HomeMy WebLinkAboutHabitat for Humanity Affordable Housing Request.pdf
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Finance Director
Chris Kukulski, City Manager
SUBJECT: Request from Habitat for Humanity for Workforce Housing mills or
Development Impact (Big Box) Fund – Affordable Housing money, totaling $45,397.
MEETING DATE: March 29, 2010
AGENDA ITEM TYPE: Action
RECOMMENDATION: Approve funding of the Habitat for Humanity Affordable Housing
request from (either: Development Impacts Fund or Community Housing Fund).
BACKGROUND: In the past, the City awarded a total of $84,000 to Habitat for Humanity
for the purchase of four lots and construction of homes in West Winds Subdivision. This money
was paid from the City’s mills levied for Workforce Housing (Community Housing Fund.)
Habitat is requesting dollars from that same source, or the Development Impact (Big Box) Fund,
be used to reimburse previously paid impact fees ($21.397) and cover additional impact fees
(estimated $24,000) on their newest projects on Hedgerow Court. All of this money would be
used to support the construction of affordable townhomes at 2721 and 2731 Hedgerow Court.
As they have done in the past, Habitat is offering the city a recorded “Assignment of Beneficial
Interest,” so that the City’s contribution can be recovered, should the home be sold within the
first 10 years. They will record the assignment on the Hedgerow Court properties and on 1748
and 1766 Buckrake Avenue, effectively ensuring 4 affordable homes in the City of Bozeman.
We have no other outstanding requests for Development Impacts Fund - Affordable Housing or
Community Housing dollars at this time.
In 2007, the Commission established criteria for granting Affordable Housing dollars from the
Development Impacts Fund. Those criteria are addressed in an attachment to this report. There
are no formal requirements for award of dollars from the mills levied for Workforce Housing.
FISCAL EFFECTS: The FY10 Final Budget included appropriation authority for spending
the balances of the Development Impact Fund and the Workforce Housing funds, should the
Commission choose to do so during the year.
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There remains $190,878 of Affordable Housing money in the Development Impact Fund. There
remains $267,000 in the Community Housing Fund. Either source could be utilized for this
request.
ALTERNATIVES: As suggested by the City Commission.
Attachments: Habitat for Humanity Request Letter
Resolution No. 4057 – Request Criteria
Development Impacts Fund Report
Report compiled on: March 24, 2010
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Development Impacts Fund (Big Box Fund) Request – Affordable Housing Dollars
Resolution No. 4057 – Request Criteria
General Information
1. Project Description: Securing 4 Townhomes as Affordable Housing Units in the City of Bozeman.
· Construction of affordable townhomes at 2721 and 2731 Hedgerow Court in West
Winds Subdivision.
· Reimbursement to Habitat for Impact Fees paid on 1748 and 1766 Buckrake Avenue, so
that the proceeds may contribute to the construction of the Hedgerow Court homes.
2. Project Budget: The Hedgerow Court townhomes are estimated to cost $135,000 each to build.
Total Cost = $270,000
Total amount requested = $45,397. 16% of Hedgerow Court project costs.
3. Project Timeline:
· Buckrake Avenue homes have already been built; Recording of “Assignment of
Beneficial Interest” would occur immediately upon funding.
· Hedgerow Court construction will break ground in the Spring of 2010.
Rating Criteria
1. Use of Funds:
a. Does the request fund first-time home ownership? Preference will be given to requests
that fund first-time home ownership. Although the Habitat for Humanity program does not require
first-time ownership as a criteria, the vast majority of participants are indeed first-time homeowners.
Habitat provides home-ownership opportunities for very low-income wage earners; most of whom have
never owned a home.
b. Is the request for a grant or a loan? Preference will be given to requests that will recover
funds through loans rather than one-time grants. While the request has elements of both a loan and a
grant, it is seen as a grant to the Habitat for Humanity program. In the past, Habitat has recorded an
“Assignment of Beneficial Interest” on the properties that the City has provided assistance to construct.
This interest allows the City to recover funds in the event the property is sold in the first 10 years of
construction (loan-like). If the property remains in the hands of the original Habitat owner, the
contribution becomes a grant after 10 years. They offer the same interest with this project, on four
townhomes: 2721 and 2731 Hedgerow Court, and 1748 and 1766 Buckrake Avenue (already
constructed.)
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2. Leveraging of Funds and Match Provided: Funding for both projects includes contributions from
private individuals, in-kind and volunteer work hours, Habitat Re-Store earnings, and support from
various Foundations that contribute to Habitat for Humanity.
3. Demonstration of Need for Project: For a number of years, Habitat for Humanity was unable to
build projects in the City of Bozeman, due to high real estate prices. Habitat homes serve the very low-
income wage earner (25% to 40% of AMI) that many other programs aren’t able to assist. Providing
home-ownership opportunities for these wage earners in the City of Bozeman is an important element
of stabilizing our local workforce. Homeownership has been shown to have positive impacts on how
children do in school and how parents are able to juggle work-life commitments. These projects add to
the number of construction-related jobs, build on existing vacant lots, and add to the tax-base of the
community.
4. Progress Measurement Reporting: Habitat for Humanity will provide an end of project report.
5. Past Performance of the Applicant: In 2007, the City awarded Habitat for Humanity $84,000 to
assist in the lot purchase and construction of affordable housing units on lots 3A, 3B, 4A, and 4B of Block
8 of West Winds Subdivision. They successfully constructed these homes, providing affordable home-
ownership to four Bozeman families.
Habitat recorded an “Assignment of Beneficial Interest” on each of these lots, in the amount of $21,000
each, so that the City will be reimbursed if any of the homes are sold in the first 10 years of occupancy.
This ensures that the City would be able to recover its contributions, within this decade, if the homes are
no longer a part of our affordable housing stock.
6. Benefits to Low and Moderate Income Persons. Requests that benefit low and moderate income
persons will be given preference: The Habitat for Humanity program’s income guidelines require
participants to have income within 25% - 40% of Area Median Income. Functionally, most participants
fall into the 30% of AMI or less category. This is seen as a low to very-low income level.
For comparison purposes, the Road to Home program provides assistance to individuals and families
earning less than 100% of Area Median Income.
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The Development Impacts (Big Box)
Fund accounts for the dollars the City
receives to mitigate impacts related to
large-scale retail developments.
In 2002 Home Depot paid $500,000
for impacts related to their project.
$100,000 was submitted directly to
Farmhouse Partners for affordable
housing. $400,000 was deposited with
the City. The fund has also received
$450,000 from Wal-Mart and $500,000
from Lowes. We don’t anticipate re-
ceiving dollars from other develop-
ments in the near future. Development
Impact dollars will total $1,450,000
(with $100,000 going directly to Farm-
house Partners). $132,000 has been
earned in interest since 2002.
See below for the program commit-
ments made, to date. After these com-
mitments, there remains a total of ap-
proximately $221,000 uncommitted.
In August 2007, the Commission es-
tablished specific grant criteria for Af-
fordable Housing requests. Farmhouse
Partners and the Road Home Project
have received funding. The uncommit-
ted balance for affordable housing pro-
jects is $190,878.
In August 2008, the Commission took
action to commit most of the Eco-
nomic Development dollars to specific
projects. A number of projects were
funded. The balance of Big Box
money that remains uncommitted for
Economic Development is $30.878.
Affordable Housing Revenues:
Home Depot FY03 $250,000
Wal-Mart FY04 $225,000
Lowes FY07-FY09 $250,000
Interest Earnings to date $ 65,878
Total Revenues: $790,878
Affordable Housing Commitments:
Farmhouse Partners - submitted directly: FY03 $100,000
The Road Home Project: FY04 $100,000
The Road Home Project: FY05 $100,000
The Road Home Project FY08 $200,000
The Road Home Project FY10 $100,000
Total Commitments: $600,000
Uncommitted Dollars: $190,878
Development Impacts Fund
(Big Box Fund)
ISSUED: FEBRUARY 28, 2010 CITY FINANCE DEPARTMENT, ANNA ROSENBERRY, DIRECTOR
Revenue & Commitments
Narrative of the Big Box Fund
Economic Development Revenues:
Home Depot FY03 $250,000
Wal-Mart FY04 $225,000
Lowes FY07-FY09 $250,000
Interest Earnings to date $ 65,878
Total Revenues: $790,878
Economic Development Commitments:
GVIBA FY03 $ 25,000
N 7th Design Plan: FY05-FY08 $ 68,000
Gallatin Ice Foundation Arena: FY07 $300,000
Economic Development Plan FY09 $ 25,000
Rocky Mtn. RC&D Loan Fund FY09 $ 60,000
Downtown Neighborhood Plan FY09 $ 50,000
North 7th TIF Improvements FY09 $232,000
Total Commitments: $760,000
Uncommitted Dollars: $ 30,878
Affordable Housing Economic Development
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PAGE 2 DEVELOPMENT IMPACTS FUND
Affordable Housing—Projects
Farmhouse Partners: In 2001, Home Depot contributed $100,000 directly to an existing Farmhouse Part-
ner’s Affordable Housing project. The money allowed Farmhouse to re-pay an outstanding $50,000 loan from the
Community Affordable House Advisory Board, saving the project interest costs. The other $50,000 was used to subsi-
dize the rents for four to eight units, allowing them to be rented to tenants earning as-low-as 40% of Area Median In-
come, a market that the program was normally unable to reach without assistance.
The Road Home: In November 2003, the City gave $100,000 to affordable housing down-payment assistance
via HRDC’s “The Road Home” program. The City dollars were part of a local match for a $500,000 CDBG grant that
provided services to persons/families earning 60%-80% of Area Median Income. In January 2005, HRDC was granted
an additional $100,000, and in September 2007 - $200,000, and in October 2009 - $100,000. “The Road Home” pro-
vides education, counseling and assistance with loan packages, as well as down-payment assistance dollars.
Economic Development—Projects
GVIBA: In FY2003, the City awarded $25,000 of Economic Development dollars to the Gallatin Valley Independ-
ent Business Alliance (GVIBA). Its mission is “to promote locally owned independent businesses in order to preserve
the Gallatin Valley’s unique character.” GVIBA is know for its “Buy Local, You Bet” campaign. City dollars were allo-
cated to their website www.gviba.org, brochures, a membership directory, and print, television & radio ads.
N 7th Design & Connectivity Plan: In June 2005, the Commission funded the Design and Connectivity
Plan for North Seventh Avenue. The actual cost of the plan was $68,000. At the time the Plan was funded, it was in-
tended that the document provide the design framework for further improvements to the area in conjunction with an
anticipated TIF district for N. 7th Avenue and for the development of CTEP projects along the corridor.
Gallatin Ice Foundation Arena: In October 2006, the Commission approved the Foundation’s request for
a total of $300,000: $125,000 to improve the existing Haynes Ice Pavilion at the Fairgrounds, and $175,000 for the fu-
ture construction of an additional Ice Arena adjacent to Haynes. The money is disbursed once it is matched dollar-for-
dollar by local pledges raised by the Foundation, with the $125,000 for the existing pavilion paid in 2007. The project
anticipates providing increased commercial opportunities city-wide, and be a magnet for increased development and
investment in the general vicinity of the Fairgrounds.
Economic Development Plan: In August 2008, the Commission approved Prospera Business Network’s
request to fund a comprehensive Economic Development Plan for inclusion in the City’s growth policy. An award of
$25,000 was made, funding a 50% of the project costs. Prospera Business Network matched the city’s share.
Downtown Neighborhood Plan: In August 2008, the Commission approved the Dowtown Business Part-
nership’s request to fund the creation of a neighborhood plan for the Downtown area (now called the Downtown
Bozeman Improvement Plan). An award of $50,000 was made, with the Partnership contributing matching dollars.
Rocky Mountain RC&D Loan Fund: In August 2008, the Commission approved the Rocky Mountain
RC&D’s request to fund the creation of the Big Sky Energy Revolving Loan Fund. The purpose of the fund is to pro-
vide a flexible financing tool for investment in energy projects. Funds target projects that result in significant energy
efficiency, conservation and green energy development. The City contributed $60,000 for creation of the fund.
N 7th TIF Infrastructure: In August 2008, the Commission approved the Tax Increment Financing Dis-
trict’s (TIF) request for dollars to dedicate to infrastructure improvements in the N 7th area, as described in the N 7th
Design & Connectivity Plan that was previously funded. An award of $232,000 was made to the TIF district, to be
combined with other TIF dollars for infrastructure improvements.
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