Loading...
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. 55 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 56 57 58 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.) 59 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. 60 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 61 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. 62