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HomeMy WebLinkAbout1998-02-12 TranscriptionFebruary 12, 1998 Council Special Work Session page 1 February12,1998 Special Council Work Session 2:00 PM Council: Lehman, Champion, Kubby, Norton, O'Donnell, Thornberry, Vanderhoefi Staff: Atkins, Helling, Karr, Dilkes, Franklin, Head, Grovesnor, Nasby, Long, Boothroy. Housing and Community Development Commission: Jayne Moraski, Gretchen Schmuch, A. Denita Gadson, William Stewart, Kathleen Renquist. Tapes: 98-26, all; 98-27, all. Housing, Forum 98-26 S1 Franklin/This session from 2:00 to 4:00 is to discuss the Community Housing Forum report that you had a report from the forum participants a short time ago. Maurice is going to take you through the various programs. Basically, what we are asking you to do is to let us know, if you can at this point, those things that you have no problem with and we can just go forward with. We will put those in one category ..... those things that you have no problem with, you can just go ahead with. Those things that you have got some questions that we will need to deal with in the short term and then we can discuss that program further. And then those programs that you may have so much either difference of opinion on the council about or you have a consensus on the council that this is not something you want to do right now, we will put those in a separate category. And we would just like to get through this as much as we can. Kubby/When is there time for clarification questions so we fully understand what we are saying yea, maybe or nay to? Franklin/I think as we go through the programs at each one. Lehman/I met yesterday with Doug and Dee Vanderhoef. I think there is probably more lack of understanding .... on housing issues probably than any area the city is involved in. What is the time factor involved in this? .... I think we need to know what we are doing .... Doug indicated that he could put together a very concise, simple sort of outline of the various programs that we are involved in ....so that council, I think, has a better grasp of the total picture. Franklin/What we are currently doing, yeah. Lehman/A total picture .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 2 Franklin/It is fairly complex. I think for today's discussion, if you can keep in mind that the Public Housing Authority and the CBDG HOME programs both take federal money and they funnel it through at the local level with the PHA focusing on renting housing for people at very low incomes, 30-50% below median. The CDBG and HOME money is money going to agencies to provide housing .... The Community Housing Forum goes a bit beyond that... talks more about owner occupancy as well as rental, but broadens the whole focus on housing to get the full spectrum. But we will give you some things... You do need a very good understanding of what we do right now in housing to go forward with this ..... Vanderhoef/...I thought what I just heard was you wanted us to make a decision on each one of these things today? Franklin/If you can't make a decision on each one, the idea is for us to get a good sense... discussion of the different programs... get a sense of where the council is on some of these programs if you know at this time .... Norton/Will you, as we go through this, consider other housing activities that are not necessarily by the Public Housing Authority but are through federal funds directly to agencies like Cedarwood? Franklin/Yeah .... And in City Steps .... those units that are provided for those income levels are taken into consideration .... Head/We will get right to it... Appendix A, Funding Mechanisms (page 1) .... I would like to ... start with the program... familiar with .... Housing Rehab Program. The Housing Rehab Program is administered in the PCD Department .... give you some information on the types of programs we have in rehab now, type of people we serve... amount of assistance... Have a little table here that gives you a little information about the Housing Rehab Program. We have Emergency Program, Mobile Home Repair Program, Exterior Program, Comprehensive Rehab Program and we have Residential Accessibility. What we are asking for .... to apply for funding to expand our Rehab Program, primarily for comprehensive rehab... much bigger ticket item... We can apply for funding from the state in order to expand the program. In the proposal we are asking for $250,000 of additional money from the state to expand this program... accomplish... provide ten households with additional assistance... target groups...I, II &III .... pages 4 & 5 of your report .... It gives you a description of the households in those target groups ..... So those are the people who we want to help with this particular program .... The city has been administering for probably This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 3 20 years now .... all are familiar with... something that is pretty straight forward .... we want to continue.. expand... To get some direction from you that this is a good thing to do, to apply for additional funds to expand this program. Lehman/Are there enough people in the target groups I and II to use the $250,000 without using Target group III? .... Head/What we have is a waiting list .... 18 months ....We take them as they come to the top of the waiting list. Lehman/ Head/The criteria we have in the Rehab Program, those people who have lower incomes is weighted so that they move up on the waiting list first. Lehman/So a Group III person is probably not going to move up as long as there are lots and lots of I and IIs? Head/That is correct. Norton/Are you talking about rehabbing homes that- acquiring and rehabbing? Head/No .... just rehabbing .... providing comprehensive rehab .... try to bring the house totally up to Code .... Norton/Why couldn't that extend to acquiring deteriorating homes and rehabbing them? .... making them available either for rent or ownership .... Head/That would be a new program .... This particular program... expand it. Thomberry/These mobile home repairs, residential accessibility, emergency, comprehensive rehabs and so on, are these homes that you are rehabbing .... by the residents? Head/Right, they are ..... we want... comprehensive rehab .... roof, electrical .... use it to bring house up to Code... reconstruction .... Thomberry/Who makes the determination whether it is a comprehensive rehab? ..... Head/We go in and we inspect the property... determine the necessary repairs .... We have a process established. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 4 Thomberry/ ..... Who makes the determination whether the funds are needed to rehab this place or whether it should be demolished? Head/We generally don't run into those kinds of situations because the housing stock is not to that point. Champion/Is that true that somebody ..... making $10,000 a year and living in a $120,000 house? Head/It could be a person that is on a fixed income that bought the house 20 years ago. Kubby/What is the matching fund amount for $250,000 of local money? Head/25%, $62,5-. Kubby/Can that amount... General Fund or can it come from federal HOME Funds? Can HOME funds leverage HOME funds? Head/No, it has to be General Funds. Kubby/We have to account for that .... Head/That money is already budgeted .... for FY99. We have the match already in place .... Norton/What provision are you making for continued upkeep? .... In retum for the commitment to rehab the place, couldn't there be either some incentives... training ....ought to be built into the system ....so people can learn how to take care .... Head/That is a very good point. One of the things that staff did last year... Homeowners Rehab Manual .... step by step how to make certain repairs around the house... follow up with more intense ..... type of homeowner education .... Norton/Who would do that? .... Head/It certainly could be a joint venture... a non-profit... Norton/There might almost be a commitment... an effort to maintain the place. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 5 Kubby/ Norton/They are going to start going again as soon as you finish the rehab is my point. Something has got to be done to make sure that people who are in these conditions... can help .... Head/We do things like to a new roof... 20 years ....Things we are going to do with the Comprehensive Program are very long term .... Kubby/I say we should do this .... Lehman/That is a go .... Kubby/...It is already budgeted ....$62,500 ....25% Head/First Home Program. This is a program that we have already done before .... downpayment assistance ..... council has approved in the past... like to continue... background of the type of people we have assisted in this program ..... Average downpayment assistance is about $2,500...household income is right at $25,000... mortgage amount is right at $64,000 .... Average home is...$71,500. What we want to do is to continue the program like we have done in the past with one change .... to recapture some of the money that we give people for downpayment assistance .... Set them up with a repayment plan .... use that money again .... right now... no repayment. The money is recaptured at the time they sell the home .... try to make some of these programs self sufficient .... take a few years to get this kind of program going .... These types of programs.. very good .... looking at descriptions on pages 4-5 .... idea of some of the people we are trying to help here. Lehman/Is this budgeted as well? Head/In terms of match?... We have to apply for those funds as anyone does. We are competing with others. Kubby/ Norton/Are these always loans? Head/Yeah, they are loans, they are not pay back loans .... recapture the money .... right now it is no interest .... We may look at a very small interest. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 6 Norton/Here again, I would argue that people from this should also have some obligation... to help ....to keep the place up ....Going to have to have the same kind of training .... Head/ Kubby/Point is that we want to have a mechanism to insure that what we are doing has some lasting affects ..... If we are going to do it for a $2,500 loan .... have mechanisms... developers .....who are developing whole subdivisions to make sure- Lehman/We have downpayment assistance, that we do periodically inspect the property? Head/No, we don't inspect the property .... They are paying us back... Most of the properties that are purchased here are new properties ....You are not going to be able to buy too many homes $71,000 in Iowa City .... Kubby/ Head/ Champion/I find it offensive to talk about all these inspections .... Kubby/Especially for that amount of money. Norton/I am just trying to get a partnership here. There is no free lunch, let's face it. Thomberry/For example, house size is either two people or one people, is that children or is that total household size? Head/That is total household size. Thomberry/So there would be two people... income is $31,000 is the household income. The mortgage amount is $83,7- and the house price is $93,000. That is a $9,300 downpayment. Is that correct? .... Head/Right .... Thornberry/What they are asking .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 7 Head/That is what they got from us. They may be getting money from other sources .... State has a program also .... Our money is not the only money in the pot. There may be money coming out of their pocket and maybe they get money from- Thomberry/There are other programs .... Head/There is only one other program... IFA... state program .... Kubby/Is there a match requirement? Head/Dollar for Dollar. Kubby/ ....their match can play double duty. Thornberry/ Kubby/The question was did they have to have a separate match for the city downpayment program and the state and the answer was that individual's match can play double duty for both the state program and the city program .... Head/Thank you .... Norton/ Lehman/Go. Head/Okay. Thornberry/I am more hesitant on this than I am on the previous one .... My hesitancy if someone saves and saves and saves and is able to buy a house, they should at least have a downpayment .... How much money is left for upkeep? .... There is always upkeep when you buy a house. Kubby/In those cases .... they wouldn't have the repayment program .... And when they sell the property, then they pay it back .... O'Donnell/If the upkeep is not maintained, you can't guarantee that you are going to sell the property .... worth considerably less. Kubby/The way it is written, the city always gets their money back .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 8 Thornberry/ Kubby/What is our experience with all of those programs? Have we had a problem? Head/No, not yet. Lehman/I have talked to several bankers... they are really high on the program .... it is very difficult to save a downpayment .... If they like it, I will go with it. Thomberry/ Norton/Maurice, you said this is one that the city manages. Would there be advantages to having it managed by a non-profit? Head/That is something we can explore .... We will continue to do it until someone expresses an interest. Thornberry/Would you put that chart back up to see household size again? Head/ Kubby/Might be some reasons for that .... Thomberry/The majority are one in the family ..... It would be interesting to know what age .... Lehman/Do we prioritize based on the size of the household? ..... Is there any way of prioritizing how these moneys are spent with regard to the size of the household? Head/The program has kind of been first come, first serve .....We could look at that maybe. Kubby/ Lehman/ (All talking). Thornberry/It would be interesting to know their ages .... Kubby/This is first time home buyers. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 9 Lehman/You got a go. Head/ ....Affordable Housing Funding Pool. This came about... we have a CDBG and HOME allocation process... starts roughly in January... HCD Commission reviews applications .... comes to you, council, for final decision .... January to about May is the funding process and commitment. What we were looking at is to have money available on a year around basis .... Have money available...responsive to non-profit and for profit developers that want to do affordable housing .... To get money from HOME funds .... competing in the application process with other people for $150,000 and matching that with the $150,000 we already have budgeted ..... This would be money that we would loan out .... Then we would get this money back... revolving program .... maximize the use of the funds .... Kubby/Why not...Housing Fund Program .... different source of money... would include some rental rehab... Why not pool these two programs to kind of consolidate? .... expand the possibility .... Norton/Would this accommodate new structures? .... Head/I think we were thinking about new housing. Norton/ Kubby/...beautiful thing about some of these is that it is new construction... need more units under $100,000 .... Norton/Looks like your money goes the furthest by preserving and rehabilitating existing structures of which there are a lot. Kubby/ Head/Another thing .... we want to leverage the funds .... We are helping production of more units... get our money back .... Champion/The thing that bothers me about this program is $300,000 is going to take 93 days of staff time to disperse that money .... Head/It is over three years... proposing is to do this for three consecutive years.. money coming back in... program running at a pace that it can be self sufficient again. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 10 Norton/ ....keep these projects ....available over some time period ..... Head/ .... that is going to be one of our goals is to make sure there is some affordability attached to them .... maintain affordability for a period of time. Norton/ Head/Money could be used for land acquisition .... Thornberry/These would not be city owned houses .... Norton/...contingents .... earmarking some how .... Thomberry/ ....we would then put strings on it .... Head/We can put some criteria on it. Kubby/As well as sustaining affordability ....for a certain period of time... Do you agree with that? (All talking). Kubby/We have done things .... Norton/Could be tricky... specify a house... certain category ....stigmatize a particular location. Kubby/ ....agree on the value of sustaining affordability if we are going to make public dollar investments ..... Vanderhoef/When the house is sold... inflation... Is there a way that we can attach a percent of that increase? .... back into our revolving fund .... Head/We were talking about single family homes... We can have some kind of recapture or re-sell agreement where we can make sure .... affordable... What we probably will want to do is to .... give you some criteria .... Vanderhoef/... use the inflation ....different way ....to keep that house affordable .... Kubby/ This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session Vanderhoef/But a new one will come back in .... Kubby/...never gaining on it .... Champion/ .... idea is to get people into affordable housing they can afford to live in and maintain .... Thomberry/If you help them with a first one, chances are they won't need it again .... Norton/ ....I certainly don't want to take away the virtues of sweat equity .... Kubby/In this program, they can still gain equity and still keep it affordable .... Issue of accountability .... expecting something back to the community in return. The same is true for an individual household .... Thornberry/... businesses... tipple affect ....I know where you are. Norton/There is a tipple affect here, too. Lehman/Would it be possible... there is assistance in purchasing the house .... Could we request the assistance plus 20%? .... O'Donnell/But if they are repaying the note, why should we penalize them on equity? .... Kubby/Because we spotted them money upfront. O'Donnell/...penalize them in the end. Kubby/ O'Donnell/ Vanderhoef/Mike, would you agree... inflation.. the money they repaid us is not as much .... To take the inflation factor out of whatever increase in equity ..... O'Donnell/ (All talking). Norton/You got to make it work .... Let you guys figure it out .... page 11 This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 12 Lehman/Target groups 3 & 4 .... Head/It was designed as a homeownership program .... Funds... requirements that there be affordability .... If house is sold that we either recapture the money or that it goes to another low income person .... opportunity to live in the house .... Kubby/ Thomberry/I didn't hear your answer to Connie's question... money goes to a developer but not necessarily to the person buying the house? Head/In this particular scenario .... set up for single family. The funds could go to help the developer build a house but the funds would stay in the house to make it affordable. Thomberry/ Atkins/Isn't there some sort of federal regulation on windfall profits? Dilkes/I think one of the things that is really important here is that this is a highly regulated area and the affordability requirements that HUD imposes, that Maurice was talking about, and these types of requirements- We only have a certain amount of discretion. Atkins/If you like the program, it does not necessarily mean we have to fund it with HOME funds ..... some windfall profit regulation. Norton/ Atkins/If you wish to have your own program .... (All talking). Atkins/We would have to do some borrowing. Norton/They will... pros and cons of that and relay them to us again .... Kubby/The idea of combining some of these funding pools .... We are going to have all these different programs with all these different criterias... same staff that knows about all of them... Makes it harder for the public to understand .... I would like to see if there is a way we can pool a few of these .... explore .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 13 Lehman/I think that would be good... to see which ones could be .... Vanderhoef/Let's go through each one .... Head/...timeline- CHANGE TAPE TO REEL 98-26 SIDE 2 Head/June and July. So you would get the opportunity to see what that criteria looks like .... So you see how it fits in on the timeline .... Champion/I like the idea .... Head/If you gave us an okay to move forward, we can begin to look at preparing that program criteria .... Vanderhoef/Let's wait and see after we get all the others. Kubby/Earmark that one to come back to today if we can to see if we want to go forward. Norton/...the numbers that you put in on these examples on page 4 & 5... annual salaries were based on a single? .... Head/That is correct ..... Moving to the second one General Obligation Bond. The idea of this concept is As I understand it, the city can issue a GO Bond and the city has the flexibility or ability to add 10% onto a GO Bond that they are going to issue... could be used for affordable housing. This particular program is important... provide permanent financing .... rental housing.. focusing... 50% and below groups .... Lehman/How does this dovetail with existing housing... the Voucher Programs that we have now?... talking about... adding 20 more housing units? .... Head/Right .... The idea here is that these units would not have a Section 8 Certificate or Voucher attached to them... affordable to people without double layering the subsidy. Lehman/ This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 14 Head/The project... will pay the bond back .... retire the bond ....The rent from the project will retire the bond so that it is not a cost to the city ....The project will pay for itself... units will be affordable .... These are rental units .... not necessarily owned by the city. It could be owned by a non-profit developer. Lehman/But the rental would retire the bonds? Head/That is the idea. Norton/...this could be a place where you could acquire existing? Head/I am thinking of this as new construction? Vanderhoef/You say it wouldn't be available for vouchers and certificates ..... Head/The idea is for the units to be affordable to someone without them having to use .... Vanderhoef/ Lehman/ Norton/ Kubby/Contract out with a non-profit .... Vanderhoef/I want to know if it is legal to do that. Kubby/ Lehman/Could also be a housing unit that probably would not be subject to taxes. Is that correct? Head/This would be subject to tax... a regular development... make units affordable to people... retire the debt... be able to pay property taxes .... Norton/...use the bonds to reduce the interest. Thornberry/What percentage? When we issue GO bonds say for this program, we can only do so many GO bonds. Would that raise our cap or eliminate us doing another project that we would like to do the GO bonds? This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 15 Atkins/It would raise the cap .... We would issue a GO bond of $1 million ..... cost of covering that debt is substantially lower .... go out and build the housing .... private contractor builds it for you. The you can turn around and lease it back... and those lease rates have to cover the cost of the debt. Kubby/ ....It is all at one shot we are talking? How much do we typically bond out in one year? At least $10 million. Atkins/Yeah, anywhere from $8- to $10~ has been our history .... Remember what you do in project such as these, if you decide on the project... $1 million is your goal, what we would like to do...short term note for the $1 million ....then put the permanent financing place later on .... Vanderhoef/So the payout would be what? 15-20 years? Atkins/It all depends, for each $1 million is $130,000 a year in a ten year bond ..... You would have to have enough projects to generate $130,000 a year in income. There is one question. If I have a voucher or certificate .... Head/I can't deny you. The idea was try to make the units affordable so somebody could without having to have a certificate. You cannot deny. (All talking). Head/Unless the city owned it. Lehman/ Thomberry/That voucher is just like money. Atkins/...use of capital financing is a tool that is available to you and the extent to which you use capital financing is going to be very much your call ..... Kubby/...We can package this however we want .... Atkins/What you have to be careful about is the IRS regulations .... Be cautious about that .... Kubby/We can't it use GO bonds to leverage federal tax credit? This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 16 Atkins/I think you can ....GO Bonds available for projects of this nature, yes... package it properly. Thomberry/ .... should we use this...GO bonds for purchasing housing owned by the city and my answer to that would be no. Kubby/That is not the only choice here. Thomberry/ Kubby/May be a matter of timing .... Lehman/I think this is one we should put in our back pocket. I don't see this project a high priority right now. But when we get ready to do that peninsula property ..... This might be just the sort of thing to help that project .... Kubby/As long as we have good transportation from that area of town. Lehman/ (All talking). Norton/ .... If we had a sales tax with a component towards housing, that might be another possibility where something like this could happen without issuing new bonds. Will the financial institutions or anybody have any problems with this kind of activity? Head/I don't think so. In looking at a timeline, we was planning on getting back to you in August on the criteria for this particular program. Does that seem like that would be kind of workable timeline for us to get something back to you on that? Kubby/I would like us to explore this more. Champion/ Lehman/ Head/What we would like to do is kind of bring you the criteria .... For you to make any final decision, it would have to be a specific project. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 17 Financial Institutions-Combination Mortgage and Rehab Loan. Basically... We have talked to several banks, two banks .... We have a large number of units that sell for under $100,000 that are s.f. properties ..... need quite a bit of rehab work. Idea is for the bank to not only provide the mortgage money but also provide money to rehab the house, wrapped into one mortgage...financing those rehab costs over the long term of the mortgage, 30 years ..... seems to be some interest from the lending communities to work with us on this program. Atkins/(Can't hear). Lehman/Maurice, what is the city's involvement? Kubby/ Head/The role we would play is that we will work with the banks in trying to help develop a criteria of the type of people ....help package the program they then would have as their model .... Lehman/ Head/They have the .... final decision on it ....help in that process. Kubby/ Head/In providing expertise. Thomberry/All we are talking about is three weeks worth of labor? Head/Right. Vanderhoef/And how about being conduit for advertising. Head/Yes. Vanderhoef/I would like to see that added on. Champion/I would also like to see this combined with rehab moneys .... so that people's income ....combine it with the possibility of adding rehab moneys ....grant... loan ....from the city program ....Become very important part of moderate affordable housing .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 18 Head/ Vanderhoef/You are packaging the rehab loan with the initial loan and I wondered... if you could afford... A lot of people are in the position... move up in salary in three to five years ....Is there a way that you package this that says you have a loan up to this amount ....in two years when you can manage a little more, then you will be ready for that rehab loan at those same prices? Head/...we have flexibility with our program. Vanderhoef/I am talking straight out with the banks. Would the banks consider doing this kind of a thing that says here is your loan, $5,000 for rehabbing right now and in two years we will allow you up to another $15,000 .... for additional rehab moneys? Head/ ....bring these things up .... Vanderhoef/It allows more option for the buyer .... I see our rehab moneys going more for the older house, fixed income people .... Head/We can certainly sit down with banks and look at all of the options. Lehman/ Head/This is a go? Lehman/Yes. Norton/I would say this is a go. Head/ ....Community Housing Linked Deposit Program. The way this program works is .....to have players in the community that is interested in affordable housing .... like major employers... to be able to purchase a housing CD .... get the normal rate of return on the housing CD and you make a commitment that you will keep your money in the bank for a period of time, 1 - 2 years. The bank then would loan your money at a rate to a developer that would provide him construction financing below what he normally would get .... That lowers his construction costs .... Idea here is to sit down with the banks... develop some criteria .... Say if a developer is willing to provide affordable housing and do these things, then these are the people we feel will be eligible for this type of program .... There is some interest from major employers .... We have gotten some pretty good interest from some of This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 19 the banks in town... try to refine this idea .... Try to look at exactly what would be the benefits to those who buy housing CDs... to developers... and what type of criteria do we want to put on developers to get this type of assistance. Kubby/ Head/New money that is deposited. Kubby/ Head/It will be a housing CD. Norton/Earmark this program... target group ..... Head/We have to sit down and look at what the savings would be to the developer to determine... enough savings .... Kubby/How do we insure that that jump from savings to developer to low cost housing happens? Head/If he is building rental housing, then we are expecting a house to rent at a certain rent level .... sell for a certain sale price. Vanderhoef/...there is no way that we can assure that that happens ....Doesn't sound like a city program to me. Head/We are trying to use some new funding sources out there. Kubby/Get the private sector involved. Lehman/...typical construction loan .... Head/12 months ..... 9 months .... Lehman/ .... I can't imagine it would be reflected in lower cost housing. Head/Again, you know, we was looking at it in conjunction with permanent financing. We are linking complimentary things together. Lehman/Try it, go for it. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 20 Norton/Doesn't hurt to try. Thornberry/...3 1/2 months of staff time .... Norton/We are on Linked Deposit. (All talking). Kubby/I want to have on the record that I would support this if it were linked to some other program that had some sustainability issues with it .... Lehman/...If we can work it out ....It will be a bank program. Kubby/But it is our staff time that could be used for other housing programs .... I would want to understand the criteria of the GO Bond Program before I could endorse spending staff time .... Lehman/Are we telling them not to do this? Kubby/No... cautionary note about how I am thinking about it. Steve Nasby/I think the link would be that the bank would- They would make that loan on the 2% spread on if it were linked to something else .... Kubby/ .... I want to make sure our game plan has in it sustainability factors .... not everybody is agreeing with that here .... more conversation later. Head/So that is a go on that one. Thank you. We left the most exciting one for last, the Housing Fund Program. This program works like- There are a certain number of rental units in town... people pay a security deposit and if you look at the interest from those security deposits... annual basis .... $300,000 ..... could be used for affordable housing .... Right now state law prohibits this. Right now interest on rent deposits go to landlords .... up to first five years .... Iowa Coalition for the Homeless has on their agenda this same program... How can they move legislation at the state to allow interest from rental deposits to go towards affordable housing ....If the law is changed and this is available to us... great source of money ....collectively use all of that money together... repair rental properties .... other affordable housing activities .... Kubby/Couldn't landlords say I pledge to do this? .... they can choose how to spend their money .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 21 Head/ ....Certainly would be nice if the law would allow- Lehman/The law would allow them to pledge now if they wanted to. Head/They could probably do that ..... voluntarily .... Kubby/ ....we could have a local ordinance that said all interest went to housing? Head/I am not sure mechanically how it would work right now .... Kubby/It would still be a voluntary act? Dilkes/It would still be a voluntary act on behalf of the landlord ..... I think the question is whether- I think they could pledge their interest to us right now ....A question of whether it can go into a separate fund that they don't control .... Norton/You could urge voluntary use of these funds. Kubby/Or at least do a survey now .... I think we should go ahead at least with the survey .... Thornberry/You could ask. Kubby/ .....Ernie would you participate? Lehman/Probably not... because I think... that kind of money will be reflected in rent .... It all comes down the bottom line ....If he gives away his interest, the rents go up. That is what happens. Thornberry/A lot of times on voucher rentals, the deposit does not cover the damage .... interest would help. Lehman/I don't care if we do a sample survey. I just don't think it is going to be a lot of reaction. Head/...take a look at later maybe perhaps? Lehman/At this point in time, it is a category three. Head/Okay. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 22 Kubby/I think it should be two at a minimum. Lehman/I would do it with a four but there is not a four in here. Champion/I think it is a very idealistic approach. Kubby/Where are we in terms of looking at it later or not looking at it at all? Champion/I wouldn't look at it at all. (All talking). Head/So four of you? Champion/ Kubby/...private sector isn't doing as much as the community needs on their own .... Thornberry/We could send a letter to the Landlord Association .... Lehman/I would be happy to have a letter directed to the Landlord Association explaining to them the purpose of the program and asking if there is any interest .... Head/I guess I would like to see what happens with the Iowa Coalition of the Homeless to see if they get the law changed and then maybe come back .... later. Norton/Okay. [Council Break 3:40PM] Head/We are going to go through the Development of Regulatory Measures .... the first one is reducing the lot size. Currently we have a minimum lot size of 5,000 square feet and the proposal is to reduce lot size to 4,000 to 4,500 square feet ....idea... lot is smaller... can get housing that would be a little bit more affordable ....allow more compact development and more housing units per acre... reducing cost of housing. Lehman/Would this be allowed in any zone? This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 23 Head/No .... limited to certain zones... 8 & 12. Lehman/If we were to say that this is a good idea ....I would assume there would be some review of this concept by P/Z and Planning ..... Kubby/Didn't we approve this by approving our Comp Plan... intent of ours? Lehman/Does anyone have a problem with this? Norton/The Comp Plan provided for this possibility .... Lehman/I think we all agree. Vanderhoef/! still have this one question .... the alley versus no alley and the amount of concrete .... The one thing that keeps coming back to me... alleys... hidden cost of maintenance of that alley ..... for the city or for the property owner... smaller lots are not a problem to me and probably not narrower widths .... alleys... How do you do that, Karin? Franklin/It would affect the building design .... could have access from a street. It wouldn't have to be from an alley. This does not mean that you have to have alleys. Vanderhoef/...If we go to something like a grid kind of thing... does that automatically make us have smaller blocks? Franklin/No... might have shared drives... smaller housing units ....It allows smaller lots, smaller units. Vanderhoef/I am missing a point. If I am looking at narrower frontages .... Franklin/It means you get more lots in a block. Vanderhoef/...smaller total square footage per lot .... and we don't take out a chunk for an alley, does that automatically bring us down to a smaller block? Kubby/ Lehman/Bigger backyard. Franklin/Not necessarily. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 24 (All talking). Vanderhoef/ Franklin/It wouldn't have to be that way, Dee .... mix of housing types .... We will have to look at all of that... When we do things in the Zoning Ordinance... allow smaller lots, that is a minimum usually. It is not a maximum ....We have talked about the concept of having maximum lot sizes in certain parts ....We will have to work through all of this as we go through the Zoning Ordinance Amendments .... go through P/Z and council. Lehman/ Franklin/Work on it .... Norton/! still think that alleys ought to be considered .... Franklin/This is not about alleys ....This is about the lot size. Champion/ Lehman/These are things to be worked out by P/Z and Planning Department .... Thornberry/If you are looking at row houses... setbacks... building to the lot sides in order to get a row house ..... Franklin/Yes and we will have to work out all those details. Do you want us to look at the smaller lot sizes and narrower widths? Lehman/This is just enabling them to do what we would like them to do. Norton/RS-5 is sacrosanct? Franklin/No, I think we will look at everything. Vanderhoef/Go. John Shaw/Is this only applicable to new developments or is this city wide on all existing zones? This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 25 Franklin/Can't tell you that right now. Shaw/It has a potential to upset existing neighborhoods .... Lehman/Good point. Head/Second point is Minimum Lot Width... those two kind of go hand in hand. We will go to the next one. Residential Street .... pavement at 28 feet... setback requirements at 20 feet. Proposed change is reduced residential street pavement widths to 26 feet and allow flexible front yard setbacks. Lehman/Isn't this part of really the full picture? Head/Yes, it is. Vanderhoef/Go for it. Norton/ Lehman/Thank you. Kubby/The reason I support these things... good environmentally... preventing... sprawl... concern... assuming that if all of these things .... lead to lower cost land costs or lower development costs... There is no guarantee with these things by themselves that that will happen .... other benefits to the city .... When we get to this fast track thing, it is a different story. There needs to be that direct linkage for me. Lehman/I agree with you .... Thomberry/...narrower streets... rolled curb also? Kubby/That is not in here. Thornberry/ Franklin/That may not be part of this particular direction but it is part of some of the things that are pointed out in the Comprehensive Plan. The council should be aware that within the city organization, Planning and Public Works do not necessarily agree on these concepts, the narrower streets. So we are going to have some debate about this as it comes back to you. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 26 Kubby/...public process ....So we understand .... Thornberry/In that discussion... consider the rolled curbs on the narrower streets .... Head/(Pre-development Meetings). Next one is the current regulations encourages pre- development meetings .... Proposal is to require a pre-development meeting, incorporate a checklist for development review... final plats approved only by city council .... whole idea of having some type of guide or checklist that staff would work with developers ....to kind of speed people through the process and know what is required of them .... Lehman/Is this not the same process we have now with council being given the staff recommendations without any activity by the P/Z Commission? Head/Yes. Lehman/ Head/ Lehman/... only final plats .... Karin .... If things go through P/Z and they get through all the way through final plat with P/Z blessing, how many times are there problems between P/Z's thinking and staff's thinking on the final plat? Franklin/Rarely. It is the preliminary plat that we have the most negotiations with the developers... commission and council. That would still take place. Once a preliminary is approved, you guys can't say we don't like it anymore. Lehman/ Franklin/It doesn't change a lot. CHANGE TAPE TO REEL 98-27 SIDE 1 Vanderhoef/How does that affect the p.h.? Franklin/It doesn't because you don't have a p.h. on plats. You just have a p.h. on zoning. Vanderhoef/ ....public input time. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 27 Franklin/Public input time and public discussion on subdivision plats, most of the controversy ....goes on during the preliminary because that is when you set it up for the final .... Kubby/If it deviates substantially, it has to go back to the preliminary process. Franklin/Yes. Kubby/ ....for everybody...or for those people who have affordable housing? Franklin/I think we would do it for everybody .... Lehman/For me the key is as long as the final doesn't deviate from the preliminary plat .... Norton/That means the final plat incorporates the stuff that was discussed .... Lehman/ Thornberry/P/Z is involved in the preliminary plat. Head/The next one is Study to Analyze the Development Code. The whole idea... look at how we can streamline the development process by looking at the Development Code to clarify... streamline the process... review of our processes... to make things better... easier for the developers going through the development process. Champion/We need to do that .... Thornberry/I put target groups I, II, III, IV. Head/That is all of them... for everybody ....Okay. Kubby/ .... If we are allowing more density... people can build more housing per acre. How do we insure affordability and maintain affordability in this kind of a program? Lehman/Can we build more per acre? .... RS-8... can still have only eight per acre .... Kubby/ ....Density bonuses are allowing you to go beyond that? .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 28 Head/The next one is Density Bonus .... The current regulation .... The proposal is to amend the Zoning Ordinance and PHD Ordinance to allow a density bonus for affordable housing. Developers would receive one conventional unit for each affordable unit offered... this has to be in the context of what the zone would allow. Champion/What is a unit? Head/One housing unit. Kubby/ Champion/ Head/He gets to build a house .... He has to build one that is affordable for one that he builds maybe not affordable. Lehman/In that order. Kubby/But can you go above the foundation zoning with these density bonuses? Head/I would think not ....It would have to be within the limitations of what is allowed in the zoning. Kubby/Then what is the incentive? Franklin/You would have to allow some bonus .... and you have to just write that into the code. You are going to a higher density .... Thornberry/...got a developer who has a big area ....put in a lot of houses... He must put in one affordable unit? Head/It is not required. Franklin/If he wants to put in more units than is allowed by the underlying zoning, to get that density bonus, and it would have to be prescribed as to what ceiling is there. To get that bonus, you would have to put in the affordable units at this ration of 1:1 .... It is an incentive and it would be dependent upon the developer wishing to have a higher density than what is allowed by the zoning. Thornberry/...only on new construction? This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 29 Franklin/Yeah. (All talking). Norton/How about in-fill? Vanderhoef/ Franklin/That is an issue that we are going to have to wrestle with as to how we do these things and don't have an adverse impact on existing neighborhoods. Kubby/...How do we insure and maintain affordability of those bonus units? Head/This would be private sector housing. There may not be a requirement .... affordable for the first person .... Thornberry/Part of it will be based on size .... Head/Affordability. Kubby/You think it would be maintained over time because of the natural- Thomberry/It wouldn't go up to a $250,000 house from an affordable house .... Kubby/ ....I could not afford my house today. Thornberry/ Kubby/The community is taking on something in perpetuity. We are taking on higher density living. Lehman/You already say that is a plus. Kubby/But the community is doing it above and beyond what the Code is currently allowing .... You still have to follow Zoning Codes ..... people are living in a smaller space... but going above and beyond our current zoning maximums to allow affordability .... To make sure that there is a good trade-off... affordable housing and not just for the first buyer. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session Lehman/The trade-off is environmental .... compact housing... less expensive city services .... Kubby/I have already said yes to three of those things... We are asking the community to take on a fourth thing. O'Donnell/ ....control it for that first time homebuyer but then- Kubby/Do you want to and your answer-you are saying no. My question is can we? Head/The goal is obviously to have diversity of housing in all neighborhoods .... do get that mix of housing types ....Can you control affordability beyond the first housing unit... difficult? (All talking). Franklin/The council has a philosophical split here on whether you should maintain affordability of the unit or you should enable people to build equity as individuals and I think that is something you should sort out at some point in time ..... Norton/I think it is very hard to put too many levers on... small unit is inherently more affordable over time... (All talking). Lehman/You maintain diversity because you built it that way to start with. (All talking). Thornberry/ ....take care of it .... Lehman/Is that a go? Head/It is a go. We have one more .... Neotraditional Housing Development .... Norton/Go for it. Champion/Go for it. We love it. Lehman/ page 30 This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 31 Norton/ ....Keep some informal shopping in those places, too .... Misc. Discussion 98-27 $1 Kubby/There are some issues that may be missing... Lehman/I would like when we proceed from Doug this outline, for us to have a more general sort of discussion regarding housing .... Kubby/Could I rattle off may be three things? .... Energy efficiency... If we have extra money for people who are doing energy efficiency things... monthly bills go down and that creates affordability. There was no mention of a non-profit consortium of all the housing non-profits and for profit developers that are in town ....catalyst for that kind of communication. On page 8 there was some mention- I am going to read it (Reads page 8, 4th paragraph), "Housing costs and household income are the two primary factors affecting affordability." I would like at some point for us to talk about household income as well ..... living wage, economic incentive for jobs .... melding economic issues and housing issues ....Taskforce has said those two issues are major trunks of affordability. Lehman/...one is a matter of economic development and one is of housing. Kubby/ Lehman/When do we want to do this? Kubby/There is nothing in here about homeless issues, life skills, or regional cooperation on a county wide basis .... Thornberry/I have one question on neotraditional housing .... We are going to be bringing in a person that can tell us how to do the neotraditional housing for $50,000. We can't do that in-house? Franklin/That is right, we cannot do that in-house. We have never done on of those developments here. Champion/ This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 32 Lehman/Do we want to set a date now? .... Let's set a date at the next informal meeting. Housing and Community Development Commission 98-27 S1 Lehman/We have a meeting here .... Head/This discussion is a response to some issues that council had last year...CDBG HOME allocation process .... River City Housing Collective... Asked the HCDC to respond to eight questions... focus on questions 1, 2, 3, 4, and 8. That will assist them in their allocation process for this year by giving them direction on these particular questions. Karr/Excuse me, before we start, could you just go around the table and give names? Head/Okay. [Introductions] Head/I guess we just kind of take them one by one. (Refers to Head's January 27, 1998 memo re: Response to comments concerning CDBG and HOME priorities.) 1. What is the appropriate level of return for non-profit and for-profit affordable housing developers? Generally it is in the 8-12% range ....Commission... that flexibility was an important ingredient .... Lehman/Does the market determine this to some degree? Head/Certainly it can ....nationally there are some perimeters .... Kubby/So does that mean... 17% percent profit, that you probably wouldn't be interested in giving them money? .... Head/It could be a loan... depends on what they are going to provide .... There may be some flexibility... person is doing something we really need .... they will be providing a needed service in our community .... You have to look at each project individually .... Kubby/ ....higher risk .... Norton/ ....include consideration... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 33 Vanderhoef/And will you be able to give us that figure roughly on each project? .... Head/Yes, sure ....Steve Nasby is over nodding .... Lehman/If we do have that number available .... behooves to let us know why... it is important .... Head/Question 2. Who is the target population to receive CDBG and HOME assistance? Three of those target groups we just got done talking about. Those are 30%, below 50% and 80% and below .... Norton/ Lehman/Our highest priority... is #1 and #2. Thornberry/How do you differentiate between the needy and truly needy? .... A person is here from Illinois going to medical school, 25... years old, dad is a doctor, mom is a doctor back in Illinois but they are on their own sort of now .... They are here going to school. Their income is rather low .... and they apply for housing .... How do you differentiate between them and the 27-28 year old that is really struggling and washing dishes...? Head/That is an interesting scenario. We only look at what they are earning .... Look at what are they making in this time period. Kubby/If someone is a dependent on someone's tax form, they don't qualify. Champion/ Thornberry/ Lehman/Do you differentiate between that person who is working very very hard to make ends meet and the person who chooses not to work .... as a result has a zero income or a very low income? Long/Some projects we can have a preference .... the preference was persons coming out of the homeless shelter .... Thomberry/ ....Is there anything else you can do? .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 34 Lehman/ .... those folks who choose not to work... as a result... experience a certain degree of poverty, are less likely to be looked on as favorably ....student by choice, able bodied people who could work and choose to be student .... I would certainly categorize those folks differently than those folks who are working very hard trying to make ends meet. Kubby/ ....landscaping is changing... welfare reform...people who are going to school because their welfare program mandates that, are you going to say that that is not legitimate? .... not worthy of getting other kinds of assistance? .... Champion/ Kubby/You got people who are working part-time, going to school part-time .... Norton/They are working wise choices .... it may be a virtue over time. I expect that when you encounter a project that involves the kind of people we are talking about, you would be particularly attentive to understand that part. That did give us some trouble in a certain context last year .... Vanderhoef/There are some other programs that student .... single parent... can plug into that are different than these programs... Workforce development programs... Champion/ Kubby/But for housing. Is the Workforce Development working on housing issues? .... focus has been are we going to provide housing for low income people with CDBG and HOME moneys who also happen to be students? Vanderhoef/I think there are some other programs out there .... Norton/ .... don't you to some extent prioritize group #17 .... perhaps #2. Okay, so there is some prioritizing going on .... Vanderhoef/ Kubby/Putting money to help diversify housing... is an important part of it. Norton/ Kubby/ This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 35 Thomberry/Only problem I have... low income student driving a BMW that is taking advantage of the program .... Kubby/In RCHC there is not one of those people. Thornberry/ ....In city owned housing, there are some of those ....It bothers me. Kubby/ Norton/This is why we have a committee to agonize over these issues. Kathleen Renquist/Was the problem with the River City Housing? Was it that these individuals were viewed as people who were perpetual students who would never want to get out (can't hear)? Lehman/I don't think so. Norton/There was some of that. (All talking). Kubby/I thought that was the main problem. Champion/ (All talking) Kubby/If that wasn't the problem ....If its student-ness was not the problem, what was the problem? Lehman/I think that was part of the problem. Kubby/ Thomberry/ ....not why I voted against it .... Kubby/What was the problem then? Lehman/I think the perception was, there may have been other groups of folks who were more in need of that money than they were... biggest single factor... Other This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 36 factor .... I don't know that the City of Iowa City can afford to be in the position of subsidizing a student population .... Kubby/...that is not something we can look at .... Lehman/In the case last time... look at the need ....there were other needs greater .... Vanderhoef/Even with the small interest rate, it would have put it at the fair market value for rent. Lehman/We could do more with the money elsewhere. Norton/ ....it was a loan ....It was a tough call. Renquist/This is about fair market value for the rent ....paying $26 less ....All I could see was that it was about students .... Lehman/ .... it benefited $26... low benefit .... Renquist/That makes more sense to me than what the major discussion seem to evolve around. Lehman/...matter of priorities .... Head/3. How can additional job training opportunities be provided with CDBG funds to encourage permanent full time employment for low and moderate income housing? The Commission has requested that staff do additional advertisement to try to get some more applications for small business applying for CDBG funds to provide permanent full-time jobs .... We talked to... two agencies that provide training... ISED and SBDC and asked them .... we have a funding source available to make application .... Kubby/One of the things we were hoping to do... have a revolving loan fund for small businesses starting up .... Has staff or the Committee ever talked about revolving loan funds specifically for job development? Long/David Schoon .... Thornberry/ ....economic development for start-up businesses .... iffy .... Kubby/70% failure rate. This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session page 37 Thomberry/Revolving loan may get pretty small pretty quick .... Kubby/You have a chance of money coming back in. Champion/The SBA .... women and minorities ....I got a loan .... Kubby/I know there are programs out there .... Thornberry/ Champion/ ....they guarantee the loan .... Thomberry/ Champion/ Kubby/ ....maybe their business plan wasn't up to snuff.... Bill Stewart/The funding runs out .... cyclical .... Kubby/ Stewart/ Lehman/Bill, I would like your feelings .....small business. Is this appropriate use of CDBH money? Stewart/I would rather see it in housing. It is hard enough to analyze small businesses .... Lehman/Is 3. a no go? Kubby/No, I was just bringing up one form... We have seen in CDBG moneys an evolution .... human service .... now we are kind of getting into housing and economic development. This is a big player... of CDBG .... Norton/Aren't you obliged to have some of this in this category? .... to make some allocations in this category? Gretchen Schmuch/ .... We really get very few applications in that category .... This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298 February 12, 1998 Council Special Work Session Kubby/ ....advertising that. Thornberry/ ....you look at it as if you are the banker .... Schmuch/ Thornberry/We haven't got the expertise to do all of this .... Kubby/That is what staff is for... representation on the Committee. Lehman/Let's go with it. (All talking). Head/4. What is the appropriate interest rate on CDBG and HOME loans? Right now the Commission establish interest rates at 0 to 3% .... Primarily we are looking at projects that can repay ..... Kubby/I think we should defer to the Committee's recommendations. Champion/Whatever you say is fine on that one. Head/8. What type of lower cost housing should the city be funding? I guess this question goes to the fact that should the city be looking at funding housing that is for homeownership as opposed to rental side? .... philosophical question. Lehman/ .... those projects that provide the most benefit to the community with the least amount of subsidy should be given very high consideration. How can you argue with that? Kubby/ ....following City Steps .... Lehman/I have no problem with it. Head/Does that help the Commission with the allocation process? Okay. Kubby/ ....we appreciate your recommendations. Lehman/Okay. Thank you. page 38 Adjourned: 4:35 PM This represents only a reasonably accurate transcription of the Iowa City council meeting of February 12, 1998 WS021298