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HomeMy WebLinkAbout01-20-2005 Housing & Community Development Commission AGENDA HOUSING AND COMMUNITY DEVELOPMENT COMMISSION LOBBY CONFERENCE ROOM, CITY HALL THURSDAY, JANUARY 20,2005 6:30 P.M. '-. , 1. Call Meeting to Order 2. Approval of the November 18, 2004 Minutes 3. Public Comment of Items Not on the Agenda 4. Old Business · Unsuccessful or Delayed Projects Policy - Project update of those FY05 projects not in conformance with said policy (Blooming Garden LP and United Action for Youth) 5. Review of the FY06 Allocation Process 6. Proforma Basics 7. Monitoring Reports · Goodwill Industries - Wheels to Work (Sandler) · Free Lunch Program - Facility Rehabilitation (Greazel) · Old Brick - Facility Rehabilitation (Barnes) · DVI P - Security Camera (Sandler) · Free Medical Clinic - Case Management (Greazel) · Shelter House - Outreach Coordinator (Richman) · MECCA, UAY, ESI- Aid to Agencies (Sandler) · Habitat for Humanity - Affordable Home Ownership (Greazel) · Greater Iowa City Housing Fellowship - FY03 Affordable Home Ownership (Barnes) 8. Adjournment ,~ 1 ~~5._~... ~~~~~ ~ ~IIII.' __ ~ 1 CITY OF IOWA CITY MEMORANDUM Date: To: From: January 13, 2005 Housing and Community Development Commission (HCDC) Tracy Hightshoe, Associate Planner January Meeting Packet Re: Welcome back from our brief winter break. CDBG/HOME applications are due January 20, 2004. If time allows, staff will provide you with a list of the FY06 applicants and the amount of funds requested the night of our meeting. The following is a short description of the agenda items. Old Business - Unsuccessful or Delayed Projects Policy Staff requested a representative of Blooming Garden LP and UA Y to be present at our meeting. If unable to attend, they may submit a written narrative providing a project status and updated timeline. As a reminder, the policy requires CDBG and HOME recipients to enter an agreement with the City by September 30. The policy also requires that all projects applying for other funds must do so in the first available application period. Review of the FY06 Allocation Process and Proforma Basics Based on the commission's previous request, 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. Monitoring Reports Our list of monitoring reports is growing long. Please come prepared to discuss your assigned project. I have provided the contact names for each project. Please contact me if you need the phone number or address. · Goodwill Industries - Wheels to Work (Sandler) Contact: Mike Townsend · Free Lunch Program - Facility Rehabilitation (Greazel) Contact: Amy Griffin · Old Brick - Facility Rehabilitation (Barnes) Contact: David Wellendorf · DVIP - Security Camera (Sandler) Contact: Kristie Doser · Free Medical Clinic - Case Management (Greazel) Contact: Sandy Pickup · Shelter House - Outreach Coordinator (Richman) Contact: Kafi Dixon · MECCA, UAY, ESI- Aid to Agencies (Sandler) Contact: MECCA (Ron Berg), UAY (Jim Swaim), ESI (David Purdy) · Habitat for Humanity - Affordable Home Ownership (Greazel) Contact: Mark Patton · Greater Iowa City Housing Fellowship - FY03 Affordable Home Ownership (Barnes) Contact: Maryann Dennis 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 tracv-hiqhtshoe@iowa-citv.orq. MINUTES HOUSING AND COMMUNITY DEVELOPMENT COMMISSION NOVEMBER 18, 2004 LOBBY CONFERENCE ROOM, CITY HALL PRELIMINARY Members Present: Lori Bears, William Greazel, Matthew Hayek, Brian Richman, Jerry Anthony, Jayne Sandler Members Absent: Erin Barnes, Mark Edwards, Rita Marcus Staff Present: Tracy Hightshoe, Steve Long Public Present: Charlotte Walker, Dave Dolan, Sandy Pickup Recommendation to Council MOTION: Greazel moved to recommend the CITY STEPS document, with the changes voted on, correct any typographical/minor errors, and forward to Council as written. Sandler seconded the motion. Motion carries: 6-0. CALL MEETING TO ORDER Chairperson Hayek called the meeting to order at 6:35 APPROVAL OF THE MINUTES FROM OCTOBER 21. 2004 Bears said that there is a mistake on the second page, second paragraph from bottom, instead of Bloomington Garden it should be Blooming Garden. Motion: Anthony moved to approve the October 21, 2004 minutes. Greazel seconded. Motion passed 6-0. PUBLIC COMMENT OF ITEMS NOT ON THE AGENDA Hightshoe handed out a letter from the Chairperson of the Iowa City Charter Review Commission. The letter requests input on such issues as the election of mayor and district representation. Hightshoe stated all City commissions would be provided this letter in an effort to solicit greater public input. The meetings are open to the public. Hightshoe added that the Iowa City Community School District entered a CDBG agreement with the City regarding the Family Resource Center. SCATTERED SITE POLICY UPDATE Hayek said that the scattered site policy task force has been meeting on a biweekly basis for more than six months. He added that they took a lot of information from various groups and City staff. He mentioned that they are at the point of deliberating information. He said that they boiled down the task to four steps. First, he said they have to define concentrated assisted housing. Second, based on the definition they would have to determine if there are any concentrations in Iowa City. Third, if there are concentrations, are the effects good or bad. The last step would be, if the impacts were bad what are some possible solutions that the City should consider. He mentioned that at this point, they are still at step one. Hayek said that they hope to wrap up soon and present some findings to City Council. Sandler asked how would that impact the deliberation for the allocation process. Hayek answered that at best the task force will forward recommendations to the City in late January, and the Council will have to deliberate and decide what they want to do. He mentioned that he doesn't believe that there will be any new policy that will affect the next round. Richman asked if there is no policy in place, can it still be in the application materials. Hayek mentioned that that is an issue that will be discussed under a separate, upcoming agenda item. PUBLIC HEARING FOR THE PROPOSED 2006-2010 CONSOLIDATED PLAN- RECOMMENDATION TO COUNCIL Walker asked what impact the commission has on the writing of CITY STEPS. Hayek answered that every five years a Consolidated Plan is required. (The City calls the Consolidated Plan, CITY STEPS.) He said that most of the commission members are appointed for three-year terms. For many, this is their Housing and Community Development Commission Minutes November 18, 2004 Page 2 first experience with the process. He said the commission reviews the plan, drafted by staff, listens and solicits public input and recommends changes/revisions to Council. Walker said that her first point is that someone has overlooked communicating with senior citizens, who are a target group in CITY STEPS. She said that senior citizens are mentioned all through CITY STEPS, but although 250 invitations went out to the community, their senior group did not hear a thing. She said invitations should be sent directly to various senior organizations. Walker said that one thing that could be handled easily is transportation for senior citizens. She said that in Cedar Rapids, there is a program that provides a weekly grocery trip to senior citizens. She added that as people get older, they get weaker. They just cannot go on the bus and carry groceries by themselves. She said that in Cedar Rapids, there is a weekly bus that takes senior citizens to a grocery store, allows a certain amount of time, and then the bus returns them and helps them to unload their groceries. She added that if Cedar Rapids can do it, why can't Iowa City? She said that she brought up this issue for the past four years to various departments and organizations, but no action has been taken. Walker said that in Iowa City there is a five-dollar charge to order groceries and a five-dollar delivery fee to have a store do the shopping for you. This is very expensive for low-income seniors. She said that the situation is insensitive, and could be easily solved. Walker said that there are older, but ineligible seniors (60 to 62 years old) who do not qualify for subsidized housing because of their age. Some have a hard time surviving. She said that there are several vacancies at elderly subsidized housing complexes. These vacancies could be used to help the persons that need help, but they are ineligible. She also added that people with mental disabilities are not accepted in the housing facility unless they are in a wheelchair. She said that there are many persons that could use the housing, but can't get in even though there are vacancies. Walker mentioned that the City should allow the placement of mobile homes because several low-income persons could be served. She said that so few are served when building hundred thousand-dollar houses. She added that we are only serving higher income households because low-income persons cannot afford a house even if given free because of the utilities, maintenance, insurance and taxes. She said that there is a two-year waiting list, and most can not wait that long. She added that we could help our low-income people by providing them a starting point, a place to live, a mobile home, or some type of affordable housing. Greazel asked if there would be people in homes that would need assistance with grocery shopping. Walker answered that the reason for her stating that there should be a bus providing grocery rides to persons living in the apartment complexes is because the service has to start somewhere. She added that people would want to go shopping in all days of the week, but by having a bus, you would determine a day and time for the trip, and all interested persons would sign-up. Dave Dolan said usually that's the argument used. If we give it to you, then we will have to provide trips to everyone. This provides an excuse to not do it at all. He added that another situation is that if the City doesn't determine that a situation is 100% workable, they will not work with a situation that is 60 or 70% workable. He said that when busses are mentioned, if you are not disabled or have a signed paper from your doctor, you can not ride the SEATS bus. He said that even though you are old, and the service is for elderly and persons with disabilities, old persons can only ride the SEATS bus if they can prove that they are disabled. Dolan said that old people are not only having trouble riding the bus, but it is also hard for most of them to carry their groceries back to their homes. Hayek said that some of the recommendations refer directly to CITY STEPS, while others should be subject to an application so that the appropriate City department would look at it. Hightshoe said that transportation is a high priority within CITY STEPS; however, for CDBG funds it is typical that a group representing elderly would have to submit an application for this particular service (senior transportation for grocery shopping). Dave said that he is confused as he thought the Housing and Community Development Commission should be an interested group. Hayek said that the commission is an interested group regarding senior citizens, as well as in other groups. Hayek mentioned that they fund money to the elderly every year, but are constrained because of the low amount of money available. Hayek added that CITY STEPS refers to the problems mentioned (transportation) as a high priority. He Housing and Community Development Commission Minutes November 18, 2004 Page 3 added that CITY STEPS does not mention this type of program specifically, but this is an example that should be specifically brought up to certain City departments or in terms of an application to the commission. Walker said that low-income people would have no opportunity for making a grant proposal because they do not know how to write a grant or have the funds or required items to apply. She said that SEATS could pull in for four trips a month, one day a week. She said that busses come to her complex to take only one person when they could have a much higher number on the bus. She added that there are very old people that are still driving, even though they shouldn't but have no other way to get groceries, as they can't ride SEATS. Hayek said that these are important issues and staff should get in contact with Walker and determine what is the best way to address this situation. Sandy Pickup said that we can't have a healthy community without all the things coming together. Pickup said that even if you have a home, and do not have food, you would not be self sufficient, or if you have a home and do not have heat, you will still not be self-sufficient. Hayek asked if Pickup considers that there should be a greater emphasis on job training and living wage issues in CITY STEPS. Pickup said that there are a number of job committing organizations that try to get their clients minimum wage jobs, and she wonders what their success in doing that is. She questioned if providing job training should be for better paying jobs that are readily available and needed in the community. Hayek asked if there are any policies on wages that need to be paid to employees of applicants to whom the commission awards money. Hightshoe said that there is no federal policy, and each community can set its own rules. Hightshoe said that the State has a program called the Community Economic Betterment Account. Businesses apply competitively for these funds which can be in the form of low interest loans or grants. To be eligible for these State funds, the applicant must provide jobs that pay over a certain amount. Hightshoe thought the per hour minimum rate was approximately $12.59. Anthony said that the commission should look to the affordable housing needs in the City compared to the amount of federal funds that will be received. He suggested more progressive policies. He mentioned that other cities have used creative methods to increase funding for affordable housing such as a 1 % food and beverage tax implemented in Miami. Anthony said that when looking at the issues, and looking at the need, the amount of money needed to address the issues is high regarding to the low amount actually received. Anthony said that there are many things that can be done. For example, he said that many cities have a linked deposit program. For example, the City will invest their funds with local banks that do well with the Community Reinvestment Act (CRA). He said that the City needs to look at demand versus the supply of affordable housing. He said that the City has to be more proactive. Greazel said that people are in need of housing, and that the City should open their policies to manufactured housing. He said that we could have more people living in decent homes if we were to allow the placement of manufactured homes. Anthony said that it is very good quality housing. Greazel said that it is safe, affordable, and energy efficient. Anthony mentioned that in many cases the structure of manufactured houses is stronger than the regular built ones. He added that in Florida, after the hurricane, most of the houses left in place were actually manufactured houses. Long asked if by manufactured housing they refer to mobile homes. Anthony said that he does not refer to mobile homes. Anthony said that this might not be the right time to discuss the issue, but they could send a message to the City saying that this is a long standing issue, and there are alternatives out there, and there are many other cities that have taken progressive steps to solve the issue. Sandler said that they should incorporate manufactured/modular homes into CITY STEPS so that organizations will see it as an option. She said that a clear definition should be provided for manufactured and mobile homes, and if one is acceptable, and one is not, then it has to be shown why, and make it clear. Sandler said that manufactured homes are starting to be expensive. Greazel said that people do not use manufactured housing because they want to save money, but because they can have a house in a shorter time. MOTION: Sandler made a motion that under Public Service needs, senior services be elevated to a high priority need level. Bears seconded the motion. Motion passed 6:0. Housing and Community Development Commission Minutes November 18, 2004 Page 4 Commission asked what were some of the major issues identified from the public meetings. Hightshoe mentioned that she heard several comments about daycare, transportation and vocational training. She said there were comments such as it is important to locate childcare facilities by educational and/or employment centers. This allows households to make only one trip to work or school and daycare such as a daycare site at or near the Iowa City Kirkwood campus. MOTION: Greazel made a motion that Commercial-Industrial Rehabilitation to go from medium to low. Sandler seconded the motion. Motion passed 6:0. MOTION: Anthony made a motion to move childcare centers under public facilities needs from medium to high. Greazel seconded the motion. Motion passed 6:0. Sandler asked why fair housing was moved to high. Hightshoe answered that she was not certain, however the last fair housing study was done in the early 1990s and will most likely need to be updated in the near future. Sandler asked if regardless of how it is rated, if the study would still be done. Hightshoe answered that she thought it would. Anthony asked who would do the study. Hightshoe answered that the City would hire a consulting firm to do so with the help of the human rights department. Hightshoe stated that fair housing may include more than just a fair housing study, it could include projects that address NIMBYism in our community and other such matters. Referring to the last graphic from the FY06 Applicant Guide, Richman asked if the staff could present the percentages from the existing CITY STEPS. Long said that tenant based rent assistance was 2.2% and in the draft it would now be 9.33%, the Acq/Rehab and/or new construction rental housing was 18.5%, and the draft reduces it to 11.67%. Homeownership assistance was 2%, and it is now raised to 18.67%, owner occupied housing rehabilitation was 19%, and now it is 5.33%, public facilities was 14.8%, and it was raised to 21.33%, public services was 9%, and now it is 8%, economic development was 8.7%, and now it is 8%, and administration was 15.3%, and now it is 15.37%. Richman said that there were a couple of categories that had dramatic changes. He said that homeownership went from 2% to 18.67%, and owner occupied housing rehabilitation went from 19% to 5.33%. Richman asked what was the assessment that caused such dramatic changes. Hightshoe said that the City allocates $200,000 a year for owner-occupied housing rehabilitation. She added that $200,000 each year for five years is quite a bit more than $400,000. She believes that this might be an error. Hayek asked if the percentages are drawn from past spending, or past goals. Long answered that the percentages that he presented are from goals. Sandler said that there is a possibility that the numbers referring to homeownership assistance and those for owner-occupied housing were reversed mistakenly. Sandler said that if the numbers are reversed, owner-occupied housing was $1,491,000 going to $1,400,000, and homeownership assistance was $149,000 going to $400,000. MOTION: Sandler moved that homeownership assistance be reduced to 5.33%, and the owner- occupied housing be increased to 18.67%. Bears seconded the motion. Sandler said that she believes that the numbers were reversed, and she doesn't want to make the final allocation of what the percentages should be. Richman asked how the percentages were generated. Hightshoe said that it is based on public input. Greazel asked what would be an example of home- ownership assistance. Hightshoe said that it could be down payment assistance or construction of homes for homeownership such as the recent Greater Iowa City Housing Fellowship and Habitat for Humanity owner-occupied projects. (The homes are not used for rental.) Anthony asked if a low-income person that would like to buy a house could apply for that type of support. Hightshoe answered down payment assistance is an eligible activity. Richman asked if $200,000 a year is automatically allocated. Hightshoe answered that $200,000 is allocated to owner-occupied housing rehabilitation administered by our Housing Rehab. Department. There is a current waiting list for this program. The City used to have a down payment assistance program, but not anymore. Sandler mentioned that there are other possibilities to get help for down payment that are available to the public. Housing and Community Development Commission Minutes November 18, 2004 Page 5 Richman asked what is the average loan that a person applying will get for home-ownership assistance (rehab. project). Hightshoe stated that most projects are less than $25,000 (due to lead requirements). The monthly payment is based on the household's income. All housing costs can not exceed 30% of the household's income, including the loan. MOTION: Sandler moved to amend her motion so that staff review the chart, verify the numbers, and explain to the commission if there are any mistakes. Anthony seconded. Greazel said that what he would like to see in the chart is what was spent last year to compare it to what is planned to be done in the next years. Sandler said that the spreadsheet is done for 5 years, and that it will not contain information about each individual year, but for the five years as a whole. Sandler removed her motion and asked the staff for clarifications. Richman suggested removing the chart completely from the application guideline. MOTION: Richman moved to remove the chart from the application packet. Greazel seconded the motion. Richman withdrew his motion. Will discuss under next agenda item. MOTION: Greazel moved to recommend the CITY STEPS document, with the changes voted on, correct any typographical/minor errors, and forward to Council as written. Sandler seconded the motion. Sandler said that she wants to be sure that it could be amended at any time and a new recommendation sent to Council. Hightshoe stated that yes; the CITY STEPs document can be reviewed and amended at any time based on Council approval. Sandler stated if the homeownership numbers were not a mistake, they will address the policy shift at a later date with possible new recommendations to Council. Motion carries: 6-0. DISCUSS AND REVIEW FY06 CDBG/HOME FUNDING PROCESS TIMELlNE Hightshoe said that the new timeline includes 2 applicant workshops. Hightshoe also stated that some commission members had expressed an interest in consolidating the two March meetings into one. Anthony asked how the process was in the past. Hightshoe replied that there were two meetings; the first meeting reviewed application scores and discussed large differences of scores on various applications. The second meeting is reserved for project funding and allocation recommendations. Sandler said that she would like to have separate meetings and be able to think about it for another week before having to make a decision. Greazel said that for the persons who have not been through the allocation process it is pretty confusing, and they will need to be educated about how things are going to work. Hayek said that it would be a great idea to do some education for new members in January. Hightshoe stated she will put it on the January agenda. Hightshoe said that they plan to strongly encourage both new and old applicants to attend the meetings. Sandler asked if they could require applicants to attend one workshop. Hightshoe answered that the commission could do that. She added that if it is a requirement, then any last minute application would be denied. In previous years, the commission has recommended funding for a few last minute applications. Anthony said that maybe the commission could add two points in the scoring sheet for attending the workshop. APPROVE FY06 CDBG/HOME APPLICATION MATERIALS Hightshoe said staff added the applicant workshop dates in the applicant guide. Sandler said that maybe it should be mentioned in the guideline that the commission will allocate points for participating in workshops. Referring to page 9, question 18 from Non-housing Application Guidelines, Sandler said that "this project" should be capitalized in order to be strongly emphasized. Housing and Community Development Commission Minutes November 18, 2004 Page 6 Hayek asked if there is a way for staff to send back applications for corrections. Hightshoe added it could be done, but most applications are received the day it is due. Hightshoe said that there could be a one- week period to ask for corrections and clarifications, however we would most likely have to change our schedule to reflect an additional week. Richman proposed that on the ranking sheet, Section V. Capacity/History, questions number 2 and 3 be reduced to a possible 4 points, and add an additional question regarding workshop attendance. Applicants would receive 2 points if yes, 0 if no. Anthony said that it is really hard for a commission member to determine if a budget is justified, and that he trusted the staff to determine this. He added that if the budget is not justified the application should not be presented for ranking. Anthony mentioned that Hightshoe and Long have more experience and can easily determine whether the budget is justified or not. Anthony proposed to have a two-stage process. The first step would be staff review for recommendation and budget evaluation. If the budget is not justified then there is no step two for that application. Step two would be the actual ranking of the projects by the commission. Sandler said that she would like to have the staff review the applications and determine if they are justified applications. Hayek said that maybe staff should only give their opinion regarding their application/budget without necessarily taking the application out of the process. MOTION: Richman made a motion that on the ranking sheet, Section V. Capacity/History, questions 2 and 3 be reduced to a possible 4 points each, and an additional question for workshop attendance included. 2 points if yes, 0 if no. Staff will also remove the last page of the application that includes the chart. Sandler seconded the motion. Motion carries 6:0. Hayek said regarding concentrations that he would like to see a note that the commission will consider potential impacts in elementary school districts. MOTION: Richman made a motion to leave the first sentence of option one from the FY06 Applicant Guide, and take everything else out. Greazel seconded the motion. Motion passed 6:0. Richman asked if the applications are distributed electronically. Hightshoe replied applicants can obtain a hard copy, a word document on disk, or download the electronic version from the City's website. Richman mentioned there should be a clear distinction between the guide and the application itself. Removing the term guidelines from the actual application could do this. MOTION: Greazel moved to approve the guidelines as discussed. Bears seconded the motion. Motion passed 6:0. MONITORING REPORTS Eagles' Flight- Hannah's Blessing Child Care Bears said that she spoke with the director of the program. She said that it is going well, but that the numbers are going down. They've been getting calls about them offering infant care, which they do not offer now. They've been putting flyers up to present the services that they offer. Greater Iowa City Housinq Fellowship- Lonafellow Manor Sandler said that they are working on the units, and everything is going all right. Neiqhborhood Centers of Johnson Countv- Planninq Bears said that they spent their funds. Compeer- Operational Expenses Housing and Community Development Commission Minutes November 18, 2004 Page 7 Hayek said that he talked with the new director. He said that it is going well. He said that the new director is also the president of NAMI. Compeer is now housed at NAMI, which reduces their cost, as they no longer have to pay rent. Hayek mentioned that they are doing a lot of fundraising and education, and are up to 14 volunteers. Greater Iowa City Housina Fellowship- Affordable Rentina Anthony said that they got $623,000 from City HOME funds. They are building 17 units. They spent about 70% of their funds. He mentioned that they constructed duplexes and townhouses that are scheduled to be finished by 2005. He said that the apartment complex is scheduled to be done by April 2005. MOTION: Sandler made a motion to adjourn. Anthony seconded the motion. Motion carries 6-0. The meeting adjourned at 9:22 PM. Minutes submitted by Bogdana Rus s:/pcd/minutes/hcdc/2004/hcdc11-18-04.doc FYOS Allocation Examples HOUSING AND COMMUNITY DEVELOPMENT COMMISSION FYo5 CDBG HOME FUNDING RECOMMENDATIONS March 18, 200 HOME Eli ible Activities Habitat for Humani $ $ 18 ,207 GICHF - Affordable Rental Const. $ $ 190,000 HACAP - Transitional Housin $ $ 1 8,000 HACAP - Transitional Housin Ac . $ 0 This subtotal must Bloomin Garden - Affordable Rental $ $ 200,000 be at least Subtotal $ $ 722 207 $608,485 Public Facilities, ED, Non-HOMEActivities Shelter House - Emer enc Assistance $ 5,000 $ ,000 $ 60,000 $ 30,000 $ 50,000 $ 00,000 $ $ 30,000 $ $ $ (move to econ dev DVIP Securi $ 4,478 $ -...-- $ 8,600 $ 6,000 4Cs - Rehab $ ,090 $ 2,000 -------- Weber PTA - PIa $ (a lication withdrawn) $ 332,300 $0 Oess than 60 oints) PATV - Automatic Door $ 1,000 $0 (less than 60 oints) MECCA Parkin Lot $ 10,000 $0 (less than 60 oints) $ 8 4 0 $ 10 78 Public Services & Planning Free _l\i~ªif'!!. Clinic - Case Mgmnt $ 0,000 $ 16,500 Com eer - Director $ 6,000 $ Shelter House - Outreach Coordinator $ 30,000 $ $ 16, 00 $ 6,000 ortation $ 20,000 $ 8,000 $ 20,000 $ $ $ OMNI Thera ies - Health Services $ $0 (less than 60 This subtotal Early Lea!'Ilers -=-n-.aE_~atio~ $ $0 cannot exceed Subtotal $ $ $60,000 FY05 RANKINGS WORKSHEET CDBG\HOME PROJECTS Revised 3/15/04 H-1 H-2 H-3 H-4 H-5 85.38 76.88 74.88 74.00 70.63 20 16 14 16 20 27 21 23 32 39 70 64 63 54 48 97 85 86 86 87 86 84 79 79 73 84 64 68 68 61 96 79 82 84 81 90 78 75 75 87 70 85 77 77 71 76 71 69 69 71 84 69 63 54 48 97 85 86 86 73 HOME Eligible Activities Habitat for Humanity GICHF - Affordable Rental Const. HACAP - Transitional Housing Rep. HACAP - Transitional Housing Acq. Blooming Garden - Affordable Rental 0-1 0-2 0-3 0-4 0-5 0-6 0-7 0-8 0-9 0-10 0-11 0-12 0-13 80.50 76.25 76.13 75.38 74.00 72.14 69.63 68.63 66.63 66.00 55.43 54.38 48.75 12 17 17 22 25 17 16 13 9 9 11 17 13 17 26 35 27 28 24 23 29 36 25 22 37 20 69 60 54 60 61 61 60 57 54 54 43 31 39 86 86 89 87 89 85 83 86 90 79 65 68 59 86 86 86 81 74 71 77 70 69 71 59 60 40 69 74 75 74 63 68 60 63 54 62 57 60 48 84 79 84 77 82 77 77 86 60 79 65 57 59 82 83 89 87 88 85 83 70 69 54 49 54 41 Public Facilities, Economic Development, Non-HOME Eligible Activities Shelter House - Emergency Assistance 83 72 82 86 UAY - Facility Rehabilitation 80 60 76 72 ICCSD - Wood Family Resource Center 83 69 69 54 Old Brick - Accessibility 72 60 85 67 Free Lunch Program - Facility Rehab. 89 61 63 72 ISED - Microenterprise Training 80 61 63 DVIP Security System 69 62 68 61 NCJC - Facility Rehabilitation 57 61 68 74 4Cs - Rehab 90 60 65 66 Weber PTA - Playground 69 62 65 Early Learners - Bldg Acquisition 60 55 43 PATV - Automatic Door 44 68 31 61 MECCA Parking Lot 39 53 52 58 PS-1 PS-2 PS-3 PS-4 PS-5 PS-6 PS-7 PS-8 PS-9 86.50 79.13 78.88 74.13 74.00 73.29 66.63 61.13 56.14 7 17 12 7 9 23 12 21 21 10 21 27 20 15 29 18 37 56 82 67 61 67 66 57 60 42 27 92 88 88 87 81 86 78 79 83 91 88 86 87 76 79 61 62 62 88 87 78 68 70 69 67 72 56 82 86 75 67 79 84 73 79 67 92 78 88 87 81 86 78 56 52 85 70 79 70 71 61 42 84 74 77 75 66 77 70 64 27 84 67 61 69 77 61 60 63 46 86 83 87 70 72 57 63 51 83 Public Services, Planning Free Medical Clinic - Case Mgmnt Compeer - Director Shelter House - Outreach Coordinator Eagles Flight - Hannah's Goodwill Industries - Transportation NOC - Planning Eagles Flight - Youth Program OMNI Therapies - Health Services Early Learners - Transportation 3/2005 1 Revised Rankings 75 68 77 75 70 67 63 74 HCDC Member Average Score FYOS CDBG\HOME FUNDING -- AVERAGE ALLOCATION WORKSHEET Revised 3/17/2004 HCDC 190.000 150.000 148.000 330.000 818.000 $ $ $ $ $ $ 275.000 100.000 106.538 150.000 631,538 $ $ $ $ $ $ 250.000 200.000 148.000 148.000 746,000 $ $ $ $ $ $ 203.000 129.340 85.840 85.840 278.400 782,420 $ $ $ $ $ $ 150.000 223,000 148,000 148,000 331.000 1.000.000 $ $ $ $ $ $ 100.000 112.650 103.600 98,750 336,000 751,000 $ $ $ $ $ $ 249,700 215,000 142,000 $ $ $ $ $ $ 200,000 173.389 148,000 148.000 669.389 $ $ $ $ $ $ 58% 73% 74% 53% 41% 202.213 162.922 110,247 78,574 196,675 750.631 $ $ $ $ $ $ 350,000 223.000 148,000 148.000 480.000 H-l H-2 H-3 H-4 H-5 HOME Eligible Activities Habitat for Humanity GICHF - Affordable Rental Cons!. HACAP - Transitional Housing Rep. HACAP - Transitional Housing Acq. Blooming Garden - Affordable Rental Sub-Total 5,000 30,000 205.000 27.022 2.500 4.478 6,000 20,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,000 45,000 350,000 40,000 3,384 30,000 4.478 8,600 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,000 30,000 278,000 25,000 3,000 4.000 8,000 15,000 4.000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3.000 55,200 203,100 23,532 2,063 17,500 2,697 5.088 17,500 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,000 35,000 20.000 3,300 4.000 8.600 33,200 1,000 7.900 118,000 $ $ $ $ $ $ $ $ 5.000 26.000 265,000 32.000 3,000 4,400 6.600 25,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 606.700 5,000 29,348 350.000 40.400 3,384 30,000 4.478 8,600 35.090 4,000 1,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 300,000 20,000 2,000 20,000 3,000 5,000 4,000 2,000 56.000 Revised Allocations 1/13/2005 $ $ $ $ $ $ $ $ $ $ 486,462 16,000 3.000 12.000 2,000 4.000 13,000 4,000 2.000 56,000 1,174.000 1,174.000 1,174.000 56.000 1,174,000 $ $ $ $ $ $ $ $ $ $ 372,000 9,000 4,000 9,000 4.000 9.000 9.000 4.000 8,000 56.000 56.000 1.174,000 $ $ $ $ $ $ $ $ $ $ 5.900 335.580 12.335 2.471 12,338 6,828 8,225 8.225 5.578 56,000 1,174,000 $ $ $ $ $ $ $ $ $ $ $ 16.000 3,000 22,000 7.000 6,000 2,000 - 56.000 $ 1,174,000 5,000 350,000 40.400 3,384 20,000 4.477 3.000 21.350 1,000 448,611 25,000 6.000 15,000 10.000 - 56.000 1,174,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 95% 52% 71% 77% 89% 46% 92% 79% 60% 25% 0% 38% 17% 4,750 31,319 250,138 31,044 3.002 13,929 4,126 6,811 20,893 1,000 375 1,725 369.110 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5,000 60.000 350,000 40.400 3,384 30,000 4.478 8,600 35,090 4,000 332,300 1,000 10,000 $ $ $ $ $ $ $ $ $ $ $ $ $ 0-1 0-2 0-3 0-4 0-5 0-6 0-7 0-8 0-9 0-10 0-11 0-12 0-13 Public Facilities, Economic Development, Non-HOME Eligible Activities Shelter House - Emergency Assistance UAY - Facility Rehabilitation ICCSD - Wood Family Resource Center Old Brick - Accessibility Free Lunch Program - Facility Rehab. ISeD - Microenterprise Training DVIP Security System NCJC - Facility Rehabilitation 4Cs - Rehab Weber PTA - Playground Early Learners - Bldg ACQuisition PATV - Automatic Door MECCA Parking Lot Sub-Total $ $ $ $ 367,000 16,500 3,000 15,000 4,000 5,000 7,000 3,500 2.000 $ $ $ $ $ $ $ $ $ $ 511,300 21.000 4.000 8.000 15.000 8,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 57% 57% 44% 26% 33% 37% 27% 4% 0% 16.979 3.434 13.167 4,354 6,528 7,318 3,635 1,500 $ $ $ $ $ $ $ $ $ $ 30.000 6,000 30,000 16.700 20.000 20.000 13.560 33.500 25.000 $ $ $ $ $ $ $ $ $ PS-l PS-2 PS-3 PS-4 PS-5 PS·6 PS-7 PS-8 PS-9 Public Services, Planning Free Medical Clinic - Case Mgmnt Compeer - Director Shelter House - Outreach Coordinator Eagles Flight - Hannah's Goodwill Industries - Transportation NOC - Planning Eagles Flight - Youth Program OMNI Therapies - Health Services Early Learners - Transportation Sub-Total 56.915 1.176.656 2,428,012 Grand Total FY05 CDBG\HOME FUNDING Consensus Worksheet o 1 o 2 3 1 o 2 2 o 6 6 5 4 2 1 2 1 o 3 H-2 H-3 H-1 H-5 H-4 HOME Eligible Activities GICHF - Affordable Rental Const. HACAP - Transitional Housing Rep. Habitat for Humanity Blooming Garden - Affordable Rental HACAP - Transitional Housing Acq. o o 1 o 1 2 1 4 6 o 8 5 5 o o o 1 2 1 o o o o o o o 5 5 5 5 5 4 4 2 2 1 o o o 3 3 2 2 o 1 3 2 o 7 o 3 3 0-7 0-5 0-3 0-4 0-2 0-9 0-8 0-6 0-13 0-1 0-11 0-12 0-10 Public Facilities, Economic Development, Non-HOME Eligible Activities DVIP Security System Free Lunch Program - Facility Rehab. ICCSD - Wood Family Resource Center Old Brick - Accessibility UAY - Facility Rehabilitation 4Cs - Rehab NCJC - Facility Rehabilitation ISED - Microenterprise Training MECCA Parking Lot Shelter House - Emergency Assistance Early Learners - Bldg Acquisition PATV - Automatic Door Weber PTA - Playground 3/2005 1 o o 1 1 1 1 2 5 8 2 2 7 6 6 3 4 3 o 5 6 o 1 1 4 2 o o 1 o o o o o o o o PS-2 PS-1 PS-4 PS-7 PS-5 PS-3 PS-6 PS-8 PS-9 Public Services, Planning Compeer - Director Free Medical Clinic - Case Mgmnt Eagles Flight - Hannah's Eagles Flight - Youth Program Goodwill Industries - Transportation Shelter House - Outreach Coordinator NCJC - Planning OMNI Therapies - Health Services Early Learners - Transportation PROFORMA SPREAD SHEET Instructions for Completing This Attachment The FY06 Housing Application, as in the past, requires the developers of rental housing projects to complete and submit a proforma for the project being proposed. The purpose of this proforma is to help the Housing and Community Development Commission (HCDC) and staff to make informed decisions on the allocation of local HOME Investment Partnership and/or Community Development Block Grant funding. All applicants for rental housing are required to complete the attached proforma. This form will provide HCDC with the needed information in a format that is uniform among all applicants. The following are instructions for completing this form and some basic "rules of thumb" for your consideration. This form allows for up to 20 years of information. If you have any questions about the form or need technical assistance please call Steve Nasby or Steve Long at 356- 5230. ***Fields shown in "e:rev" are for number entry when usine: the excel spreadsheet*** Revenues rAfter YR I a rent escalator of2% is calculated in the spreadsheet which is consistent with the Fair Market Rent (FMR) increases for Iowa City 1 Line 1 Gross Rent: Is the total amount of rent generated from the housing units, based on proposed rent levels (proposed rents may be less than FMRs but cannot exceed FMRs). Other Income: Include laundry income, application or pet fees, and interest income. Tenant Contributions: Include other payments such as rent for parking or storage space. Gross Income: Is the sum of Lines I through 3. Vacancy Loss: Line I multiplied by 5%. Effective Gross Income: Line 4 minus Line 5. Line 2 Line 3 Line 4 Line 5 Line 6 OperatinK Expenses rAn inflation escalator of 3% is calculated in the spreadsheetl Line 7 . Operating Expenses: Estimated insurance expense (estimate from an agent). Line 8 Operating Expenses: Repairs and Replacements ($230 - $390 per unit depending on building age). Line 9 Operating Expenses: Management Fee (usually 5 -7% of Gross Rent). Line 10 Operating Expenses: Property Taxes (estimate may be obtained from the City Assessor's Office). Line II Operating Expenses: Miscellaneous Expenses (legal, accounting, advertising, water\sewer, etc.). Line 12 Operating Expenses: Reserves (generally no more than 2-3% of gross rent). Line 13 Total Operating Expenses: Is the sum of Lines 7 through 12. Net Operatin2 Income Line 14 Net Operating Income: Is Line 6 minus Line 13. Debt Service rust mortgage payments for principal and interest onlvl Line 15 Debt Service for 1st Mortgage. Line 16 Debt Service for 2nd Mortgage( s) (include the total payments for all junior mortgages on this line). Line 17 Total Debt Service: Is the sum of Lines 15 and 16 (should not be less than 87% of Line 14). Cash Flow Available for Distribution Line 18 Cash Flow: Equals Line 14 minus Line 17. EQuity Investment Line 18B is the amount of funds being invested in the project by the project developer\sponsor. This does not include the equity raised through the sale of Low Income Housing Tax Credits as they are accounted for on Line 33. Cash on Cash Return on Investment rshows return to developer or investors on their equity contribution before taxes or tax credits are included] Line 19 Cash on Cash ROI: Equals Line 18 divided by equity investment as shown on the application. PAGE 2 PROFORMA INSTRUCTIONS CONTINUED Determinine Taxes Line 20 Cash Flow:'Carry over the figure from Line 18. Line 21 Depreciation Expenses: Annual depreciation of property (27.5 year straight-line schedule). Line 22 Amortization of Fees: Annual amortization of project fees (15-year straight-line schedule). Line 23 Principal Payments: Calculate the amount of principal paid on all loans for each year. Line 24 Reserves: Carry over the figure from Line 12. Earnines (Loss) Before Taxes Line 25 Earnings Before Tax: Equals (Line 20 minus Lines 21 and 22) plus Lines 23 and 24. Taxes Line 26 Tax Rate: Use a 35% tax rate on for-profit organizations and non-profits use 0%. Line 27 Taxes Incurred (Saved): Equals Line 25 multiplied by Line 26. Cash Flow After-Tax Line 28 Cash Flow: Carry over figure from Line 20. Line 29 Taxes Incurred (Saved): Carry over figure from Line 27. Line 30 Cash Flow After-tax: Equals Line 28 minus Line 29. Total Benefit Analvsis Line 31 Cash Flow After-tax: Carry over figure from Line 30. Line 32 Rehabilitation Tax Credits: Calculate full value of rehab tax credits. Line 33 Low Income Housing Tax Credits: Calculate full value ofLIHTC annually for each of the 15t 10 years. Line 34 Net Sale Proceeds: In year 20, calculate the estimated future market value of the property by taking the total cost of the project as presented in this application and compound it by 2% for each year. Place this amount on line 34. Line 35 Net Cash Flow After-tax: Equals the sum of Lines 31 through 34. Line 36 Return on Investment: Equals the Net Cash Flow After Tax divided by the Equity Investment. Proforma~pread Sheet FY06 Rental Housing Projects PJe~se enter info-'-"J_ation into "ofev"fieJds on/v if '(9U are usina eJ Line Description Svmbols rß.1 m YR3 YR4 Xߧ. YR6 ill YR8 YR9 YR10 Revenues 1 Gross Rental Income + G. Rent $ $ $ $ 2 Other Income + O. Income $ $ $ $ 3 Tenant Contributions r. Contrubuti< $ L- $ -L- - ~ - 4 Gross Revenues = G. Income $ $ $ $ $ $ 5 n Vacancy Loss -Vac $ $ $ $ $ $ $ (5% Vac. Rate x Gross Income) - - - - - 6 Effective Gross Income = EGI $ $ $ $ $ $ $ - - Operatina Expenses 7 Insurance $ $ $ $ $ $ $ $ $ 8 ~intenance §.. Structural Repairs $ $ $ $ $ $ $ $ $ 9 . ~-ªna~m..QntFees $ $ $ $ $ $ $ $ $ 10 . _F'!oj>er1y!~es . $ $ $ $ $ $ $ $ $ 11__Jv1J§.f. Operating É_xpenses $ $ $ $ $ $ $ $ 12 Reserves - $ $ $ $ $ 13 - OPR. Expenses $ $ $ $ - $ $ $ - $ $ 14 =NOI 15 Debt Servif~First Mortgage 16 Debt Service Subordinate Mortqaqe(s) ~ 17 Total Debt Service -DIS $ $ $ $ - $ - $ $ 18 Cash Flow =CF $ $ $ $ $ $ $ 18(I~LEquity Investment In Proj~t $ $ $ $ $ 19 Cash -on- Cash ROI 9: #DIV/O! #DIV/O! #DIV/O! #DIVlO! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIVlO! - - - ç. -p-~ Equity Inves' rB.1 ill ill rBi YR5 ~ YR7 YR8 m - YR10 CF $ $ DEPR $ $ $ $ $ -AMORTZ $ $ $ +P $ +RESERVES L- L-- $ L-- - $ L-- L-- - - =EBTx $ $ ~ $ $ - - ------.., xRATE 0% 0% - 0% 0% 0% 0% $ $ $ $ $ $ L- $ $ CF $ $ $ $ $ $ $ $ $ TAX (+SAV) $ $ $ $ $ L- $ $ =CFATx $ $ $ $ $ L- $ $ - - CFATx $ $ $ $ $ $ $ +RTC $ $ $ $ ---- $ $ $ $ +LlHTC $ $ $ $ $ $ +NSP $ $ $ $ $ - $ - =NCFATx $ $ $ $ $ ROI #DIV/O! #DIV/O! #DIV/O! #DIVlO! #DIVlO! #DIV/O! #DIV/O! #DIV/O! #DIV/O! !d!!!L Determininq Taxes 20 Cash Flow 21 . ºepreciation.E.2<~eÐses 22 Amortization of Fees - --~-_._.._---_.- 23 Prir1.<:.ipal F'i3Yrr1E~nts . 24 Reserves 25 ~a~ings (L()ss) B¡¡toreTaxes 26 x Tax Rate (35% or 0%) 27 Tax Incurred (Saved) Cash Flow After Tax 28 Cash Flow 29 Tax Incurred (Tax Saved) 30 Cash Flow After Tax Line Total Benefit Analysis 31 Cash Flow After Tax 32 Rehabilitation Tax Credit 33 how Income Housing T.a2<.<:;r.edit 34 Net Sale Proceeds 35 T otaIJ!E!r1i!li~AfterJ·ax (NCF AD. 36 Return on Investment .r!ill YR12 YR13 YR14 YR15 YR16 YR17 YR18 YR19 YR20 Line Description Revenues $ $ $ $ $ $ $ $ $ $ 1 Gross Rental Income $ $ $ $ $ $ $ $ $ $ 2 Other Income $ $ $ $ $ $ $ $ $ $ 3 Tenant Contributions -$ $ $ $ $ $ $ $ $ $ 4 Gross Revenues -$ $ $ $ $ $ $ $ $ $ 5 Vacancy Lo~~ - - - (5% Vac. Rate )( Gmss Income) $ $ $ $ $ $ $ $ $ $ 6 Effective Gross Income Operatina ~xpenses $ $ -- $ $ $ $ $ $ $ $ 7 Insurance $ $ $ $ $ $ $ $ $ $ 8 Maintenance & Structural~E!-ºairs $ $- $- $ $ $ $ $ $ $ 9 Manage"lent Fees $ $ $ $ $ $ $ $ 10 Property Iaxes $ $ $ $ $ $ 11 Misc. OperatingE:2<j)enses L-- L-- - L-- - - - 12 Reserves - $ - $ - - $ - - - - 13 Total Operating Expenses - 14 Net Operating Income 15 ºebt S~ice First Mo~_ ~ 16 Debt Service Subordinate Mortqaqe(s - - - - - - - 17 Total Debt Service - 18 Cash Flow 18(b) _É9lJitylnvesJmenJlnJ"roject #DIVlO! #CIVlO! #DIV/O! #DIV/O! #DIV/O! #CIV/O! #CIV/O! #DIV/O! #DIV/O! #DIV/O! 19 Cash -on- Cash ROI YB1l ..1!ill.. .:!!ill.. ...Yß1i rB.1.§. ~ rB1L - YR18 - YR19 YR20 b!lliL - Determinin, $ $ $ $ $ $ 20 Cash Flow $ - $ $ $ $ $ $ 21 Dep!eciatio~xpenses $ $ $ 22 Amortization of Fees $ $ 23 Prin~ipal P-ªyr1l~nts $ ~ ~ $ $ $ $ L ----L ----L 24 Reserves $ $ $ $ $ $ $ $ $ $ 25 0% 0% 0% 0% 0% - 0% 0% - 0% 0% 0% 26 - $ $ $ $ $ .L..-...- $ ...1 L 27 Cash Flow After Tax $ $ $ $ $ $ $ $ ~ 28 Cash Flow $ $ $ $ $ .L..-...- $ ...1 ! 29 Tax Incurred $ $ $ $ $ .L..-...- $ $ ! 30 Cash Flow After Tax - Line Total Benefit Analysis - $ $ $ $ $ $ $ $ 31 Cash Flow After Tax $ $ $ $ $ $ $ $ :g_J~ehabllitation Tax Credit $ $ $ $ $ $ $ $ 33 l,ow Income HousingTax Credit - - $ - $ - $ - $ 34 Net Sale Proceeds $ -$ 35 Tota!ªenefits~~el" Tax (NCFAT) #DIV/O! #DIV/O! #DIV/O! #DlV/O! #DIV/O! #DIV/O! #DIV/O! 36 Return on Investment . . an - I I A practical guide to real estate financing for nonprofit developers 1 \ , ~. \\ I \ \ ' \ l \\ \ I LL lL~LJ. l :~; ~ .'. ~"",.J' '\; . ) ROBERT R. REAM LYNN ARLINGTON PHARE Commissioned by a consortium of New York banks 2nd EDITION , ~ 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 fonnulas currently used by the New York City Division of Housing Preservation and Development (HPD) and the Community Preservation Corporation (CPe). These rules of thumb reflect current (1996) cost es- timates which are subject to change. Whenever possible, obtain infonnation 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 detennines 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, Consµltant 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, 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. ) ~.~I:~.·· L'F t ~~-.; ".", " ~ .~~ ,r' 61 ,I ¡: 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 a 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 1 % 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 loan. 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 ftmds 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 asswne 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} :1 ¡I ; :, !,If (I {I '" i[1 :~ !. .1 62 ~ 4' 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 aparbnents and commercial space or the sale of residential units can vary enonnously---esti- mates should be given careful considemtion.For low and modemte income residential rental projects, HPD allows $9,000 plus $300 per unit. Soft Cost Contingency: This is an allowance for unforeseen costs and overruns. Allow a lump sum of$10,000 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 Fonna 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 fonnula: Gross Rents - Vacancy Allowance- Expenses = Net Operating Income. Each of the components of this fonnula 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 fonnula : 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.) -) 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 all 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 detennin- 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 of20% or more for commercial space. J 63 Expenses: Lists all operating expense~, management fees, and alloca- tions to reserve funds. Remember to hiclude 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 (NOI). It is the most important number on the spreadsheet because it will be used by the lender to detennine the amount of debt that your project can support. (Determining the maxi- mum loan amount using the NOI 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 York City Division of Housing Preservation and Development (HPD) and the Community Preservation Corporation (CPe). For cost estimates based on the number of rooms, 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.) i. if¡ ~ f I ,; ¡ i I ;: I I I 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 estimated 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 $ I 2,000 ¡ I ¡ i ¡i I' i {; Ii.] ;'1 'I :, 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 · Exhibit 3: Pro Forma Income and Expenses f-- \ -' DATE NAME OF PROJECT SCHEDULE 2 : Pro Forma INCOME AND EXPENSES RESIDENTIAL INCOME Unit Type Rent/Mo. Units Gross/Yr 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 GROSS ANNUAL INCOME $162,600 (less) Residential Vacancy 5.00% ($7,080) (less) Commercial Vacancy 10.00% ( 2,100) EFFECTIVE GROSS INCOME $153,420 EXPENSES Real Estate Taxes Insurance Payroll Elevator Maintenance Water and Sewer Heating Utilities Clean i n g/Ex te rm inating/S upp lies Repairs and Replacements Painting Legal and Accounting Management Fee (6%) Building Reserve (2% of gross) TOTAL EXPENSES AND RESERVES NET OPERATING INCOME :J $0 7,348 18,000 4,000 7,750 10,850· 2,790 2,604 3,680 2,480 3,200 9,205 J..2.i2 $75.159 $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. CPC and HPD use $42 per room. Repairs and Replacements: Estimate at $230 to $390 per unit depend- ing 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, 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% of the 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%. I 'i \i I I 1 I I I ;1 q I J ) , '¡I; , f . j 11 J; V .'1 I. I:", Questions To Ask The Lender j' .,; 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 X:YZ 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 II, 1 i'! \' " ~ I:i " Itl I " .< Ji~ :;\ 66 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 tenns 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 confinning the lenders interest in the project.) Don't be afraid to ask questions, but don't expect precise answe.rs, Remember that at this stage, infonnation provided about rates, fees, and other tenns will be very preliminary and subject to negotiation and change during the loan review and underwriting process. If your loan is approved, the lender will issue a commitment letter detailing the tenns and conditions of the loan. Until the commitment letter has been signed by both parties, tenns and conditions can be negotiated and changed. Listed below are some questions you may want to ask the lender prior to submitting an application. (Many of these items are discussed in Chapter 3.) Interest Rate . 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 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.) Fees 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 nonnally 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 -, (This is an important consideration in planning for the pre-dosing ex- penses you will incur.) r ¡ : ¡ ¡, ~ 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 ofloan 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 infonnation about expenses you will incur and pay prior to the closing.) Equity Requirements and Guarantees , 'j 'II Ii " j;¡ 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? l tj " Nature and Timing of the Loan Review Process ,I :, . J What are the steps in the loan review process and how much time is re- quired for each step? What types of infonnation or documentation will be required at each step? :1 ! , Loan Application Checklist ti ril ]" ' I;: ¡ :' .\ ¡j i '1 "I ,:, " 'I, ,: ~, :1 :,1 II 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 applìcation, 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 px~s-_citizen.com I Local News local news IOWA CITY PRESS-CITIZEN Page 1 of2 about usll newsll sportsll featuresll opinionll goiowacity I classifiedsll obitsll customersll community I shop ~.. aportmen1s.tom ~ News via RSS: Local news Hawkeyes Entertainment Tuesday, December 14, 2004 Agencies struggle with housing Families need help finding places to live By Deidre Bello Iowa City Press-Citizen A lack of affordable housing is one issue human service organizations must battle this winter as they try to provide holiday cheer for low-income families, agency leaders said Monday. Details · Hawkeye Area Community Action Program, or HACAP, helps disadvantaged people in Johnson, Benton, Linn, Iowa, Jones and Washington counties achieve self- sufficiency. There are 67 families, including about 200 children, waiting for transitional housing assistance from the Hawkeye Area Community Action Program, said AI Axeen, housing operations director. He said numbers steadily had increased, but past data were not immediately available. Funding for transitional housing is stable but the agency still struggles with increased rental costs, he said. · It provides 32 units of supported rental housing in the Iowa City area; 77 units in Cedar Rapids; 13 units in Washington County and three units in Benton County. · An estimated 21.7 percent of the Iowa City population falls belOw the poverty level while only 9.1 percent df the total state population falls in this category.The median household income in Iowa City is $34,977 a year. Meanwhile, families that are victims of domestic violence are staying longer in temporary shelters, which in turn causes staff with the Domestic Violence Intervention Program to turn people away or direct them to agencies outside Johnson County, DVIP interim co-director Kristie Doser said. "The biggest issue for us is getting affordable housing," Doser said. "It's incredibly difficult. In the last three years (families have) gone from a few months to at least two years (waiting) for subsidized housing." The average stay in temporary housing through DVIP jumped from 26 days last year to 45 days, Doser said. Last fiscal year, which ended June 30, the agency placed 275 women and children in shelters and served another 800 women, children and men through outreach services. It turned away 360 women and children seeking shelter. Doser said community donations make things a little easi'er on families and http://www.press-citizen.com/apps/pbcs.dll/artic1e? AID=/20041214/NEWSO 1 /412140309/1 079 Soften, e.3! T:r;1J 12/14/2004 pre~s-citizen.com I Local News m11J Sports (non- Hawkeye) What is RSS? c} GAtNm DVIP staff. But in Iowa City, agencies still must compete with college students for housing and face high rental prices for transitional housing property, Axeen said. Economic factors such as a lack of education, opportunity and low-income jobs are causing more people to seek help, he said. Another sign there is more need comes from the 870 applications in Johnson County for HACAP's Li-Heap program that helps low-income families with heating bills. About 3,600 applications statewide had been processed as of last week, according to organizers of the Homeless Children's Trust in Johnson County. "We expect, going into each year, that 25 percent of our people are living in misery and that's a judgment that society makes," Axeen said. " I guess that's what they want. How many people have to live in misery before we do something about it?" Axeen said his agency continues to seek additional money. Efforts are under way to buy two housing units to replace two mobile homes, he said, and in the future buy four additional housing units. Reach Deidre Bello at 339-7360 or dbello@press-citizen.com. Let us know what you think of this story... Home for the holidays... TR,.VI L.U IATOD.Y,..... Copyright 1999-2004 Iowa City Press-Citizen Use of this site signifies your agreement to the terms of service (updated 2/1/2003) contact us at online@press-citizen.com http://www.press-citizen.com/apps/pbcs.dll/article? AID=120041214/NEWSO 1/412140309/1 079 Page 2 of2 4 12/1412004