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HomeMy WebLinkAbout01-28-2010 Housing & Community Development Commission AGENDA HOUSING AND COMMUNITY DEVELOPMENT COMMISSION LOBBY CONFERENCE ROOM, CITY HALL THURSDAY, JANUARY 28, 2010 6:30 P.M. 1. Call Meeting to Order 2. Approval of the December 3,2009 Minutes 3. Public Comment of Items Not on the Agenda 4. Staff/Commission Comment 5. Review of the FY11 Allocation Process and Proforma 6. Update on Projects per the Unsuccessful or Delayed Projects Policy . FY08 Blooming Garden IHA LP - Downpayment Assistance . FY09 Dolphin International LLC - Downpayment Assistance . FY10 The Housing Fellowship - Rental Housing 7. Monitoring Reports . Community Mental Health Center - Facility Rehab. (McMurray) . MECCA - Facility Rehab. (Gatlin) . FY09 & FY10 Neighborhood Centers of Johnson County - Facility Rehab. (Gatlin) 8. Adjournment l ~ 1 -~ = -~a.. f~ai:t:~ ~ ~=I~ ~~ CITY OF IOWA CITY MEMORANDUM Date: January 19, 2010 To: Housing & Community Development Commission (HCDC) From: Tracy Hightshoe, Community Development Planner Re: January Meeting Packet Below is a brief description of the January agenda items. Review of the FY11 Allocation Process and Proforma Basics Staff will review the allocation cycle for the benefit of the current and new commission members. Staff will also provide a brief overview of the proforma sheet included in the housing application for rental housing projects. Please review the packet of information regarding housing project finance. This information will give you the basics in understanding the spreadsheet and rental housing budgets. Staff will also be discussing conflict of interest issues as they relate to the allocation process. Update on Projects per the Unsuccessful or Delayed Projects Policy Staff will update the commission on three projects that are subject to this policy. Staff will provide an update or a representative of the agency will be there to answer any questions or concerns about their project. A copy of the Unsuccessful or Delayed Projects Policy is included in the packet for your reference. Monitoring Reports (contact information included) . Community Mental Health Center - Facility Rehab., Replacing asphalt/concrete (McMurray) Contact Sherri Zastrow, 338-7884 x219, szastrow@meimhc.org . MECCA - Facility Rehab., Security system (Gatlin) Contact Ron Berg, 351.4357, rberg@meccaia.com . FY09 & FY10 Neighborhood Centers of Johnson County - Facility Rehab., Deck and outdoor play area improvements, asphalt repairs, (FY09) Window replacement (Gatlin) Contact Brian Loring, 358.0438, brian-Ioring@ncjc.org If you have any questions about these agenda items, or will be unable to attend, please contact me at 356-5244 or by email at tracy-hightshoe@iowa-city.org. MINUTES HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 - 6:30 PM MEETING ROOM B, ROBERT A. LEE RECREATION CENTER PRELIMINARY MEMBERS PRESENT: Andrew Chappell, Andy Douglas, Charlie Drum, Holly Jane Hart, Michael McKay, Rebecca McMurray, Jarrod Gatlin, Brian Richman, Rachel Zimmermann Smith MEMBERS ABSENT: None STAFF PRESENT: Steve Long, Tracy Hightshoe OTHERS PRESENT: Charlie Eastham RECOMMENDATIONS TO COUNCIL: (become effective only after separate Council action): Gatlin motioned to recommend approval of the 2011-2015 CITY STEPS plan to City Council with the approved changes, modifications, and edits as noted by the Commission and staff. Drum seconded. The motion carried 9-0. CALL TO ORDER: The meeting was called to order by Chairperson Richman at 6:30 p.m. APPROVAL OF THE OCTOBER 22nd MEETING MINUTES: Chappell motioned to approve the minutes. Zimmermann Smith seconded. The minutes were approved 8-0 (Hart not present at time of vote). Richman announced that there had been a request to change the order of the agenda items, as a member of the public wished to comment on the CITY STEPS plan. He said that the CITY STEPS plan would be addressed directly after Public and Staff/Commission comments to accommodate that request. PUBLIC COMMENT OF ITEMS NOT ON THE AGENDA: None. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 2 of 16 ST AFF/COMMISSION COMMENT: Long gave a brief update on the status of various flood-related programs. He noted that the City is beginning its second round of buy-outs; up to 54 more homes will be purchased with the available funding. Per federal requirements, the homes will then be demolished and made into green space. Long said that to-date 29 homes had been purchased by other federal funds; 13 homes have been demolished, ten more will come down before Christmas, leaving eight to tear down. Long said the program has been a very emotional one for everyone involved with it. He said many affected residents had lived in their homes for decades. Long said the second round of the New Homes Program has begun. Forty new homes have or will be built to replace the first batch of homes acquired by the City in the buy-out; 37 have been completed, with about 30 families expected to be living in their new homes by Christmas. Long said that the second round will consist of approximately 36 new homes to be built in the spring of 2010. Long said that $6.6 million has been awarded to help create a flood mitigation gate/pump system near Rocky Shore Drive, intended to help prevent flooding of the Coralville Strip. CDSG funds in the amount of $5 million will help the City move the wastewater treatment plant. He said that four new business programs have been announced to the five already in place for businesses needing flood assistance. Long said that approximately 84 homeowners have been assisted with housing repairs or rent assistance. REVIEW OF THE DRAFT 2011-2015 CONSOLIDATED PLAN (a.k.a. CITY STEPS) Richman said that the Commission needs to get to a point by the end of the meeting where it can make a recommendation to City Council with regards to approval of the CITY STEPS plan. Richman said that it could be approved in its current form or with any changes the Commission wished to make. Richman said that the primary goal should be to go through the priority levels that had been assigned to different kinds of projects by the consultants, and assess whether the Commission agrees with them. Richman said the consultants had reached their priority levels based on input from public meetings, a survey, interviews with staff, interviews with non-profit and public agencies, and various reports. Richman opened the meeting to public comment. Charlie Eastham, Iowa City, said that he has been active in affordable housing issues for a long time. Eastham said he had asked to address the Commission because he wanted to get his comments into the record as early as possible, as the City Council does not have a great deal of time between when it receives the Commission's recommendation and when it votes on the matter. Eastham said that he supports the idea that affordable rental housing is given a high priority in the plan. Eastham said that with regard to the housing objectives outlined in pages 46 & 47, he would ask that the Commission revise the wording of the fifth bulleted item such that it reflects that The Housing Fellowship has an approved plan of action for developing affordable housing, but also has discretion in implementing that plan. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 3 of 16 Eastham noted that page 37 outlines activities that are funded by CDBG/HOME funds and Section 8 housing assistance. Eastham stated that most of the activities listed are actually owner-occupied activities, not rental. Eastham said that assistance for renters comes primarily from Section 8. Eastham recommended looking at that section and bringing the activities more in line with the stated goals. Eastham said that the way he sees it, CDBG/HOME funds should be primarily directed at rental housing because that is where the greatest need exists. He said that the plan should clearly reflect the City's intentions for using CDBG funds for rental housing activities. Eastham said that it is not clear to him how the current draft of the Consolidated Plan actually contains an assessment of the specific needs of minority and lower income residents. He said the needs may be described in the plan, but are not assessed. Eastham addressed concerns regarding the survey conducted by the consultants for the Consolidated Plan. He said there is a strong racial bias and a lot of coded language to be found in the comments of the survey-takers, which he paid particularly close attention to. Eastham said that in his view the survey asks how the City should meet low-income housing needs, and survey-takers essentially respond by saying that it should not meet them at all. At the same time, Eastham said, many respondents expressed racial bias. Eastham said that in his view the responses to the question of whether or not to expand the supply of low-income housing incorporates the opinions of people who would deny housing based on race. Eastham said that the Fair Housing Act makes this illegal. Eastham said the responses indicate that there is significant resistance to fair housing in the community, and that the perception of race continues to playa part. Richman said that in his opinion it was important to ask if the consultants got the right results and correctly applied the tools they had available. Drum said he had questions about how much weight the survey was given in assigning priority levels. Hightshoe said that staff had made it clear from the beginning that staff did not want to set the priorities themselves. Hightshoe said that the consultants met with affordable housing providers, non-profit organizations, the police, the Parks and Recreation Department, the Planning Department, economic development groups, the school district, the local Homeless Coordinating Board, and various other groups. Hightshoe said that staff wanted the consultants to formulate a plan and assign priority levels based on all of those contacts and the provider and online surveys. Hightshoe said that at this meeting the priorities will be evaluated and revised based on Commission input. Richman asked Hightshoe to describe tools other than the survey used by the consultants for assessment and prioritization. Hightshoe said the consultants administered a survey to local service providers, gathered input from focus groups, reviewed prior studies and census information. Hightshoe said she did not know how much weight was given to each instrument. Long said the greatest weight was given to hard data such as the Affordable Housing Market Analysis and the census information. Zimmermann Smith asked if the census information was based on the 2000 census. Long replied that it was, but that updated estimates were derived from the data in 2007. Long said his impression of the report is that the Housing section was largely based on the Affordable Housing Study, and the Public Facility and Public Service portions were based more on public/agency input and surveys. Zimmermann Smith asked if the Affordable Housing Study was conducted by the City or the consultant. Long said the study was conducted by the consultant but was a comprehensive, regional study of the surrounding HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 4 of 16 communities as well. Long said in the time since the survey was completed the Johnson County Council of Governments (JCCOG) has facilitated regional discussions on affordable housing issues. McKay asked if the consultants debriefed staff on their thinking processes in creating the plan. Long and Hightshoe said the consultants discussed process during phone calls, but did not give a final debriefing on how each priority level was determined. McKay asked what staff's impression of the plan was, and whether they believed it was something of value to the community that can be worked with over the next five years, or if they felt it had weaknesses that needed to be addressed. Hightshoe said the major weakness she found is that the entire narrative of the document must be read in order to determine the priorities. Hightshoe said she wanted to see a chapter that outlines a strategic plan and summarizes the goals. There were some items that historically have been lower priorities such as street and sidewalk improvements as the City has other revenue sources for those needs. The City has used funds for sidewalk improvements in low-income neighborhoods. Under our housing rehab. program, low income homeowners can use CDBG or HOME funds to make sidewalk improvements on their lot. Typically, Hightshoe said, those items would not be ranked as high priorities, and she believes that the high ranking given to them stemmed from the online survey. Hightshoe said that the Commission would need to discuss whether or not they wished to keep them as a high priority. Hightshoe said she felt the priorities given in housing and public service were pretty accurate and were consistent with past plans and current input. Gatlin said that there were some Public Facilities items that he believed the Commission may want to look at again; he said he believed that fire stations and equipment should be moved from a low priority to a moderate priority. Hightshoe explained that funding for the general operation of government is not an eligible activity. Gatlin asked if street improvement would not then also be ineligible. Hightshoe said that if the street can be documented to be in an area of low to moderate income it could be eligible for funding. Hightshoe said that HCDC had done targeted sidewalk repairs in the past. Chappell said that that seems like a good way to address the issue because typically sidewalk repairs are born by the resident. Hightshoe said that a chapter addressing the priorities in summary would be helpful for Commissioners when making allocations. Gatlin asked if the Commission ultimately had the discretion to weigh issues on factors other than their priority level, or if the priority levels would wind up binding Commissioners to certain projects. Long said the 5-year plan is merely a guide. He said that every year it can be refitted and have changes made to it if necessary. McMurray asked if the applications would actually change as a result of changed priorities in the plan. Because the same providers tend to apply year after year, McMurray wondered what impact the changes would actually have. Hightshoe said that the plan will definitely send a message to the community. She said that if it so chooses, the Commission has the discretion to target their funding to a few larger capital campaigns rather than the smaller multiple projects (such as air conditioning and carpet replacement) it has funded in recent years. Richman said that one of the challenges for the Commission historically is that the CITY STEPS plan provided very little guidance as it listed everything as a high priority. Richman said that in some ways this is a real opportunity to identify what the real, high priority needs are. However, he said, the Commission must recognize that the allocation process will also be driven by those priorities. If the Commission says that housing is a high priority need and everything else is low, Richman said, then when it is time to allocate funding the Commission could not in good conscience fail to well fund housing. Richman said it is important to get the priorities right. In doing so, Richman said, it is important for Commissioners to consider which assessment and HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 5 of 16 information gathering tools that led to the conclusions in the report are more valuable and which are less valuable. Zimmermann Smith said that part of her problem is that it is difficult to tell which conclusion is based on which data. She said that it is just as valid to say that some of the focus groups were biased in some ways as it is to say that the survey was biased. Zimmermann Smith said that the consultants do not provide any narrative explaining how they arrived at the priorities they did. Chappell said he really questions how useful the document will be for the City Council unless they have a really good shorthand summary from staff or the Commission. Drum said that the Commission could ask the consultants to provide an executive summary; however, Drum said, if the Commission is at odds with the priorities in the plan, perhaps it should be something the Commission and/or staff do themselves. Hightshoe pointed out that the consultants had been paid for that service and that it is not unusual for a summary to be included in a plan. Zimmermann Smith asked if there was a way for the Commission to determine how the consultants came to their conclusions. Hightshoe said she did not think there would be a scale stating what percentage each information source was rated. Zimmermann Smith said she was not looking for that, but that a narrative of how they arrived at the priorities would be helpful. Long said he too thought that would be helpful, acknowledging that the process was probably not a very scientific one. Zimmermann Smith said there was a global picture that was not being presented; there was a lack of reflection on what was learned. Richman said that it was his understanding that the Commission must make a recommendation to the City Council by the end of the meeting that outlines their priorities. He said this means that the Commission must state that they are prepared to accept the recommendations of the consultant, or identify exactly where the priorities must be changed. Richman said that the methodology of the consultant was a bit academic at this point because at the end of the night the Commission has to make a recommendation. Chappell asked if this was because the Commission was at the tail-end of the public comment period. Long said that this was a factor, as is the fact that there will be applicants for funding starting December 15th. Gatlin asked if anyone had a major issue with the priorities as outlined by the consultants. He said that he personally felt like the Public Facilities improvements that would normally be funded from the general fund should be given a low priority. He said another option was grouping all of Public Facilities as a low priority. Hightshoe pointed out that Public Facilities includes non- governmental agencies such as youth centers, crisis centers, free medical centers; not all Public Facilities categories are government run. Richman said he agreed that a large list of essential city services included in the report are probably not appropriate to fund with CDSG funds. Hightshoe noted that the Commission would be receiving a windfall lump sum of $2.9 million in a year, and that it might be wise not to limit the ways in which low-income areas could be protected with those funds. Long said keeping flood-related activities as high priority may be wise. Chappell said that the idea would be to use the money for flood mitigation in low-income areas. Long said that was just planning ahead; ultimately, the City Council can use the money for whatever it wants. Chappell asked staff to walk through the summary table in the report. He said that he assumes that some of the information will be filled in at a later date as there are gaps. Hightshoe said that the Department of Housing and Urban Development (HUD) puts the table in the report, but that the consultants said that they do not complete the table because it is almost impossible to gather the necessary information. Chappell asked if it was the case that the numbers were intended to cover the number of projects, but were not relative to the value or cost of the projects. Richman said that to his mind it was fairly useless information. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 6 of 16 Chappell noted that the Housing Needs Table lists all needs as high or medium priorities; there are no low priorities in that section. Chappell asked from which pot of money activities in this area would be funded. Long replied that there would be money from both HOME and CDBG going to Housing Needs. Long said that HOME money has to be used for housing. Chappell asked if HOME was where the money from rental assistance came from. Hightshoe explained that the Iowa City Housing Authority receives its own funding, although HCDC does provide some additional assistance. Hightshoe said that essentially all rental activities were given high priority by the consultants, and all homeownership activities were given medium priority. Chappell said that given the priority levels assigned by the consultants, it is pretty evident that the biased comments of the survey that Eastham was concerned about were roundly ignored by the consultants. Hightshoe said she was not sure that the comments were ignored, but that the consultants probably took into account that new construction owner-occupied funding was coming from alternative sources, such as the UniverCity project and Single Family New Construction Program. Hightshoe said that in the first two years of this five year plan the City will be doing more new construction owner-occupied housing than it did in the previous five years. Long said that the report does contain narrative explaining that the needs for CDBG/HOME funded owner-occupied assistance are less than in the past due to ongoing, alternatively funded projects. Chappell said that his point was that the vitriol of the survey had not swayed the consultants away from setting rental projects as a high priority. The Commission discussed Eastham's requested language changes concerning The Housing Fellowship and its goals. Hightshoe noted that the information in that section was taken from a 2008 housing study and is somewhat outdated as several projects discussed in the table are already completed. Zimmermann Smith asked what the category "all other households" consisted of. Zimmermann Smith stated that it seemed to her that if there was going to be a priority list then something had to be of low priority, unless there was an endless supply of money. She asked for clarification on the categories, and Hightshoe said she would look through the narrative to determine exactly what that category meant. Zimmermann Smith said that if it consisted solely of students, then the priority level given to it might be different than it would be if it also included those recovering from substance abuse or chronic mental illness. Hart asked if those factors were not already taken into account when the recommendations were developed. Hightshoe said it was part of the housing analysis that had been done. She said that the consultants had factored students as persons under 24 years of age without a dependent child. Hart said her question was whether those adjusted numbers were already factored into the housing needs. Long said he assumed so. Richman said he was having trouble understanding some of the statistics. He said that the report stated that 34.3% of "elderly renter" households have a housing problem; this is identified as a high priority. Later in the report, 84% of "owner-occupied, small related" households are identified as having a housing problem. Drum noted that "large related" had 100% identified as having a housing problem. Richman said that it did not make sense to him intuitively that those would be identified as "medium" priorities, and the "elderly renter" would be "high." Long agreed. Richman said it felt as though the priorities were assigned across the board without actually looking at individual categories. Long said that it was possible that the reasoning was that owner-occupied problems could be taken care of through housing rehabilitation programs. Zimmermann Smith asked if it was the case that all owner-occupied were of lower priority because there are alternative funding sources. Hightshoe said that for the purposes of this section elderly households are one or two person households where either person is age 62 or older. Small households are 2-4 persons. Large households have 5 or more persons. "All other households" are those that do not belong to one of the three previous categories including student households with non-related individuals. Long said that one of the goals is to have HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 7 of 16 people age in place, staying in their homes as they age. He noted that Housing Rehabilitation does have a category to help with this population, so funding it through CDBG/HOME may not be critical. Drum said that by the standards with which other categories were measured, then the alternative funding source should set that priority as low. Richman said that he feels like the Commission is in the difficult position of accepting the consultants recommendations of prioritizing all rental housing as high and all owner-occupied housing as less high, or going through and making recommendations on much smaller categories based on data that no one seems to have a very good understanding of. Hightshoe said that the narrative statements of the consultants do a better job of clarifying and limiting than the tables do. Gatlin asked how much the goals of the Commission would be changed when it came time to allocate funding if the Commission accepted the priorities as outlined by the consultants. He said that if the Commission must still go through on a case by case basis to determine the projects necessary and worthy of funding, then the priorities outlined in the plan need not be binding. Gatlin said that sitting and arguing the priorities may not be entirely useful. Drum said that when it comes to that time in the funding process, predetermined and agreed upon priorities will actually be useful. Richman added that there can be some justifiable criticism when projects marked as "low" priorities are funded at a higher level than those marked as "high." Hightshoe noted that page 37 in the Housing section does a good job of outlining priorities. Hightshoe said that the HUD mandated table does not allow for tweaking and subdivisions. Long pointed out that this is where a summary would be helpful. He said that a summary should be ten pages or less for simplicity's sake. McKay said that it seemed to him that if the Commission's viewpoint on the tables is that they are not of much value, then that should be noted in the summary. He said there should be some acknowledgement that it is an imperfect system and that the Commission is doing the best it can with the general priorities it has. He said that the Commission should not open itself up to later being nit-picked over data that they do not believe in. Hightshoe said that as long as the projects that are funded can be justified in the Commission's end of the year report, then it is fine. Hightshoe added that she would like to see the phrase "aging in place" added to the priorities concerning funding elderly housing needs. Zimmermann Smith said she would like to see owner-occupied elderly issues moved from moderate to high priority status. Richman asked what the Commission thought about taking an approach wherein housing needs for a category of 75% or more were considered high priority, 50% to 74% were considered moderate, and below 50% was considered low priority. He noted that this would change elderly renter to low priority; small related renter would be high; large related-renter would be high, all other renter would be high; and elderly owner-occupied to moderate. Chappell said that one concern with that is that the priorities would no longer match those described in the narrative. Chappell noted that discussions seemed to indicate that the Commission had been putting more stock in the narrative than in the numbers. Hart asked if Commissioners were pretty much in agreement with the narrative as a reasonable account of things. Zimmermann Smith said she was not entirely convinced that the priorities set in the narrative were accurate, and she was unsure if the City Councilor the Commission should be wed to them as they did not know how they were arrived at. Hart asked if it was reasonable to say that the majority of the Commission felt that the bulk of guidelines and priorities should come from the narrative in the report. She said that it might not be reasonable to ignore the findings simply because there was no explanation in the report about the methodology for coming up with them. Hart said this was the first time the 5-year plan realistically addressed renters and prioritized them ahead of owner- occupied housing. Hart said that the Commission had discussed an interest in increasing HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 8 of 16 support on the affordable rental housing front during the last funding cycle. Long noted that the table in the report is based on 2000 census data and the narrative is based on more current information. He said it was necessary to merge the two to get an accurate portrait of the situation, since it will be another three years before the next census information comes out. Chappell said he agreed with McKay's sentiments regarding the Housing Needs Table, although he was unsure how the Commission could convey that message. Chappell said that because all of the needs were considered high or medium priorities, the Commission should have the flexibility to adjust to applications when they are received. Chappell said that the benefit of the findings is that they allow for a fair amount of wiggle room. He said he was not entirely comfortable adjusting the findings without having more information, although he did agree with the idea of adjusting the elderly owner-occupied category to high priority. Chappell said he was not sure what benefit could be derived from tinkering with the priorities in that section since they were all considered moderate to high priority. Drum said he agreed with the adjustment to the elderly category. Richman asked if the narrative addressed all income levels with respect to elderly housing. Hightshoe said that the report took into account that CDBG/HOME funds could only be used for low-income populations. Richman said that it sounded like the proposal on the table was to accept the recommendations as drafted in the report; the exception being that the two categories for elderly owner-occupied housing at less than 50% would be changed from medium to high priority. The Commissioners indicated their agreement to that proposal. Hart said she was questioning the priority level assigned to homeownership at the 0-30% income level. Hightshoe and Long said that at that income level homeownership would not be encouraged as it would be difficult to obtain a mortgage and afford necessary rehabilitation of the homes. Long noted that if someone is already in place at that income level the desire would be to maintain them in the home. Richman directed discussions to the Public Services and Public Facilities sections of the document, saying that he was open to suggestions for how best to deal with these. Long noted that in the last plan, health facilities were prioritized as low but the Commission still funded the Free Medical Clinic. Hightshoe said that Public Services is probably the most competitive funding category that the Commission has, because the amount of money available is relatively low. Because of this, Hightshoe said, it may be helpful to look closely at the priority levels assigned. Zimmermann Smith asked for clarification on funding fair housing activities, and Gatlin asked if it could include grants to Legal Services, who helps tenants with fair housing issues. Long said that the funding would have to specifically target fair housing activities and could not be used for any other type of legal service. McMurray asked about the high priority level given to crime awareness. Hightshoe said that a police officer's salary could be funded under crime awareness. Long said that crime prevention and awareness activities could be funded under this category, such as neighborhood groups, security lighting, etc. Hart asked about the priority level given to elderly/handicap services and Long noted that there had been drastic cuts in funding for these services at the state level. Richman said that he had heard repeatedly in the public forums held by the consultants about the need for transportation services; however, that was given a low priority ranking. Hart noted that the report considered only transportation assistance and not transportation in general. Hightshoe said that this would include activities such as the "Wheels to Work" program Goodwill used to run. Long noted that that program had been discontinued due to a change in Internal Revenue Service (IRS) codes. Chappell noted that cars could still be donated, but that now only the fair market value of the car is deductible. McMurray suggested moving the priority level for domestic abuse from low to medium. Several Commissioners agreed, and Gatlin pointed out that the priority level for abused and neglected children should probably also be raised to medium. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 9 of 16 Richman suggested giving Commissioners five minutes to go through the categories on their own to determine which ones they believe needed to be changed. Hightshoe noted that there are essentially 20 categories, and that a past complaint has been that too many of them are marked as high priority. She suggested each Commissioner come up with their top three priorities. The Commissioners then reviewed the categories silently for five minutes. McKay asked how the number of categories is determined. The actual category definition is provided by HUD under their Consolidated Planning tool. Douglas asked what the category "general public facilities" consisted of and Long replied that it was a catch all for things that did not fit into the other categories. Zimmermann Smith asked what code enforcement activities would be and Long explained that it concerns building and housing inspection. Gatlin said that he did not believe the streets and sidewalk improvements should be listed as high priorities. He said as applications are reviewed, a particular sidewalk could be funded, but that in general the category should not be high priority. Douglas asked if this was because these projects could be funded from other sources and Gatlin said it was. Richman agreed. Chappell said he agreed with respect to streets but that because sidewalk rehabilitation is the responsibility of the homeowner he felt it should remain a high priority. McMurray noted that fixing sidewalks was not optional as the City would fix it itself if the repairs are not made. Chappell countered that the bill would still have to be paid by the homeowner. Zimmermann Smith noted that timely sidewalk repair kept sidewalks accessible to the elderly and disabled. The Commission reached general agreement to put streets as a low priority and sidewalks at a medium priority level. Chappell asked about the medium priority level assigned to the handicap centers category. Long said this was probably due to non-profit assistance that was available for the physical construction of handicap centers. Chappell asked if there was an overabundance of facilities for abused and neglected children that would explain the priority level assigned to that category. Zimmermann Smith said the only one in Johnson County is Four Oaks. Richman noted that Four Oaks had just used CDBG money to complete an addition to their facility. Hart noted that most abused and neglected children would actually be in foster homes not facilities. Richman asked if medium would be an acceptable rating for that category, and the Commission indicated agreement. McKay said that category 3F probably was assigned its priority level based on survey results, but that he did not think it should rank above other more fundamental needs. McMurray said she believed that having a nice park or recreation facility in low-income neighborhoods can make a big difference. McMurray noted that the Wetherby Splash Pad has made a huge improvement to the Grant Wood neighborhood. Chappell said that on the meta-level he did not see this category as a high priority but that he did not mind keeping it designated as high because some of those areas are arguably underserved with recreational facilities. Long noted that CDBG funds were used to buy land for a park in the Miller-Orchard neighborhood, which had been underserved. McKay said his question was one of how much more is there to do on this front. McMurray said these facilities constantly need to be updated for safety and maintenance reasons. She joked that her graduate degree in recreation could be biasing her viewpoint on the matter. Douglas said that in comparison to the last 5-year plan, which rated all priorities as high, this plan will offer both flexibility and guidance. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 10 of 16 Hightshoe directed Commissioners to the homeless facilities category. The report indicates that there is no such need because a new general use shelter is being constructed. She noted that this category also includes domestic violence facilities and facilities for youth transitioning out of foster care, so it may be wise to list it as some sort of a priority. Richman asked if the Domestic Violence Intervention Program (DVIP) would not follow under the category for abused and neglected children. Long replied that technically DVIP was a homeless facility. Hightshoe said that if the category remained listed as "no such need" then it would be difficult to fund an otherwise valid application from an agency like DVIP. Gatlin said that he thought it should be given some sort of priority level. Douglas said that given that a new homeless shelter has just been funded, the sentiment would probably run against putting this category as high priority. Chappell agreed, saying that the large amount of money given to fund Shelter House would be a factor. Hart said she would rate this category as a medium priority. Zimmermann Smith said that if domestic violence victims were included in this category, then saying that there is "no need" in this area is clearly inaccurate. A consensus was reached to rate this category as medium. The Commission moved their discussions to the Public Services categories. Gatlin said he would like to move the category for battered and abused spouses up to a medium priority level. Richman said he did not believe there had been an application for this category in the time that he has been on the Commission. Chappell asked what such an application would look like. Hightshoe said that an example would be an application for coordination services, job training, or staffing a crisis line. Gatlin said that if there was an opportunity to fund something like that he would want to at least be able to make a case for it. Drum pointed out that DVIP has been funded in the past. Richman noted that public facilities for DVIP have been funded, not personnel costs. Chappell noted that United Action for Youth (UA Y) is a pretty active organization, and youth services are listed as a high priority; he asked if they were heavily funded by the Commission. Hightshoe replied that UA Y is partially funded by the Commission. Richman noted a category for security deposits and asked staff if this was the program that had been run through Shelter House a few years prior. Hightshoe said that it was. Richman said he would like to see this changed from "none" to low priority. Douglas said he would like to see crime awareness moved from high to medium priority as he does not think there will be enough funds available to justify this being a high priority. Zimmermann Smith said she would disagree because the survey results strongly indicate a desire to see this category funded. She noted that the survey also heavily supported code enforcement. Zimmermann Smith said that if rental properties were going to be put as high priorities, then code enforcement of those rentals should be funded. Richman said he had questions as to whether that would be a good use of CDBG funds versus another funding pool. Hightshoe said that code enforcement is a self-generating revenue source. Zimmermann Smith said she would like to see code enforcement listed as a priority because the survey results support it and doing so would give the City Council a case for actions they may want to take in that area. Chappell asked which codes Zimmermann Smith wished to see enforced. Zimmermann Smith said that some cities, the Quad Cities being one example, use CDBG funds to enforce code for Section 8 housing. Zimmermann Smith contended that putting code enforcement as a low priority is not reflective of the public input received. Chappell asked what code enforcement the survey respondents were concerned with: housing code, building code, or another area of code. Zimmermann Smith said that the comments dealt with occupancy requirements and having housing officers, so she presumed the housing and rental codes were what the respondents would like to see better enforced. Chappell said he suspected that the respondents were actually concerned with the Iowa City Housing Authority's (ICHA) enforcement of its own codes and regulations. Zimmermann Smith said that CDBG funds can be used for enforcement of ICHA rules and regulations, and are in other cities. Long pointed out that ICHA already has its own fully funded full-time inspector for HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 11 of 16 compliance issues. Hightshoe reminded Commissioners that a high priority for the community might not necessarily be a high priority for the 5-year plan because there could be community resources other than CDBG/HOME funds to fund that need. Douglas asked if it was explained in the report that what might be a high priority to the public might not be a high priority for CDBG/HOME funds because of other funding sources, and Long replied that that information can be found in the narrative of the report. Hart asked if Zimmermann Smith was talking about using CDBG/HOME funds for rental subsidy and Zimmermann Smith replied that she was talking about code enforcement, and the fact that some communities use CDBG funds to pay for code enforcement. Zimmermann Smith said that the low priority rating does not reflect the public comments. She said she realized the Commission may ultimately decide not to actually put any money toward the category, but that she thought the plan should reflect the public comments on the subject. She recommended moving the priority level to a medium and the Commission reached general consensus to do so. Hart said she would like to discuss 5B, transportation services. Gatlin asked what was included in transportation services. Long said that if an agency wished to pay for bus passes, taxi cabs or SEATS trips to get clients from one place to another they could apply for this funding. McMurray asked if it could be used for parking expenses and Long said that that might be possible. Hart noted that in all of the public comments and forums childcare and transportation were repeatedly cited as community needs, and she wondered if the priority level was not rated as high because there were alternative funding sources. Long noted that CDBG funds could not be used to fund a new bus route. Zimmermann Smith said she felt it should be at least a medium priority and several other Commissioners agreed. Chappell asked if funded legal services had to be limited to housing related issues. He said that he thought the need for legal services would continue to grow in light of state budget cuts and the reduction of other funding streams, though he was generally comfortable with the medium priority. Gatlin asked how often an applicant in this category has sought funding. Long said that Legal Services of Iowa has applied in the past. The general consensus was to keep the priority level at medium. Douglas asked if there was a category that covers nutritional needs. Hightshoe said that the prevention and health services category would encompass nutritional needs. Hightshoe noted that case management and the Free Medical Clinic would also fall into this category. The Commission reached a consensus to set the priority level for this category at medium. Richman said that the CDBG/HOME categories all sort of repeat themselves, and yet they are not scored the same. Hightshoe said that some cities separate their CDBG and HOME funds for the application and allocation process; Iowa City combines both in the same pot. Richman proposed changing the CDBG priorities to match the HOME priorities. There was consensus. Chappell asked what the fair housing activities in 5J concerned. Long said that that particular activity was for a staff salary. Chappell asked if it was a high priority because it was an existing staff person. Long said that was not the case, and that the consultants must have determined there was a need in that category. Chappell asked what activities would fall under that category. Long said a fair housing attorney, a housing counselor, or a marketing campaign could all fall under that category. Chappell and Zimmermann Smith advised shifting that category's priority level from high to medium or low. A consensus was reached to shift the priority level to medium. Hart said that it might be short-sighted to lower the priority level since the plan is looking five years into the future. Long noted that the plan will be reviewed annually. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 12 of 16 McKay asked about 18C, micro-enterprise assistance and its 25 projects listed as high priorities. Hightshoe explained that these are CDBG funds, but they are earmarked by City Council. Long said the resolutions are already adopted. Hightshoe noted that special needs housing categories were all prioritized as low priority, except for public housing residents. Hightshoe explained that the category concerned special needs housing for elderly, frail elderly, severe mentally and developmentally disabled, and other special housing needs. She said that if an application for a housing project for people with chronic mental illness or persons with disabilities came in, it would be ranked as a low priority. In the last CITY STEPS plan, Hightshoe said, all of these categories were ranked as high priorities. Hightshoe said that there is a good supply of elderly housing presently, but that affordability is a factor. Richman said that he would have a difficult time going through this list of very specialized needs and saying what should be a medium or high priority. He said he feels like all of these categories could actually fall into other already existing categories that the Commission has already prioritized. Chappell asked if Richman was proposing leaving the priority levels as they are and then if a project application comes in that the Commission really likes they find the language to support funding it in another related category. Richman said that was correct. Douglas asked if the section would still be in the document and Long noted that it is HUD required and must be included in the 5-year plan. Hightshoe asked if the Commission wanted to keep public housing residents prioritized as high with all of the other categories as low. Chappell asked where the numbers to support that prioritization came from. Long said that it was likely determined from the Section 8 waiting list. Chappell noted that that category could also be seen as a catch all for all of the other specialized housing needs categories. Hightshoe said that if ICHA wants to target Tenant Based Rental Assistance (TBRA) vouchers to victims of domestic abuse, then it must be listed as a high priority in the CITY STEPS plan in the Housing section. The Commission agreed to have the categories necessary to accomplish this included as high priorities in the plan. Hart asked about the priority levels set in the HOME section for rehabilitation of existing rental housing. Hart said that if acquisition was a high priority, then rehabilitation should also be a high priority. Hart asked if the acquisition would be by affordable housing agencies only. Long said the acquisition could be done by any developer that targets the appropriate income levels, such as The Housing Fellowship, Builders of Hope, etc. Hart said that she believed the rehabilitation of existing rental units should be a high priority. Douglas said that it would be a cheaper way to go. Hart said that it could also help smaller landlords hang onto properties. Gatlin said he had no problem moving that to high priority. He asked Hart if she felt that acquisitions should be moved to a lower priority. Hart said that if it was the non-profit entities discussed that were doing the acquisition, then it should remain a high priority; her concern had been about the increased concentration of private ownership. The Commission reached consensus on raising the priority level to high for rehabilitation of existing rental housing. Richman said that the last item to discuss was the page entitled "Planned Allocations for 2011- 2015." Richman said that including this page in the strategic plan was optional. The issue, he said, is whether the Commission wanted to go through and set percentage goals targeting funds for specific activities. Chappell said that he would rather not use the percentage goals given the reticence the Commission feels about the usefulness of some of the HUD forms and the uncertainty with some of the consultants' data. Hightshoe said that the funding categories serve as a better guide than the HUD tables. Gatlin said that if this page was included there would have to be strong narrative explaining that the Commission cannot be boxed in by those percentages. Richman said he personally is inclined to leave it out. He acknowledged the form HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 13 of 16 may make things easier for reporting progress to HUD, but said that it sort of hamstrings the Commission in unforeseeable ways. Long said some of the percentages are pre-set by statute. Richman said the big issue is how much of the CDBG funds get used for Housing versus how much get used for Public Facilities, and he personally is not comfortable making that statement at this point. Hart said she did not mind leaving the page in the document with an accompanying narrative. She said that she personally finds it helpful to see the numbers. Hightshoe said it would change the application process to leave the page out because there will not be any guidance to the Public Facilities applicants on how much money is available for their projects. Hightshoe said that could make Public Facilities applicants believe they can apply for up to $1 million, when that will not in fact be available to them because it includes the Housing money. Richman noted that those providers cannot apply for HOME funds. Hightshoe said that if the categories are not broken down then it will be difficult for the Public Facilities applicants to understand how much money is available. Richman said he is not opposed to the concept of including the page, but that he has no idea how to come up with the percentages, and that indicates to him that it probably does not make sense to do so. Zimmermann Smith said that even if the page was not included, the past could be used as a guide to allocation percentages; she said it is unlikely that the percentages would vary that greatly from previous years. Hightshoe said that typically an information guide is included with applicant materials that states the amounts of money available for each category. Richman suggested simply saying a maximum of "$X" is available for "Y." Zimmermann Smith said that the past couple years of allocations could also be included to help guide applicants. Hart asked if the page could not simply be included with a disclaimer that it is only an estimate. Chappell suggested that giving applicants information on the maximum amounts available and the past funding cycles would be more useful than an arbitrarily set percentage. Hightshoe stated she preferred that past funding amounts not be included as the City should be guided by the current 2011-2015 plan, not what funding patterns were in prior years under previous plans. The Commission reached consensus to leave the percentages out of the plan. Gatlin motioned to recommend approval of the 2011-2015 CITY STEPS plan to City Council with the approved changes, modifications, and edits as noted by the Commission and staff. Drum seconded. The motion carried 9-0. NEW BUSINESS: DISCUSS AND REVIEW FY11 CDBG/HOME FUNDING PROCESS TIMELlNE: Commissioners agreed that the timeline was appropriate. REVIEW AND APPROVE FY11 CDBG/HOME APPLICATION MATERIALS: Hightshoe said that she would change the priority guide in the application packets, and would update the dollar amounts. She said that the application deadline was being bumped from January 21 5t to January 26th. Chappell moved to approve the application materials as amended. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 14 of 16 Zimmermann Smith seconded. A vote was taken and the motion carried 9-0. Douglas noted that in the past there had been comments that the HCDC ranking forms need to be changed. Douglas said some points on the form do not seem to accurately reflect what the Commission is getting from the applicants. He asked if that was something that should be looked at or talked about. Hightshoe said she would include the information as to whether applicants attended the application workshop, and would assign priority levels. Richman said that it would be helpful to have the binary answers readily available so that nine different people are not going through and looking them up. Douglas asked if the Commission could look at the ranking forms ahead of time and Hightshoe said they are in the Commissioner packets with the applicant materials. Long said that unfortunately the ranking forms are a part of the application packet which had just been approved so substantive changes could not be made. He asked Commissioners to let them know if there were concerns or changes they would like made for next year's funding cycle. MONITORING REPORTS: DVIP - Facility Rehab. (Drum): The air conditioners have been purchased. Arc of Southeast Iowa - Facility Rehab. (Drum): The carpet has been installed. The Housing Fellowship - CHDO Operating Expenses (Drum): These funds are paying for a financial manager. Rental Housing: They had an offer with contingencies accepted on a lot on Muscatine Street across on which they hope to build six units. They have made an offer on a lot in North Liberty where they hope to build seven duplexes. FYOB Blooming Garden - Downpayment Assistance (Chappell: Hightshoe said that they will be sending in a letter soon with a final decision as to whether or not they will be accepting the awarded CDBG funds or applying for a different program. FYOB Wetherby Splash Pad (Chappell): Concrete was being poured on November 30th with the hopes of finishing that week. The rest of the equipment is to be installed and tested in the spring. $30,000 in CDBG funds were used for this project. Hightshoe asked Commissioners if they preferred to meet twice in December or hold off until January (as this meeting was actually the meeting originally scheduled for November). The consensus was to wait until the January meeting. Hart said she assumed that the October 22nd minutes had been approved at the beginning of the meeting, but that she wondered if there was a process by which they could still be amended. Hart said there were statements attributed to her in the minutes that she had not said and she would like them corrected. Long asked if Hart could send the corrections to staff and they could look into re-opening the minutes. Hart said she could send Staff the corrections. She said the comments were mistaken and needed to be corrected. Richman said that a motion could be made to reconsider the minutes at the next meeting. Hightshoe said the motion would have to be made now so that staff could make the corrections prior to the next meeting. Chappell asked if Hart was talking about the minutes that had been approved at the beginning of the meeting. Hart said she was, and that she would have brought it up at the time but she was unable to get to the meeting until later due to a rehearsal. Drum motioned to reconsider approval of the minutes. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DECEMBER 3, 2009 PAGE 15 of 16 McMurray seconded. Long asked if the Commission wished to see Hart's changes. Hart said she had not written them out. She said that the voucher program had been discussed and the concern that Johnson County might be paying for Chicago to get rid of its public housing population. Hart said the minutes have her saying something about the gentrification of properties in Chicago and criminal elements making them unlivable. Chappel asked if the minutes could be considered along with the December 3rd minutes in January; Long said that was fine. A vote was taken and the motion carried 9-0. Zimmermann Smith motioned that Hart e-mail the corrected minutes to staff or the minute-taker, have the changes incorporated into the minutes, and have the minutes approved with those changes. The 10-22-09 minutes are approved with Hart's corrections. Drum seconded. A vote was taken and the motion carried 9-0. ADJOURNMENT: Gatlin motioned to adjourn. Chappell seconded. The motion carried 9-0. The meeting was adjourned at 9:03 p.m. CITY OF IOWA CITY FYll ALLOCATIONS TIMELINE Dates Subject to Change Dec. 17/ 2009 Dec. 29/ 2009 Jan. 13/ 2010 Jan. 26/ 2010 Feb. 16,2010 Mar. 11, 2010 Mar. 25, 2010 April 2/ 2010 April 15/ 2010 May 3/ 2010 May 4/ 2010 May 4/ 2010 July 1/ 2010 Public notice that CDBG and HOME applications are available CDBG/HOME Applicant Workshop, Emma Harvat Hall, City Hall, 4:00 PM CDBG/HOME Applicant Workshop Emma Harvat Hall, City Hall, 11:00 AM Applications due to City of Iowa City by 12 noon HCDC meeting: question/answer discussion with CDBG/HOME applicants. Iowa City Public Library, Meeting Room A, 6:00 PM HCDC meeting: review of groupings and consensus funding scenario. City Hall, Emma Harvat Hall, 6:30 PM (CDBG/HOME applicants encouraged to attend, but not mandatory) HCDC meeting: recommendation on CDBG/HOME funding awards. City Hall, Emma Harvat Hall, 6:30 PM (CDBG/HOME Applicants encouraged to attend, but not mandatory) Draft FY11 Annual Action Plan done - 30-day comment period begins HCDC meeting: Review FY11 Annual Action Plan and recommendation to City Council Expiration 30-day comment period on the FY11 Annual Action Plan City Council: public hearing on the FY11 Annual Action Plan (If needed, joint HCDC/City Council meeting) City Council Meeting: resolution-approving the FY11 Annual Action Plan Start FY11 projects (If awarded funding, no expenses may be incurred prior to both July 1 AND execution of a CDBG/HOME agreement) 12/16/2009 an - . . I I A practical guide to real estate financing for nonprofit developers .'. \p \ \, \ \ L'I \\1 . LL., ~ I ROBERT R. REAM LYNN ARLINGTON PHARE Commissioned by a consortium of New York banks 2nd EDITION [:f'..j.' .r LlL~~~ L~ Ii i ~ .~ Rules of Thumb for Estimating Development Soft Costs (Note: Soft costs vary according to the size, type and location of the de- velopment project. Most of the guidelines presented below are based on formulas currently used by the New York City Division of Housing Preservation and Development (HPD) and the Community Preservation Corporation (CPC). These rules of thumb reflect current (1996) cost es- timates which are subject to change. Whenever possible, obtain information about actual costs for your project. Architect and Engineering: The fee charged by the architect for pre- paring drawings and monitoring the project during construction. Usu- ally 4% to 10% of the construction cost, not including the contingency allowance. Government funders frequently set a maximum allowable percentage. The architects fee includes the cost of hiring engineers needed for structural and major system design. Environmental Survey: Survey of building and lot for toxic sub- stances including asbestos. Varies from about $1,700 to $2,500 per building or site. Appraisal: A determination of the value of the existing property and the value of the property after completion of construction. The ap- praised value determines the maximum loan amount based on the loan to value formula used by the lender. Varies with the size and complex- ity of the project. Cost will be higher for mixed-use and scattered site projects. Allow at least $2,500 to $5,000. Consultant Fees: Varies with the size and complexity of the project and the extent of consultant services to be provided. Allowable con- sultant fees are usually limited by government funders. . -.r ~ ',. ,ol- Survey: Determines the boundaries and exact location of the lot and is required in order to obtain title insurance. Fee varies, allow $1,500 per building or lot. Tax Exemption Program Filing Fee: A fee paid to a government agency for processing an application for real estate tax exemption and/or abatement. Varies with the program. Title Insurance: Insurance that protects the owner .and lender from possible future losses caused by defects in the title. Estimated cost is .007 x the amount of the mortgage or the total development cost. Mortgage Recording Tax: A State tax charged when a mortgage is re- corded in a book of public records. Calculate as 2.75% of the mort- gage recorded. Calculate as 2.5% of mortgages over $500,000 and 2% of mortgages under $500,000. This fee can be waived for certain types of nonprofit development corporations. 61 Developer Legal Lawyer's fees for reviewing and preparing docu- ments and managing the legal aspects of the closing. Varies with the complexity of the project. Allow from $10,000 to $25,000. Develop- ers of projects with multiple sources of government and private financ- ing may incur higher legal fees. Developer Fee: Varies. Usually calculated at 3 % to 10% of the total project cost or as a flat fee based on the number of units. Certain gov- ernment programs allow developer fees of up to 15% of the total devel- opment cost. The fee is intended to compensate the developer for project-related administrative costs, salaries, office rent, transporta- tion, etc. Government funders may limit or disallow this fee. Construction Period Real Estate Taxes: Real estate taxes on the land and the building under construction. Calculate by using the present as- sessed value x tax rate x length of the construction period. Real estate taxes will be higher if the project is re-assessed during construction and is not exempt from tax increases. Construction Period Water and Sewer: Charges for water and sewer service during construction. Calculated by assessment x length of the construction period or as it flat fee for limited usage during construction. Construction Period Insurance: Cost of fire and liability insurance during construction. Insurance is in addition to insurance carried by the general contractor. Use actual quote from your insurer or estimate at $5 to $8 per $1,000 of replacement value. Permanent Lender Fee: A fee charged by the lender for underwriting and processing the loan. Usually.l % to 2% of the loan. Permanent Lender Legal: Legal expenses incurred by the lender in connection with making the loan. Paid by the developer. Estimate at $10,000 to $30,000 depending on the size and complexity of the project. Construction Lender Fee: A fee charged by the lender for underwrit- ing and processing the loan. Usually 1 % to 2% of the loan. Construction Lender Legal: Legal expenses incurred by the lender in connection with making the Ipan. Paid by the developer. Estimate at $10,000 to $30,000 depending on the size and complexity of the project. Bank Engineer: Usually a consultant selected by the lender to inspect the construction work and approve the release of funds to the general con- tractor. Fee includes the initial review of construction drawings ($2,500 to $5,000) plus a charge for each inspection of the building and review of the contractor's requisitions for payment. Allow $500 to $750 for each inspec- tion and assume one inspection per month during construction. Construction Loan Interest: Interest paid monthly on the portion of the loan that has been advanced to the borrower. Usually estimated at , ,..~i ;\ It 62 50% to 60% of the construction loan x the interest rate x the length of the construction period. Marketing and Leasing: Costs incurred during leasing of apartments and commercial space or the sale of residential units can vary enormously-esti- mates should be given careful consideration. For low and moderate income residential rental projects, HPD allows $9,000 plus $300 per unit. _I,.,","1111! \ '. i ; ') I Soft Cost Contingency: This is .an allowance for unforeseen costs and overruns. Allow a lump sum of'$1 0,000 to $25,000 depending on the size of the project, or use 5% to 10% of the soft costs. Income and Expenses The Schedule of Pro Forma Income and Expenses is used for income producing property only and is frequently referred to as the pro forma. The pro forma presents the expected results of the first year of opera- tion of the project after it has been completed and leased. The pro forma is simply a detailed presentation of the. following formula: Gross Rents - Vacancy Allowance - Expenses = Net Operating Income. Each -1': ~ of the components of this formula is discussed below. (In the case of a sales project, the comparable schedule would show projected gross in- come from the sale of the units less the expenses incurred in selling the units such as legal costs, brokerage fees, advertising and transfer taxes. The schedule should include a breakdown of the projected per unit sales price for each unit or type of unit. For a sales project, the schedule is a detailed presentation of the following formula: Gross Sales Pro- ceeds - Sales Expenses = Net Sales Proceeds. The developer's profit equals Net Sales Proceeds less the total development cost shown in the Sources and Uses schedule.) Iii ~II ill' III jilll :1' II: , I l ;~ ~ ,. t! (I 1:11 ~ -'I ',I' I! 'I Gross Rents: This item includes all sources of income including resi- dential rents broken out by unit type, number of units; commercial units with square footage and rent per square foot, and any other in- come such as coin operated laundry, parking, and other charges. The total gross rent is the projected total income from the project if all units are occupied for the full year and aU rents are collected. Vacancy and Loss Allowance: Gross rents are reduced by this allow- ance for vacancies and uncollected rents. The rule of thumb for determin- ing the vacancy and loss allowance is 5% for residential and at least 10% for commercial space. Banks may require higher vacancy and loss allow- ances depending upon the location of a project and market conditions. While the demand for affordable rental housing is usually very strong, de- mand for commercial space can vary greatly and the lender may require a vacancy allowances of 20% or more for commercial space. \.--..,- 63 Expenses: Lists all operating expenses, management fees, and alloca- tions to reserve funds. Remember to include the operating expenses for the superintendent's apartment. (See Rules of Thumb for Estimat- ing Annual Operating Expenses, below.) Net Operating Income: This "bottom line" is referred to as the Net Operating Income (NOl). It is the most important number on the spreadsheet because it will be used by the lender to determine the amount of debt that your project can support. (Determining the maxi- mum loan amount using the NOl is discussed in Chapter 3.) Rules of Thumb for Estimating Annual Operating Expenses (Note: Operating costs vary greatly depending upon the age, size and location of the building. The guidelines presented below are based on formulas used by the New Yark City Division of Housing Preservation and Development (HPD) and the Conununity Preservation Corporation (CPe). For cost estimates based on the number ofrooms, calculate the room count by using two rooms for studios, three rooms for one bed- room units, four rooms for two bedroom units and five rooms for three bedroom units.) Real Estate Taxes: Varies with the type of tax exemption program. Most projects in low and moderate income areas will be eligible for tax exemption. For projects without tax exemption benefits, annual taxes equal the estimate~ assessed value of the completed project x the applicable tax rate. ".- Insurance: Includes fire and liability insurance. Estimate insurance costs at $2.50 per $1,000 of coverage for fire insurance plus $250 per unit for liability insurance. If possible, obtain an estimate from your in- surance agent. Payroll: Varies with the size of the building, location and the services to be provided. This cost is usually estimated on a case by case basis. HPD uses the following general guidelines: Superintendent Porter . . . . $25,000 $12,000 Superintendents of larger buildings (20+ units) are usually also given a free apartment. A porter is usually required for buildings with more than 35 units. Elevator Maintenance: Includes the cost of the elevator maintenance contract and an allowance for repairs. Estimate at $4,000 per elevator. 64 il" ','rf . II! . i.......1 \ :' , 'Ii I ~. ! :i! ! Exhibit 3: Pro Forma Income and Expenses DATE NAME OF PROJECT SCHEDULE 2 : Pro Forma INCOME AND EXPENSES RESIDENTIAL INCOME Unit Type Rent/Mo. Units G ross/Y r One Bedroom $650 6 $46,800 Two Bedroom $750 6 $54,000 Three Bedroom $850 -A $40.800 TOTALS 16 $141,600 COMMERCIAL INCOME Gross Rentable SF 1,200 Rent per SF/Year $17.50 TOTAL COMMERCIAL INCOME $21,000 -.f' -.~ : I GROSS ANNUAL INCOME $162,600 Ii .II I (less) Residential Vacancy 5.00% ($7,080) (less) Commercial Vacancy 10.00% ( 2, I 00) !'jl. ,;. :, $153,420 ., EFFECTIVE GROSS INCOME I. .' !! EXPENSES Real Estate Taxes $0 Insurance 7,348 Payroll 18,000 Elevator Maintenance 4,000 Water and Sewer 7,750 Heating 10,850 Utilities 2,790 Clean i n g/Ex term i n at i ng/S upp lies 2,604 Repairs and Replacements 3,680 Painting 2,480 Legal and Accounting 3,200 Management Fee (6%) 9,205 Building Reserve (2% of gross) Mi2. TOTAL EXPENSES AND RESERVES $75.159 NET OPERA TING INCOME $78.261 ''''"--, , 65 .......... Water and Sewer: Based on frontage or metered water use. Use the actual assessment or calculate at $125 per room. Heat: Varies with the age and type of the building and the type of fuel used. HPD estimates at $150 to $175 per room per year. Build- ings heated with gas or the best grade of fuel oil are estimated at $175 per room. Utilities: Apartment gas and electricity is usually individually metered and paid by the tenant. For common area utility expenses (hall- ways,basement, exterior), the City uses $40 per room for walk-up buildings and $45 per room for elevator buildings. Supplies, Cleaning and Exterminating: Charge for contract with ex- terminating service and for cost of supplies used by superintendent and porter. Varies. epc and HPD use $42 per room. Repairs and Replacements: Estimate at $230 to $390 per unit depend- jng upon the extent of the work. Includes the cost of repairing and re- placing appliances. Gut rehabs and new construction projects will have lower repair and replacement expenses, at least during the early years of operation. -.r .~ Painting: Annual allowance for painting apartments and hallways. Es- timate at $40 per room. Legal and Accounting: Covers legal fees for leasing and evictions and accountant's fees. CPC and HPD estimate this cost at $1,600 plus $100 per unit. Management Fee: Use 6% to 8% ofthe net rent (gross income less vacancy allowance). Note that lenders will require a deduction for this expense even if your organization intends to manage the project. Building Reserve: Annual payments into a fund used for future major expenses such as replacing the roof or the boiler. Usually calculated as 2% to 3% of the gross rent. Total rehabilitation and new construction projects should use 2%. Questions To Ask The Lender Before taking the time to prepare and submit a loan application, contact prospective lenders and briefly describe the project and the type and ap- proximate amount of the loan required for your project. Lender guidelines regarding the type and size of loans being made are subject to change. The fact that six months ago XYZ Bank made a construction loan at 1.5% over prime for a mixed-use project in Brooklyn does not assure that they would make the same loan today. The overall availabil- ity of loans, the availability of particular types of loans, and the terms 66 Interest Rate and conditions of those loans are all subject to change. Make sure there is a match between your project and the type of loans currently being made by the lender. If the lender is willing to consider your application, ask for guidelines regarding terms and conditions such as the current rate or range of rates, the commitment fee, bank legal fees, and bank policy regarding equity requirements and guarantees. (You may want to request a letter confirming the lenders interest in the project.) Don't be afraid to ask questions, but don't expect precise answers. Remember that at this stage, information provided about rates, fees, and other terms will be very preliminary and subject to negotiation and change dunng the loan review and underwriting process. If your loan is approved, the lender will issue a commitment letter detailing the terms and conditions of the loan. Until the commitment letter has been signed by both parties, terms and conditions can be negotiated and changed. Listed below are some questions you may want to ask the lender prior to subtftitting an application. (Many of these items are discussed in Chapter 3.) For the type of loan requested, what is the current interest rate or range of rates? For variable rate loans, how is the rate calculated? (Construc- tion loans are usually keyed to the prime interest rate, variable rate mortgages are usually keyed to treasury bill rates.) Loan-to-Value and Debt Service Coverage Fees Ask about the lender's guidelines for these underwriting criteria. (For- mulas for calculating loan-to-value and debt service coverage are presented in Chapter 3.) For the type of loan requested, what is the range of percentage points charged as a commitment fee? (Although commitment fees usually vary with the type of loan and the perceived level of risk, the lender can usually provide an estimate that is within a fairly narrow range.) Does the lender normally charge a lower commitment fee to non-profit bor- rowers. Could payment of the commitment fee be deferred until the loan closing? If not, what is the likely schedule for payment of the fee. 67 e -J. tll I I:' I n ill i - 'r .1 1: " (This is an important consideration in planning for the pre-dosing ex- penses you will incur.) If the loan is approved but does not close, will your organization still be liable for payment of the commitment fee and other bank. expenses? Other Fees and Expenses For the type of loan requested, what is a reasonable estimate of bank. le- gal fees? Would the legal work be done in-house or by outside counsel? (Fees for outside counsel are usually higher.) Ask about the timing of payments for fees and expenses such as the cost of the ap- praisal, surveys, and environmental reports. (The loan officer can be a useful source of information about expenses you will incur and pay prior to the closing.) Equity Requirements and Guarantees What is the lender's policy regarding corporate guarantees by nonprofit organizations? What are the lender's guidelines regarding equity re- quirements by nonprofits? Would grants and loans be accepted as equity contributions? What types of expenses previously incurred in connection with the project would be acceptable as equity? Will the lender require that the equity be spent prior to release of funds by the lender? . ,J. Nature and Timing of the Loan Review Process What are the steps in the loan review process and how much time is re- quired for each step? What types of information or documentation will be required at each step? Loan Application Checklist " j l U lj A suggested list of documents and additional information that should be submitted with the loan proposal is presented below. Some of these items supplement information about your organization, others are pro- ject specific. Prior to submitting your application, contact the loan officer and list for her the items you plan to include in the application. Ask about any additional items you should include, By submitting a complete package to the lender now, you will avoid future delays and frustration. 68 Housing and Community Development Commission Unsuccessful or Delayed Projects Policy Adopted by City Council March 2, 2004 in Resolution 04-68 From time to time there may be Community Development Block Grant (CDBG) and/or HOME Investment Partnership Program (HOME) projects that do not meet the anticipated schedule for implementation as presented to the Housing and Community Development Commission (HCDC). These circumstances may be due to unforeseen events (e.g. unfunded applications for other financing). HCDC recognizes the need to utilize CDBG, HOME and other funding as effectively and efficiently as possible to meet the needs of low-moderate income household for housing, jobs and services within Iowa City. To assist HCDC in evaluating a project's status and ability to proceed the following policy is hereby adopted to begin with Fiscal Year '04 projects beginning July 1, 2003: 1. All CDBG and HOME projects will have entered into a formal agreement with the City of Iowa City for the utilization of federal funds by September 30 each year. Should a recipient fail to meet this threshold, the project will be reviewed by HCDC to evaluate if extenuating circumstances exist. If extenuating circumstances exist and it is anticipated the project will proceed, a new timeline will be established for the completion of the project. If circumstances do not warrant an extension of time, HCDC may recommend the recapture and re-use of the funds to the City Council. 2. All CDBG projects (except applicants for L1HTCs) will have expended a minimum of fifty percent (50%) of the assistance provided for the proposed project by March 15 each year. This provides the recipient with approximately 255 days following the start of the fiscal year to reach this threshold for CDBG projects. All HOME projects will expend their funds on a timely basis per the applicable HOME regulation. Should a recipient fail to meet these thresholds, all unexpended CDBG/HOME funding will be recaptured by the City of Iowa City and recommendations be made by the HCDC for re-use of the funds or HCDC may allow the recipient to retain the funds for the previously approved project. 3. If housing projects are applying for other funds through various state or federal agencies, the recipient must apply for those funds in the first available application period offered. Should a recipient fail to meet this application threshold, all CDBG/HOME funding will be recaptured by the City of Iowa City and recommendations be made by the HCDC for re-use of the funds. 4. Should a recipient be unsuccessful in obtaining the funds listed in the application in the application round immediately following the allocation of local CDBG\HOME funds, and the project will not be able to proceed without the aforementioned funds, all CDBG/HOME funds will be recaptured by the City of Iowa City and recommendations be made by the HCDC for re-use of the funds or HCDC may allow the recipient to retain the funds for the previously approved project. If the project is unsuccessful in obtaining the required funds listed in the application after two consecutive funding rounds following the allocation of local CDBG/HOME funds, the City of Iowa City will recapture all CDBG/HOME funds. December 31, 2009 I ~ 1 -~= -~... ~~ai~~ -.;;:",;:.; l!II;"'~ -- CITY OF IOWA CITY Mr. Jerry Lee Burnes Robert Burns & Associates 319 E. Washington St., Suite 111 P.O. Box 1226 Iowa City, IA 52244 City Attorney's Office 410 East Washington Street Iowa City. Iowa 52240-1826 (319) 356-5030 (319) 356-5008 FAX www.icgov.org In re: 2434/2436/2444/2446 Catskill Court Dear Mr. Burnes: The agreement between the City of Iowa City and Blooming Garden IHA Limited Partnership ("Blooming Garden") for FY08 CDBG funds provides that Blooming Garden must construct at least two and no more than four single family units at 2444, 2446, 2434 and 2436 Catskill Court by October 31,2009. To date, construction has not begun on even one unit. The City of Iowa City will not continue to carry over these CDBG funds into another fiscal year. As a result, Blooming Garden must begin construction on at least one unit by March 1,2010. Begin construction means that at least one unit must pass one documented footing inspection. In other words, obtaining a building permit is not sufficient to satisfy the meaning of begin construction. The unit will need to be inspected by the City Housing and Inspections Division, and it must pass the inspection. If Blooming Garden does not begin construction by March I, 20 I 0, the City will terminate said agreement and reallocate the CDBG funds as part of the FYII allocation process that will occur in the spring 2010. If you have questions about this letter, please contact either Tracy Hightshoe or me Sincerely, ~ Susan Dulek Assist City Attorney Copy to: Tracy Hightshoe