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Date
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March 8, 2010
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Agenda
Item No. 29F Roll
Call No. 10-
Communication
No. 10-117 Submitted
by: Larry Hulse, Director Community
Development Department |
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AGENDA
HEADING:
Resolution
of support for an application to the Iowa Finance Authority (IFA) submitted by
SA Metro Lofts, LP requesting low income housing tax credits (LIHTC) for the
construction of 111 units of mixed income housing at 255 Vine Street.
SYNOPSIS:
Recommend
support of the application to the IFA for a LIHTC allocation for 100 of the 111
units. This project was supported by
City Council for 2009 tax credits, the only change is in the number of assisted
units. In 2009, 62 of the units were to
be assisted, in 2010, 100 of the 111 units will be assisted. An amended Urban Renewal Development
Agreement with Metro Lofts LLC for the project to be located north of Vine
Street between 2nd and 3rd Streets was approved at the
City Council meeting on January 25, 2010, by Roll Call No. 10-152.
FISCAL
IMPACT: NONE
Amount: N/A
Funding Source: N/A
ADDITIONAL
INFORMATION:
Metro
Lofts – 255 Vine Street
Developer
– Sherman Associates Development, LLC, George Sherman, 233 Park Ave S.,
Minneapolis, MN
Project
– New Construction of Mixed Income Housing
Number
of Units – 111 Total Units, 100 Affordable Units, 11 market rate units
Area
Median Gross Income (AMGI) to be served – 100 at 60% AMGI
Commitment
to Affordability – 30 years
Management
Company – Sherman Associates Property Management
Neighborhood
Action – A letter of support was submitted from the Downtown
Neighborhood Association last year and the developer has asked for an updated
letter.
Funding
Request – No Additional Request. $1.5 million of Tax Increment Funding
was previously committed to this project.
Of the $1.5 Million, $500,000 has already been expended during purchase
of the land. The additional commitment is $1,000,000. The amended
contract approved on January 25, 2010 by Roll Call No. 10-152 authorizes
$500,000 upon close of financing.
History of Project - The original
70-80 unit condominium project became economically infeasible due to escalating
construction costs, but the developer worked to analyze alternatives to make
the project successful. The most reasonable alternative was to pursue a mixed
income apartment project as a way to contribute needed housing to the downtown
market and utilize a key infill development site. The revised concept was
presented to Council in 2006, where approval was given to proceed with amending
the original development agreement. Subsequently in late 2006, Council approval
was also provided for application to the IFA for LIHTC funds to create the 60%
affordable, 40% market rate mix of housing for the Metro Lofts project. The
project was not awarded credits in 2007 or 2008, but reapplied, again with City
Council support, in 2009 and was awarded an allocation of credits.
The
developer will not be able to utilize the 2009 tax credits under the IFA
deadlines so will make application for 2010 credits. The biggest change in the credit application
is that the project will now be 100 affordable units out of 111 units, or 90%
of the units will be affordable.
Initially,
the remaining 11 units will be listed at market rate, but offered at the same
rent levels as the affordable units. Initial rents for all of the
units will be $674 for the 35 one-bedroom units and $813 for the two-bedroom
units.
The
project amenities and security features will include laundry facilities on each
floor, surveillance cameras, a community room/lounge, exercise room, computer
room, limited access entry and an on-site manager.
Each unit will have central air
conditioning, blinds, carpet, a refrigerator, stove/oven, dishwasher, microwave,
washer/dryer, coat closet and high-speed Internet connection. Additionally, all
of the one-bedroom units and select two-bedroom units will have a walk-in
closet. Select two bedroom units will also have an interior storage closet.
The
deadline for applications for 2010 LIHTC is March 15, 2010. From staff’s knowledge of the LIHTC Market,
credits are selling for around 65 cents, and it is extremely hard to market the
credits to an investor.
Income
Limits for 60% of Area Median Gross Income
1 person household - $28,560
2 person household - $32,640
3 person household - $36,720
4 person household - $40,250
Staff
Recommendation: Approval of
application, as City Council has entered into a development agreement for the
project. In addition, although the
property has 90% assisted units, it is located near market rate rental and is owner-occupied,
so it should not create a concentration of assisted units. City Council should be aware, however, that
assisted units are also being put in the Rumley Building, which is only one
block to the west, and may not want to approve additional assisted units in
this immediate two block area.
Criteria
and Process for Review and Support of LIHTC applications
Adopted
by Roll Call No. 08-2162 on December 8, 2008
Review Process:
Before City Council reviews the projects, the developer should attend a
pre-application meeting with City staff to ensure that the zoning and physical
infrastructure is adequate for the development.
A general neighborhood meeting should be held with a recognized
neighborhood organization and with adequate information to allow the
neighborhood to make comments on the project’s ability to address design, management
services and amenities prior to City Council action.
·
Only support
projects that contain 100% assisted units, if they are located near market rate
rental or owner-occupied housing to avoid concentration of assisted units. Within census tract 51 (downtown) support
projects where there is existing or potential for market rental or
owner-occupied housing within a two block radius of the projects to avoid
isolation of assisted housing projects.
·
Support
projects that meet the housing needs identified in the City’s Consolidated
Plan, including rental units for families below 50% of median income and three
bedroom or larger units.
·
Support
projects that develop on an infill parcel with connectivity into a neighborhood
including a link to schools. Infill is
defined as a Brownfield site, a location that includes demolition of a non-historic
dilapidated building, property that has previously been developed, or a centrally
located site available for development because of infrastructure improvements. Projects on a commercial corridor should develop
links to neighborhoods or pedestrian areas to gain City Council support.
·
Support
projects for which City Council has entered into development agreements or has
authorized staff to begin negotiation, including sale of land or commitment of
funding. Council should support all
projects, to which it may support: land contribution, Tax Increment Fund
dollars or Federal allocation dollars.
·
Support projects
that are certified by Leadership in Energy and Environmental Design (LEED) or other
sustainable program, and/or utilize energy saving technology such as geothermal
heating and cooling.
·
For
rehabilitation of existing assisted or market units, support projects that make
substantial external and energy efficient improvements, including the use of
brick on the outside, conformance with the city’s landscape standards and energy
efficient heating and cooling systems.
In 1994, the City Council amended the City’s
Comprehensive Plan to institute guidelines for reviewing LIHTC or any other
programs that provide new construction funding for rental housing designed for
persons under 80% of median income. The
overall goal is that affordable housing be spread equally through the community
and not concentrated in any one area of the city. The comprehensive plan also includes the
following criteria to evaluate proposals:
·
The
development’s design should be sensitive to and compatible with the character
of the surrounding neighborhood;
·
The management
services must be adequate and responsive to the needs of low income tenants.
·
Appropriate
amenities, including storage facilities for toys and other large items, are
provided; and
·
A recognized
neighborhood organization has been given the opportunity to comment on the
project’s design, management services and amenities.
PREVIOUS
COUNCIL ACTION(S):
Date: January 25, 2010
Roll
Call Number: 10-152
Action: Urban
Renewal Development Agreement with Metro Lofts LLC for construction of an
apartment building north of Vine Street between 2nd Avenue and 3rd
Streets, and approving proposed Conceptual Development Plan. (Council
Communication No. 10-036) Moved by Hensley to adopt. Motion Carried 7-0.
Date: December 8, 2008
Roll
Call Number: 08-2162
Action: Adopting
criteria for City Council Review and Support of Low-Income Housing Tax Credit
(LIHTC) Applications. (Council Communication No.
08-729) Moved
by Vlassis to adopt. Motion Carried 7-0.
Date: December 27, 2008
Roll
Call Number: 08-1904
Action: SA Metro
Lofts, Limited Partnership for new construction of mixed income housing at 255
Vine Street. Moved by Kiernan to adopt.
Motion Carried 7-0.
ANTICIPATED
ACTIONS AND FUTURE COMMITMENTS:
None, unless an amendment to the financial
assistance is requested from the City of Des Moines.
For more information on this and other agenda items,
please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office
on the second floor of City Hall, 400 Robert D. Ray Drive. Council agendas are available to the public
at the City Clerk’s Office on Thursday afternoon preceding Monday’s Council
meeting. Citizens can also request to receive meeting notices and agendas by
email by calling the Clerk’s Office or sending their request via email to cityclerk@dmgov.org.