Title:
Title
(City Council / Housing Authority) Lavender Courtyard by Mutual Housing - Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing, Approval of Tax-Exempt Bonds, and Extension of Funding Commitment (Noticed on 11/26/2019)
End
FileID
File ID: 2019-01523
Location
Location: 605 16th Street, 1612 F Street and 1616 F Street, District 4
Recommendation:
Recommendation
Conduct a public hearing and upon conclusion adopt: 1) a City Council Resolution indicating the City Council has conducted a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing related to the proposed construction and financing of the Lavender Courtyard by Mutual Housing; 2) a City Council Resolution which authorizes the Sacramento Housing and Redevelopment Agency (Agency) to a) approve a funding commitment of $1,905,525 in City Home Investment Partnership (HOME) funds, b) execute a Funding Commitment Letter with Lavender Associates, L.P. (Mutual Housing California) or related entity, c) execute all necessary documents associated with this action, d) amend the Agency budget, and e) make related findings; and 3) a Housing Authority Resolution a) indicating the intention of the Housing Authority of the City of Sacramento to issue up to $35,000,000 in tax-exempt mortgage revenue bonds to provide acquisition, construction and permanent financing for the Project, b) authorizing an application to the California Debt Limit Allocation Committee (CDLAC) for allocation authority to issue bonds, and c) authorizing the Executive Director, or designee, to execute necessary documents associated with this action.
Contact: Christine Weichert, Assistant Director, (916) 440-1353, Tyrone Roderick Williams, Director of Development, (916) 440-1316, Sacramento Housing and Redevelopment Agency
Body
Presenter: Anne Nicholls, Housing Finance Analyst, Sacramento Housing and Redevelopment Agency
Attachments
1-Description/Analysis
2-Vicinity Map
3-Project Summary
4-Cash Flow
5-Maximum Income and Rent Levels
6-City Resolution - TEFRA Hearing
7-Housing Authority Resolution - Tax Exempt Bonds
8-City Resolution - Loan Commitment
9-Exhibit A: Loan Commitment Letter
Description/Analysis
Issue Detail: On March 8, 2016, the City Council authorized the Agency to execute a Loan Commitment for $1,905,525 in Home Investment Partnership (HOME) funds for the Lavender Courtyard by Mutual Housing (Project). That commitment expired on March 8, 2017 and this report seeks reauthorization of the commitment of HOME funds for the Project. The Project and the amount of HOME funds committed to the Project has not changed. The Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing also expired and this report seeks to conduct another TEFRA hearing for a tax-exempt mortgage revenue bonds issuance up to $35,000,000.
The Project 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 605 16th Street, 1612 F Street and 1616 F Street in Sacramento’s historic Mansion Flats neighborhood. A vicinity map is included as Attachments 2. Lavender Associates, L.P. (Mutual Housing California) acquired the property in July 2015. Mutual Housing California (Developer) has applied to the Agency for the issuance of up to $35,000,000 in tax exempt mortgage revenue bonds, and a gap financing Agency loan of $1,905,525 in Home Investment Partnership (HOME) funds for the acquisition, construction and permanent financing of the Project.
In addition to the Agency loan, the Project is anticipated to be funded with 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, a bank loan, a deferred developer fee and a general partner capital contribution. The affordability schedule consists of 8 units affordable to seniors earning 20 percent or less of area median income (AMI), 14 units to seniors earning 30 percent or less of AMI, 21 units to seniors earning 35 percent or less of AMI, and 9 units to seniors earning 40 percent or less of AMI.
Description of Development: 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. Mutual Housing California proposes to develop Lavender Courtyard by Mutual Housing, a new construction affordable senior housing development friendly to the LGBTQ community. This Project is the first of its kind in our region. 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.
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. Agency staff has reviewed and approved the management plan, including daily operations, leasing procedures, maintenance, and eviction procedures, to ensure the company meets the Agency’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. The Agency 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, a bank loan, a deferred developer fee, a general partner capital contribution, and an Agency 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 3 and a project cash flow pro forma is included as Attachment 4.
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). The Agency further requires that 20 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 5. 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:
|
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) the Agency’s previously-approved Multifamily Lending and Mortgage Revenue Bond Policies; 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). 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 the Agency 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 the Agency 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 has been determined to be exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section15332 (infill development) and 15194 (affordable housing).
National Environmental Policy Act (NEPA): An Environmental Assessment (EA) was prepared for this project and a Finding of No Significant Impact (FONSI) was made pursuant to the National Environmental Policy Act (NEPA). The Authority to Use Grant Funds (AUGF) was received on March 30, 2016.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies and targets of the Sustainability Master Plan and the 2035 General Plan. If approved, these projects 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 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 the Agency to continue to fulfill its mission to provide a range of affordable housing opportunities in the City and are consistent with the Agency’s previously approved Multifamily Lending and Mortgage Revenue Bond Policies, the City of Sacramento’s 2013-2021 Housing Element, Promise Zone Plans and Goals, the Downtown Housing Initiative and the Central City Specific Plan.
Financial Considerations: The Agency 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, in the lesser of 0.125 percent of the bond amount or $25,000 for the term of 55 years. The Developer will be responsible for payment of all costs, fees, and deposits relating to the bond application. Mortgage revenue bonds do not represent a financial obligation of the Agency, Housing Authority, or City of Sacramento. The law firm Orrick, Herrington and Sutcliffe, LLP, is acting as bond counsel for the Housing Authority. The Agency loan is comprised of $1,905,525 in HOME funds with an interest rate of three percent and a term of 55 years after the construction period is complete.
LBE - M/WBE and Section 3 requirements: 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 Agency’s Section 3 Economic Opportunity Plan. The Developer and general contractor will work with the Agency’s Section 3 Coordinator, Sacramento Employment and Training Agency, the Greater Sacramento Urban League or similar programs, to promote employment opportunities.