closely, giving additional support to a positive staff recommendation for this
funding request.
If CAHAB recommends approval of this grant, staff will draft a grant agreement
which will be presented to the City Commission for approval at a later date. The
grant agreement will include additional detail on the use of the grant funds, and
how and when requests for payment must be made.
FISCAL EFFECTS: The full payment of $500,000 will reduce the balance of the
Community Housing Fund to $XXX as of the writing of this report. The budget for
community grants in FY21 was $515,000 and has been spent. This and any
additional projects approved in FY21 will require a budget amendment to
appropriate Community Housing Funds to that budget line item (Community
Grants).
Attachments:
HRDC grant request cover letter
HRDC application
Project schedule
Project budget
Report compiled: 10/7/2020
78