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Home My WebLink About12/6/2006 - STAFF REPORTS - RA.2. PALM 5p c " RipR�7ry' w ° RIA CRA Staff Report DATE: DECEMBER 6, 2006 NEW BUSINESS SUBJECT: APPROVAL OF A RESOLUTION SUPPORTING AN APPLICATION BY COACHELLA VALLEY HOUSING COALITION TO THE CALIFORNIA HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS (HCD) FOR PROJECT FINANCING OF THE DEVELOPMENT OF A 57-UNIT APARTMENT PROJECT ON A 4.45 ACRE PARCEL ON LAS VEGAS ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING; AND TO DIRECT STAFF TO DRAFT AN OWNER PARTICIPATION AGREEMENT ("OPA"). FROM: David H. Ready, Executive Director BY: Community & Economic Development Department SUMMARY This action directs staff to begin preparing an Owner Participation Agreement with the Coachella Valley Housing Coalition to provide Agency financial support in an amount not to exceed $1,200,000 for a 57-unit apartment project on Las Vegas Road. CVHC recently received a commitment of $4,036,441 from State HOME funds for the project, and will apply for State MHP funds and 4% Low Income Housing Tax Credits to complete the financing. RECOMMENDATION: Adopt Resolution No. _, APPROVAL OF A RESOLUTION SUPPORTING AN APPLICATION BY COACHELLA VALLEY HOUSING COALITION TO THE HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS (HCD) FOR PROJECT FINANCING OF THE DEVELOPMENT OF A 57-UNIT APARTMENT PROJECT ON A 4.45 ACRE PARCEL ON LAS VEGAS ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING; AND TO DIRECT STAFF TO DRAFT AN OWNER PARTICIPATION AGREEMENT (°OPA"). STAFF ANALYSIS: Coachella Valley Housing Coalition ("CVHC') has submitted a proposal for an affordable housing project to be developed in collaboration with the Community Redevelopment Agency on a 4.45 acre site owned by CVHC Las Vegas site in Desert Highland. CVHC and the Agency have a long and successful history of partnering on projects filling the need for affordable housing for families in Palm Springs. CVHC, ITEM NO. "mil ' CRA Staff Report December 6, 2006- Page 2 of 6 CVHC Las Vegas Road Apartments which has owned the property for several years, wanted to make a contribution to the many exciting new projects and initiatives taking place in the Desert Highland neighborhood, including the City's proposal to the Desert Community College District Board for the West Valley Educational Center, and wanted to contribute to the continued revitalization and growth of the neighborhood. CVHC has received national recognition for providing attractive, service-enriched affordable housing for low-income households. For example, in conjunction with the Agency, CVHC successfully completed 140 units in Coyote Run Phase One in 1993 and recently opened the second 66-unit phase in September. In addition, CVHC and the Agency together completed 40 single-family units throughout the city including the award winning Cottonwood Chuckwalla project in 2003. CVHC proposes developing approximately 57 units of family apartments on the Las Vegas Road Site. The project will be a mix of one, two, three and four bedroom units and will include their typical site amenities such as pool, community room, laundry, tot lots, etc. The project will also supply a rich variety of community services modeled after Coyote Run, which shall include after school day care, computer classes, and health, education, music and arts programs. Similar to Coyote Run 2, the financing structure will utilize 4% Tax Credits, MHP, HOME, with CALHFA Bonds for Construction Financing as well as City Funds. Based on the project's initial budget projections, CVHC is requesting an Agency contribution of $1.2 million, or approximately 10% of the total development budget. The proposed major schedule milestones are as follows: Submit initial site plan and budget to RDA January 2006 Adopt Agency Resolution of Support December 2006 Approve OPA March 2007 Site plan and Design approvals June 2007 Submit MHP application to HCD January 2007 MHP Funds approved March 2007 Submit State HOME application August 2006 HOME Funds approved November 2006 Submit for Credits and Bonds March 2007 Credits awarded June 2007 Commence Construction August 2007 Complete construction October 2008 As with the approval of support for the Tahquitz Court Apartments in October, 2005, staff would commence preparing an Owner Participation Agreement with the details of the project, as well as the Agency's commitment, once an indication has been received that the project has been successful (or will be successful) for HOME funding. The resolution does commit the Agency to the $1.2 million as part of the development project, but the project has to proceed first. CRA Staff Report December 6, 2006- Page 3 of 6 CVHC Las Vegas Road Apartments FISCAL IMPACT: Finance Director Review: The final financing structure for the project will be included in the OPA, though the Developer has asked for a commitment of up to $1.2 million for the gap financing. Previous housing projects with CVHC and others have allowed the Agency to spread payments over several years -- Coyote Run, Vista Sunrise, and the proposed commitment to Tahquitz Court. The Agency's current annual Housing set-aside funds are approximately $2,100,000 and are growing at about $100,000 per year. Since all of the units currently are, and would continue to be, restricted to low- and very-low income residents, the Agency per-unit subsidy would be about $21,000. NJOHN . NND unity & Economic Development THOMAS J. SON Assistant City Manager, Development DAVID H. READY City Manager Attachment: Resolution CVHC January 5, 2006 Request Letter CRA Staff Report December 6, 2006 - Page A of 6 CVHC Las Vegas Road Apartments Resolution No, OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA SUPPORTING AN APPLICATION BY COACHELLA VALLEY HOUSING COALITION TO THE HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS (HCD) FOR PROJECT FINANCING OF THE DEVELOPMENT OF A 57- UNIT APARTMENT PROJECT ON A 4.45 ACRE PARCEL ON LAS VEGAS ROAD IN THE DESERT HIGHLAND NEIGHBORHOOD, INCLUDING AGENCY FINANCIAL PARTICIPATION NOT TO EXCEED $1,200,000 IN GAP FINANCING; AND TO DIRECT STAFF TO DRAFT AN OWNER PARTICIPATION AGREEMENT ("OPA") WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the "Agency") has established an affordable housing setaside fund in accordance with Section 33000 et. seq. of the California Health and Safety Code; and WHEREAS, the funds are earmarked for the acquisition, construction, or rehabilitation of affordable housing to benefit the community; and WHEREAS, the developers of a 57-unit apartment project on Las Vegas Road in Palm Springs, the Coachella Valley Housing Coalition (the "Developer"), intends to apply for state financing for the construction of a new 57-unit apartment project and have sought Agency financial assistance to cover a portion of the development cost; and WHEREAS, the Developer will submit a Low Income Housing Tax Credit (LIHTC) application to the California Tax Credit Allocation Committee and shall apply for state Multifamily Housing Program (MHP) funds, HOME funds, and Tax Exempt Bonds for the development of the project WHEREAS, the owners will agree to continue to restrict, though a Regulatory Agreement approved as an attachment to the OPA, the rents on 100% of the units (57) to levels affordable to families with incomes no more than 60% of Area Median Income (AMI) for a period of 55 years; and WHEREAS, the Owner Participation Agreement between the Agency and Developer shall be drafted after the Project has received a commitment of HOME funds, and return to the Agency for approval; it shall provide for assistance by the Agency to the Project in the form of subordinated loans to be repaid from Project revenues. NOW, THEREFORE, BE IT RESOLVED, by the Community Development Agency of the City of Palm Springs, as follows: • CRA Staff Report December 6, 2006- Page 5 of 6 CVHC Las Vegas Road Apartments 1. The Agency hereby approves of the Developer' Application for a 4% Low Income Housing Tax Credit allocation through the California Tax Credit Allocation Committee. 2. The Agency offers its approval of a Note in the amount of $1,200,000 to the Developer on behalf of the Project, subject to the successful negotiation of an Owner Participation Agreement, on the following terms: (i) the Agency may make staggered disbursements on the note over no fewer than two fiscal years; and, (ii) the note provides the Agency security for the Regulatory Agreement which contains the affordability provisions and other performance requirements; the interest on the Agency note shall be 1% simple interest, payable from residual receipts on the project; and the note shall be for a period of 55 years. 3. Agency staff is directed to bring an Owner Participation Agreement to the Agency containing the above terms upon a successful award of HOME funds to the Developer. 4. The Executive Director is hereby authorized and directed, on behalf of the Agency, to execute all documents, including applications or letters of intent or commitment, related to the Project and the purposes of this Resolution. 5. The adoption of this Resolution shall not obligate (i) the City to provide financing to the Developer for the acquisition or development of the Project or to issue the Bonds for purposes of such financing; (ii) the City, Agency, or any department thereof, or the City, or any department thereof, to approve any application or request for, or take any other action in connection with, any environmental, General Plan, zoning, or any other permit or other action necessary to effectuate the Project. 6. This commitment by resolution shall expire within twelve months of the date of its adoption if the project does not proceed to the Owner Participation Agreement stage. ADOPTED THIS 6th day of December, 2006. David H. Ready, Executive Director ATTEST: James Thompson, Assistant Secretary CPA Staff Report December 6, 2006- Page 6 of 6 CVHC Las Vegas Road Apartments CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. _ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk City of Palm Springs, California Coachella Valley Housing Coalition i 45.701 Monroe Street,Suite G,Plaza 1,Indio,C9.92201 'T;L: (760)347-3157 FAX: (760) 342.6466 January 5, 2006 John S. Raymond Director of Community & Economic Development City of Palm Springs 3200 Tahquitz Canyon Way Palm Springs, California 92262 RE: Proposed Desert Highlands Multi-Family Apartments Dear Mr. Raymond: On behalf of the Coachella Valley Housing Coalition, we are pleased to submit a proposal for another affordable housing project to be developed in collaboration with the City of Palm Springs on our 4.45 acre Las Vegas site in Desert Highlands. CVHC and the City of Palm Springs have a long and successful history of partnering on projects filling the need for affordable housing for families in Palm Springs. Coupled with the many exciting new projects and initiatives taking place in Desert Highlands, we are pleased to be able to contribute to the continued revitalization and growth of the neighborhood. At CVHC we are proud of our history, and of the national recognition that we have received, of providing attractive, service-enriched affordable housing for low-income households. As you know, in conjunction with the City of Palm Springs, CVHC has successfully completed 140 units in Coyote Run Phase One, and will be opening our 66 unit second phase in mid April. In addition, we have completed 40 single family units including the award winning Chuckwalla project in 2003. CVHC proposes developing approximately 50 units of family apartments on the Las Vegas Road Site. (See site plan previously provided) The project will be a mix of one, two, three and four bedroom units and will include our typical site amenities such as pool, community room, laundry, tot lots, etc. We will also supply our usual rich variety of community services modeled after Coyote Run, which shall include after school day care, computer classes, and health, education, music and arts programs Similar to Coyote Run 2, the financing structure will utilize 4% Tax Credits, MHP, HOME, with CALHFA Bonds for Construction Financing as well as City Funds. Based on initial budget projections, we are requesting a City contribution of$1.2MM, or approximately 10% of the total development budget. www.evhc.nrp Our proposed major schedule milestones are as follows: Submit initial site plan and budget to RDA January 2006 Adopt DDA March 2006 Site plan and Design approvals August 2006 Submit MHP application to HCD October 2006 MHP Funds approved September 2006 Submit State HOME application August 2006 HOME Funds approved November 2006 Submit for Credits and Bonds March 2007 Credits awarded May 2007 Commence construction October 2007 Complete construction December 2008 We realize this is an aggressive schedule. We would be safer applying in the March 2006 MHP round if we had the DDA approved before the pool is potentially exhausted by the second round. Please do not hesitate to call if you should have questions. Let us know what our next steps should be. T el guilar r of Dev opment lla Valley Housing Coalition rvww.cv/ec.ore Las Vegas Multi-Family Housing Project #1•Income,Expenses and Project DoI #2-Development Costs Median Income-Family of 55,700 Riverside County Deval Budget Talal Ra�idenlrl Depr Res T.0 Ehg Comm'I Defer Non-Deprec. 00%Income Limit.Fnm of4 33420 Acgwsdlen-Land 450000 0 0 0 450000 Acquisition-Buiding 0 0 0 0 Inci 9units Construction a552,805 6,502,805 6,502,605 a 50000 Residential Units 47 Per Yr. Per Me Net Consir Conlingcncy 10% 365,000 365.000 365000 a 30146AMI15odmom 1 271 Devnlepers Fee 10% 965,790 965,790 965,790 0 2 Bedroom 6 318 Depreciable Soft Costs 1 148 675 1 1do G75 1 148 675 3 Eedmom 8 361 Non-DepreNGin Son Costs 296 501 215 800 216 800 0 90,701 4 Bedroom 1 306 Tax Credit Syndlcallon Costs 85 000 25 000 25 000 0 6D 000 50%AMI1 Bedroom 1 410 2 Bedroom 5 464 3 Bedroom 5 664 Project Reserves 141 000 141 000 4 Bedroom 1 Got Total Devel Casts 10,004,771 9223070 9223070 0 1 751701 00%AMI1 Bedroom 3 505 Cos[/Unq 212667 2 Bedroom 5 509 Total Financing Gap 9,017,458 3 Bedroom 8 656 is Gap per Residential Unit 121 661 4 Bedroom 3 749 Total 47 286700 23399 Commercial Unit; 0 93-Percentage of Use(square feet or cost) Cgmmcrclul D 235 Rcs,dcnool Square Footage 100% Commercial D Commercial Square Foolene D% Total 0 D Gross Rcml,I Inc 2BG 785 22999 94-Historic Tax Credit Calculation Los!;Vacancy at 5% 14 339 1 195 Will you use the Hislenc Credits yea/no no Net Rental Income 272449 22704 Residential Commercial Total Historic Tax Credit Basis D 0 a Hiatede Tax Credit Rate 20% HTC Equity Raise 0.850 OPcmlmg Expenses HTC Eqully a 0 0 Expenses lUnIbYear 3,500 104,500 13,708 OR #5-Low Income Housing Tax Credit Calculation Utilities 0 RchabMow Corsi, Acquisition Rcppir5 6 Mmnl 0 Will you use Low Income Housing Tax Credits you tie Imsomnce/Adm,m 0 Ellginle Bast Residential Units 9,223,070 0 RE Taxes/Profession D Less-Basis Used for Historic Tax Credits 0 Other 0 Eligible Basis Avalable for LIHTC 9,223,070 0 Total Operating Expenses 0 0 Percent of residential rental units that arc lax credit eligible 1130% 100% Operating In umc 107 949 8 995 Is the project,n a 130%Cen us Tract yes10o no Qualified Basis Available`or LIHTC 9 223 070 0 Reserve Payments, 350 16450 Tex Credit Rate month of Neu.aS 3]1% 3.40% Income for Debt Svc Cwcragc 91,499 Annual Tax Credits 10 yrs =t.c period 342,176 0 Tax Credit LmV LIHTC Equity F isc 92% LIHTC Equity 3,148.918 0 Debt Service Coverage Redo 1.10 96-Project Funding Gap Income Available for Debt Svc 83181 Total Development Costs 10,004,771 100% rot Rate-Permanent Debt 700% Permanent Debt 987,313 10% Term-Permanent Debt(Yrs) 30 Tax Credit Equity Historic Tax Credits 0 0% Maximum Allon+ahlc Debt 1,032.191 LIHTC•Rcdido-tol/New Construction 3,148,018 21% 41HI-Acquisitor 0 0% Total Tax Credits 3,148,018 31% Initial Project Funding Gap(=Subsidy Required) 5,869'"0 59% Subsidy Required per Unit 124,002 Additional Sources of Financing City of Palm Springs 1.181.440 MIAP 2,500 000 HOME 2,000 000 Ali 155 000 Net Preece Funding Cep (a) Subsidy Required per Unit (a) Feesabllily Analysis Las Veoas 5-27-05-RevlAed 12/O82005