Title:
Title
(Housing Authority / City Council) Lavender Courtyard by Mutual Housing: Approval of Final Tax Exempt Bonds and Loan Documents
End
FileID
File ID: 2020-00902
Location
Location: 1616 F Street, District 4
End
Recommendation:
Recommendation
Adopt: 1) a Housing Authority Resolution authorizing the Executive Director or designee to: a) issue, execute, and deliver mortgage revenue bonds of up to $25,000,000 for the financing of the Lavender Courtyard by Mutual Housing (Project); b) execute and deliver necessary documents relating thereto, and c) approve all actions taken by officers and agents of the Housing Authority deemed necessary or advisable to issue and deliver the bonds and 2) a City Council Resolution authorizing Sacramento Housing and Redevelopment Agency (SHRA) to enter into and execute a Loan Agreement comprised of $1,905,525 in HOME Investment Partnerships Program (HOME) funds, and all necessary agreements to finance the Project.
FileName
Contact: Christine Weichert, Assistant Director, (916) 440-1353; Tyrone Roderick Williams, Deputy Executive Director, (916) 440-1316, Sacramento Housing and Redevelopment Agency
Body
Presenter: Christine Weichert, Assistant Director, (916) 440-1353, Sacramento Housing and Redevelopment Agency.
Attachments:
01-Description/Analysis
02-Vicinity Map
03-Project Rendering
04-Residential Project Summary
05-Cash Flow Proforma
06-Maximum Income and Rent Levels
07-Housing Authority Resolution - Final Bond Documents
08-Exhibit A: Public Disclosures Relating to Conduit Revenue Obligations
09-City Council Resolution - HOME Loan Documents
10-Exhibit A: HOME Loan Documents
Description/Analysis
Issue Detail: Lavender Associates, L.P. acquired property at the southeast corner of 16th and F Streets in the historic Mansion Flats neighborhood of downtown Sacramento in July 2015. On March 8, 2016, the City Council authorized SHRA to execute a Loan Commitment for $1,905,525 in Home Investment Partnership (HOME) funds. That commitment expired on March 8, 2017. On December 10, 2019, Council reauthorized the commitment of HOME funds for the Lavender Courtyard by Mutual Housing (Project). The amount of HOME funds committed to the Project did not change. The Re-Tax Equity and Fiscal Responsibility Act (Re-TEFRA) public hearing and intent to issue up to $13,000,000 in tax-exempt mortgage revenue bonds was held on December 10, 2019.
Lavender Courtyard by Mutual Housing is a new construction affordable senior housing development friendly to the Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ) community and is the first of its kind in the region. The development is located on approximately 0.59 vacant acres at 1616 F Street in Sacramento’s historic Mansion Flats neighborhood. A vicinity map and rendering are included as Attachments 2 and 3.
In addition to the SHRA loan, the Project was awarded four percent Low Income Housing Tax Credits (LIHTC’s), State Tax Credits, Project-Based Vouchers (20), tax-exempt bond financing, a Multifamily Housing Program (MHP) loan from the State Department of Housing and Community Development, an Affordable Housing Program (AHP) loan, a conventional bank loan, a deferred developer fee and a general partner capital contribution.
Description of Development: The development will have a four-story wood frame building totaling approximately 35,000 square feet on 0.59 acres of undeveloped land.
The Project includes 53 residential units, consisting of 48 one-bedroom and four two-bedroom residential units for seniors age 62 years of age and over and a one-bedroom manager’s unit. “Green” building materials, energy-efficient HVAC systems, kitchen appliances and lighting, as well as water-efficient plumbing fixtures will be used. All units provide one-bathroom, living space, storage and private outdoor balconies that have a minimum five foot depth.
The ground floor of the building will include a small 863 square foot commercial space for use by a community partner. Also located on the ground floor is a 17-space gated parking garage accessed from the alley through a roll up door, trash enclosures, and fire, electrical and utility equipment areas. A rooftop photovoltaic system will also be installed.
Additional amenities include covered bicycle parking on the ground floor, an outdoor landscaped courtyard to provide socializing areas with bench seating, a barbeque area, management office, community space for resident services and activities, elevator, and security cameras with a digital video recording system. Similar “Green” materials and systems will be included in the common areas, the building’s exterior and landscaped areas. Details of the Scope of Development are included with Exhibit A attached to the council resolution.
Developer: Mutual Housing California (MHC) is an experienced owner and manager of affordable rental housing projects. MHC owns and operates 18 communities, and houses more than 3,000 low income residents. Incorporated in 1988, MHC was formed as a partnership of neighborhood residents, business representatives, housing advocates and local government dedicated to improving housing opportunities for lower income families.
MHC’s goal is to offer a permanent solution to the housing needs of low-income residents with residents taking a key role in the management and maintenance of their homes and developing a vested interest in the success of their community. MHC is the owner of a number of projects in the Sacramento area, including Evergreen Estates, Glen Ellen Estates, Mutual Housing at Lemon Hill, Norwood Avenue Apartments, Norwood Estates, River Garden Estates and Victory Townhomes.
Property Management: The Project will be managed by Mutual Housing Management, a property management company with staff experienced in operating affordable apartment communities. SHRA staff has reviewed and approved the management plan, including daily operations, leasing procedures, maintenance, and eviction procedures, to ensure the company meets the SHRA’s requirements for property management.
Resident Services: Resident services will be provided by MHC which currently provides resident services to 18 properties serving low and very low income residents. The service provider will be required to provide at least 15 hours of services per week. Programs will be tailored to the needs of the residents. SHRA staff has reviewed and approved MHC’s resident services plan detailing the scope and schedule of services to be provided. Examples of services include an on-site services coordinator, as well as educational and enrichment programs. Lutheran Social Services will provide case management to 24 households formerly experiencing homelessness.
Project Financing: The Project’s anticipated financing will include a combination of four percent Low Income Housing Tax Credits (LIHTC), Project-Based Vouchers (PBV), tax-exempt bond financing, a Multifamily Housing Program (MHP) loan from the State Department of Housing and Community Development, an Affordable Housing Program loan, a conventional loan, a deferred developer fee, a general partner capital contribution, a SHRA loan of $1,905,525 in City HOME Investment Partnership (HOME) funds. A project summary, including proposed sources and uses of funds, is included as Attachment 4 and a project cash flow proforma is included as Attachment 5.
Low-Income Set-Aside Requirements: As a condition of receiving tax credits and the benefits of tax-exempt bond financing, federal law requires that apartments be set-aside for targeted income groups. Income restrictions from LIHTC financing require that no households have income higher than 60 percent Area Median Income (AMI). SHRA further requires that 15 percent of the units be restricted to households with income no greater than 50 percent AMI. Maximum rent and income limits can be found in Attachment 6. Project affordability restrictions will be specified in regulatory agreements with the Developer. These anticipated sources and their affordability requirements are summarized in the following table:
Lavender Courtyard by Mutual Housing
|
Unit Type |
Units |
% of Units |
Affordability Restriction (55 years) |
|
4% LIHTC, State Tax Credits, Tax-exempt Bonds, MHP & PBV |
8 |
15% |
Extremely Low Income 20% of Area Median Income (AMI) |
|
4% LIHTC, State Tax Credits, Tax-exempt Bonds, MHP & PBV |
12 |
23% |
Extremely Low Income 30% of AMI |
|
4% LIHTC, State Tax Credits, Tax-exempt Bonds & MHP |
2 |
4% |
Extremely Low Income 30% of AMI |
|
4% LIHTC, State Tax Credits, Tax-exempt Bonds, MHP & HOME |
21 |
39% |
Very-Low Income 35% of AMI |
|
4% LIHTC, State Tax Credits, Tax-exempt Bonds, MHP & HOME |
9 |
17% |
Very-Low Income 40% of AMI |
|
Management Unit |
1 |
2% |
Exempt Management Unit |
|
Total |
53 |
100% |
|
Policy Considerations: The recommended actions are consistent with a) SHRA’s approved Multifamily Lending and Mortgage Revenue Bond Policies (Resolution No. 2019-0452 and HA-0022); b) the 2013-2021 Housing Element, encourages the development of senior housing, particularly in neighborhoods that are accessible to public transit, commercial services, and health and community facilities (Resolution No. 2013-415); c) the Sacramento Promise Zone Plans and Goals, Sustainably Built Community sub-goal is to increase housing types and transit growth to promote livability and connectivity within the Promise Zone (Resolution No. 2015-263); and d) the Downtown Housing Initiative and Initiation of the Downtown Specific Plan, to bring 10,000 places to live to Downtown Sacramento by year 2025 (Resolution No. 2015-282) and e) located in an Opportunity Zone that provides a federal tax incentive for investors, who invest in real estate projects and operating businesses located in designated low-income communities through deferral and partial tax reductions of reinvested capital gains and forgiveness of tax on new capital gains (enacted into federal law through the Tax Cuts and Jobs Act of 2017). Additionally, on November 30, 2015, the City of Sacramento approved the Project, including site plan and design review (File No. DR15-299).
Regulatory restrictions on the property will be specified in regulatory agreements between the Developer and SHRA for a period of 20 years on the HOME-assisted units and 55 years on the mortgage revenue bond assisted units. Compliance with the regulatory agreements will be monitored by SHRA on an annual basis. All units will be regulated for a period of 55 years as a Low Income Housing Tax Credit funding requirement.
Economic Impacts: This multifamily residential project is expected to create an estimated 210.94 total jobs (118.42 direct jobs and 92.52 jobs through indirect and induced activities) and create an estimated $18,503,226 in total economic output ($11,371,306 of direct output and another $7,131,920 of output through indirect and induced activities).
The indicated economic impacts are estimates calculated using a calculation tool developed by the Center for Strategic Economic Research (CSER). CSER utilized the IMPLAN input-output model (2009 coefficients) to quantify the economic impacts of a hypothetical $1 million of spending in various construction categories within the City of Sacramento in an average one-year period. Actual impacts could differ significantly from the estimates and neither the City of Sacramento nor CSER shall be held responsible for consequences resulting from such differences.
Environmental Considerations:
California Environmental Quality Act (CEQA): This project was reviewed pursuant to CEQA and it was determined to be exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15332 (Infill Development), and 15194 (Affordable Housing). National Environmental Policy Act (NEPA): An Environmental Assessment (EA) was prepared for this project pursuant to NEPA Guidelines at 24 CFR Part 58 and it was determined that the project will have no significant impact on the human environment.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies and targets of the Sustainability Master Plan and the 2030 General Plan. This project will advance the following goal, policy and target of goal number one - Energy Independence, specifically by reducing the use of fossil fuels and providing long-term affordable and reliable energy.
Commission/Committee Action: At its meeting of November 20, 2019, the Sacramento Housing and Redevelopment Commission considered the staff recommendation for this item. The votes were as follows:
AYES: Boyd, Griffin, Macedo, Morgan, Nunley, Staajabu, Starks
NOES: None
ABSENT: Alcalay, Wedding
Rationale for Recommendation: The actions recommended in this report enable SHRA to continue to fulfill its mission to provide a range of affordable housing opportunities in the City and are consistent with the SHRA’s previously approved Multifamily Lending and Mortgage Revenue Bond Policies, the City of Sacramento’s 2013-2021 Housing Element, Promise Zone Plans and Goals, Opportunity Zone and the Downtown Housing Initiative and Initiation of the Downtown Specific Plan.
Financial Considerations: SHRA will receive a one-time issuance fee of 0.25 percent of the bond amount, which is payable at bond closing, and annual payment for monitoring the regulatory restrictions and administration of the bonds, 0.125 percent of the bond amount for the term of 55 years. SHRA will also receive a $100 annual administrative fee for each HOME assisted unit. Mortgage revenue bonds do not represent a financial obligation of SHRA, Housing Authority, or City of Sacramento. The law firm Orrick, Herrington and Sutcliffe, LLP, is acting as bond counsel for the Housing Authority. The SHRA loan is comprised of $1,905,525 in HOME funds with an interest rate of zero percent and a term of 55 years after the construction period is complete.
Local Business Enterprise (LBE) - M/WBE and Section 3 requirements: Local Business Enterprise considerations do not apply to this report. Minority and Women’s Business Enterprise requirements and Section 3 will be applied to all activities to the greatest extent possible and as required by federal funding and in accordance with the SHRA’s Section 3 Economic Opportunity Plan. The Developer and General Contractor will work with the SHRA’s Section 3 Coordinator, Sacramento Employment and Training Agency, the Greater Sacramento Urban League or similar programs, to promote employment opportunities.