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HomeMy WebLinkAbout3/24/2004 - STAFF REPORTS (6) DATE: MARCFI`97`2004 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT AUTHORIZING THE SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA HOUSING FINANCE AGENCY FOR FUNDING UNDER THE HOUSING ENABLED BY LOCAL PARTNERSHIPS(HELP)PROGRAM;THE EXECUTION OF A STANDARD AGREEMENT IF SELECTED FOR SUCH FUNDING AND ANY AMENDMENTS THERETO; AND ANY RELATED DOCUMENTS NECESSARY TO PARTICIPATE IN THE HELP PROGRAM. RECOMMENDATION: It is recommended that the Agency approve an application to the California Housing Finance Agency for funding of $1,000,000.00 (One Million Dollars) in HELP funds for development and construction of a affordable apartment complex at the southeast corner of Indian Canyon Drive and San Rafael Road. SUMMARY: This action would authorize the Agency to apply for up to $1,000,000 in HELP funds through the State of California for a 60-unit affordable apartment complex on Indian Canyon Drive and San Rafael Road. The project has previously been approved and has sought funding through the 9% Low Income Housing Tax Credit (LIHTC) program without success. The alternative is to fund the project through a combination of tax-exempt bonds, 4% tax credits, HOME funds and Agency assistance. A successful HELP application could reduce the developer's request for additional City/Agency assistance for the project. BACKGROUND: Subsequent to the July, 2002 round of 9% Low Income Housing Tax Credit applications, CBM Group is now trying to restructure the project financing in order to complete their project at San Rafael Road and Indian Canyon Drive. They applied for 9% credits during the July round but the project did not receive an allocation. The 9% program is the most favorable form of affordable housing financing because it creates substantial equity in the project, thereby reducing the debt load. The tax credit investors receive their return on investment through a discount paid to the developer for the credits. Since the tax credit equity does not seek a return, the lower debt means the project can serve lower income households. The next most favorable form of financing is a 4%tax credit allocation combined with tax exempt bonds. However, not every project completely"pencils" under the combined bond/4% program, as is the case here. The Agency is eligible to apply for up to $2,000,000 in HELP funds through the California Housing Finance Agency for any qualified project. The application deadline is April 2, 2004, and all attachments (including this resolution) need to be included. The HELP loan, if successful, would cover a portion of the gap. State prevailing wage legislation (SB 975) has exacerbated the gap. The project would be subject to prevailing wage requirements under any state or Agency program. Previously only federally-funded projects had prevailing wages. In a prior application, the applicant had to apply for more funding because ofDavis- ( be 1 (MOM Bacon requirements that increased the size of the project gap: federal prevailing wages are required on the project if the federal subsidy exceeds 11 units, which increased a previous $2,000,000 gap by close to $2,000,000. The Agency's previous DDA restricted 29 units, so this program does not affect the Agency's calculation on subsidy per unit. Staff is recommending the Agency to consider applying for the HELP funds to assist the project. The HELP program does not require a local match. The advantage of this application is that it could make the tax-exempt bond/4% program, which is much more straightforward than 9% tax credits, more viable; if the applicant is successful with this application the project will almost certainly be developed. The application is for$1,000,000 rather than the maximum of$2,000,000 in order to strengthen its competitiveness. The terms of the program is that the State make a loan at 3% simple interes to the Agency for a period of 10 years. O OHN . RAY ND or of Community & Economic Development APPROs�` c ✓' Executive Director ATTACHMENTS: 1. Resolution REVIEWED BY DEn OF FINANCE t �, RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITYOF PALM SPRINGS,CALIFORNIA AUTHORIZING THE SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA HOUSING FINANCE AGENCY FOR FUNDING UNDER THE HOUSING ENABLED BY LOCAL PARTNERSHIPS (HELP) PROGRAM; THE EXECUTION OF A STANDARD AGREEMENT IF SELECTED FOR SUCH FUNDING AND ANY AMENDMENTS THERETO; AND ANY RELATED DOCUMENTS NECESSARYTO PARTICIPATE IN THE HELP PROGRAM. WHEREAS, the Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (Health and Safety Code §§ 33000, et seq.); and WHEREAS, the Agency wishes to apply for and receive an allocation of funds through the Housing Enabled by Local Partnerships(HELP) Program (hereinafter referred to as "HELP") ; and WHEREAS, the California Housing Finance Agency (hereinafter referred to as "CaIHFA") has commenced an application round for the"HELP" program and is authorized to approve loan applications made to it to be used for the purposes of directly producing affordable housing units; and WHEREAS, the Agency wishes to submit an application to obtain from the CaIHFA an allocation of"HELP" funds; WHEREAS,the Agency acknowledges that the HELP program is a loan made to the public Agency to be repaid from either project revenue or from general low-mod housing setaside funds that accrue to the Agency. NOW, THEREFORE, BE IT RESOLVED BY THE COMMUNITY REDEVELOPMENT AGENCY of the City of Palm Springs, California, that: SECTION 1. The Agency shall submit to the California Housing Finance Agency an application to participate in the "HELP" program in response to the application round notice issued on February 6, 2004, which will request a funding allocation for the following activities: 29 units of a 60-unit Rental New Construction Project to be located on APN 501-031-028 in Palm Springs, California. SECTION 2. If the application for funding is approved, the Agency hereby agrees to use "HELP" funds for eligible activities in the manner presented in the application as approved by CaIHFA in accordance with its regulations. c(&6 ~ SECTION 3. The Agency authorizes the Executive Director or his designee to execute in the name of the Community Redevelopment Agency of the City of Palm Springs the application, the Standard Agreement and all other documents required by CaIHFA for participation in the "HELP" program, including: drawdown requests, quarterly performance reports, annual performance reports and environmental certifications as the Certifying Officer, and amendments thereto. ADOPTED this day of 2004. AYES: NOES: ABSENT: ABSTAIN: ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic BY Assistant Secretary Chairman REVIEWED &APPROVED