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HomeMy WebLinkAbout2013-11-13 HAC MinutesCITY OF CHULA VISTA MINUTES HOUSING ADVISORY COMMISSION SPECIAL MEETING Wednesday, November 13, 2013 4:00 P.M. CALL TO ORDER/ROLL CALL — 4:02 P.M. PRESENT: Mark Minas, Sergio Quero, Lillian Uy ABSENT: Mauricio Torre (excused) STAFF: Stacey Kurz, Senior Project Coordinator Jose Dorado, Project Coordinator Leilani Hines, Housing Manager CITY HALL CONFERENCE ROOM C101 276 FOURTH AVENUE APPLICANT: Colin Rice, Rice and Healing Development Group $:> 7124113 - Chair Uy motioned to approve the minutes from the meeting of 7/24/93. Member Minas second the motion and all members agreed 3-0. Staff Dorado provided a summary of the staff report, Exhibit 1 and brief presentation, Exhibit 2 of the request by the applicant Rice and Healing Development Group for the Housing Authority to issue $12M in tax exempt bonds for the rehabilitation of Kiku Gardens senior affordable rental housing. He further introduced the applicant as being available for questions and Colin Rice added that they anticipate closing in June and taking 6-8 months for the rehabilitation with an anticipated finish in December 2014. Chair Uy asked if any conservation measureslenergy upgrades would be included in the rehabilitation and how that would impact tenants rents? The applicant replied that they would be doing energy upgrades including the installation of solar, however utilities are paid by the owner and therefore no financial savings will be seen by residents however they will have a healthier environment. Staff Dorado explained that the complex is a Section 8 Project Based Development and therefore all residents do not pay more than 30% of their income. The development will be restricted by HUD regulations for an additional 55 years through this refinance and the project based Section 8 assistance is locked for an additional 20 years. Chair Uy further inquired about how tenants will be relocated during the rehabilitation. The applicant indicated that the rehabilitation will be phased, that they did not anticipate any tenant -being -out of their unit for longer than 4 days. They will -be providing vouchers for hotels or financial stipends if they have other housing preferences and that they were being sensitive to the conditions tenants return to. Vice Chair Quero inquired whether local contractors would be used for the rehabilitation. The applicant indicated that they had a general contractor that would be soliciting local subcontracting. Vice Chair Quero further inquired as to whether any new programming for tenants would be provided and the applicant replied that the existing services such as on-site activities and shuttle services to cultural and shopping venues would continue and the on-site service coordinator would continue to engage tenants. Member Minas inquired as to whether the common areas would also receive a facelift and the applicant replied yes. Member Minas asked staff about a previous development that came before the commission and had Radon issues that prevented the project from moving forward. Staff Kurz indicated that complex was Briarpatch and the environmental issue was with the primary lender and not the City funding, He Housing Advisory Commission Minutes Paqe 2 of 2 followed up by asking the applicant if they had completed their due diligence and whether a situation could occur to prevent the project from moving forward and they replied that they had been doing their due diligence and they did not anticipate any issues. Member Minas further asked if tenants have been resistant to the rehabilitation. The applicant indicated that the residents have not been opposed to the rehabilitation and that the owners have been and will continue to meet and involve residents including posting the materials boards with tenants for them to be party to the rehabilitation. Chair Uy asked for greater clarification on the common areas and unit rehabilitation. The applicant indicated that the property was built in the mid 1980's and therefore needs a complete facelift including the kitchen and living space common areas which will be one of the first renovated. He added that all units and spaces will be ADA compliant, new art will be added and computers and books to the library. Member Minas motioned to recommend conditional approval of a $12M tax exempt bond for the rehabilitation of Kiku Gardens, Vice Chair Quero second the motion and all members agreed 3-0. 3, RESOLUTION CHANGING THE TIME OF REGULAR MEETINGS Member Minas motioned to approve the Resolution changing the regular meeting time to 4:00 p.m. Vice Chair Quero second the motion and all members agreed 3-0. Project Updates_ 6q4 lofts on Landis — Staff Kurz indicated that the project received the tax credit financing in late September and is anticipated to submit for building permit in the next few weeks. Groundbreaking will occur in February/March 2014 and should be completed by May 2015. Congregational Towers -- Construction has begun on the rehabilitation project and should be completes in summer 2014. qvlffli7thli!14,114 •i None. None. 7. ADJOURNMENT — HAC Meeting was adjourned at 4:47 p.m. when Chair Uy motioned to adjourn with a second from Vice Chair Quero and all members agreed 3-0, to the next regular meeting of January 22, 2 der, Stacey Kurz Exhibit 1 — Kiku Gardens Staff Report Exhibit 2 — Kiku Gardens Presentation EXHIBIT 1 The City of Chula Vista Housing Authority HOUSINGA REPORT TO THE I Item No. 2 Staff. Jose Dorado Project Coordinator iI BATE: November 13, 2013 SUBJECT: KWU GARDENS APARTMENTS - RECOMMENDATION OF APPROVAL TO THE HOUSING AUTHORITY TO CONDITIONALLY APPROVE A TAX EXEMPT BOND OF UP TO $12 MILLION FOR THE FINANCING OF THE REHABILITATION OF EXISTING AFFORDABLE UNITS AT KIKU GARDENS APARTMENTS (1260 THIRD AVENUE) That the Housing Advisory Commission recommend APPROVAL to the Housing Authority to conditionally approve a tax exempt bond not to exceed $12 million for the financing of the rehabilitation of existing affordable senior housing units at the Kiku Gardens Apartments. H. BACKGROUND The City of Chula Vista has received a request from C&C Development Group, dba RARD Group ("Applicant") to consider the issuance of tax exempt obligations to finance the acquisition and rehabilitation of 100 existing affordable units at Kiku Gardens Apartments (the "Project"). Kiku Gardens Apartments are located at 1260 Third Avenue in southwest Chula Vista. The rehabilitation will improve the property and extend the term of the affordable rents. The Applicant is preparing an application for an allocation of tax credits and tax-exempt private activity bonds for multi -family projects from the California Debt Limit Allocation Committee (CDLAC) and is requesting that the Housing Authority of the City of Chula Vista be the conduit bond issuer for an aggregate amount not to -exceed $12 million. The application must be submitted by March 21, 2014. The bond allocation and tax credit contributions will be used to substantially finance the Project. W. PROJECT DESCRIP'T'ION The _A2p icant The Applicant is currently under contract to purchase the Project located at 1260 Third Avenue. The Applicant has successfully acquired and rehabilitated over 450 residential units in California, 355 in San Diego, previously funded through the Department of Housing and Urban Development (HUD). November 13, 2013 Kiku Gardens Apartments Pate 2 Upon close of escrow, the Applicant and Hearthstone Housing Foundation, a nonprofit service agency organized under section 501(c)(3) of the Internal Revenue Service Code, will create a new limited partnership, Kiku Gardens Housing Partners, LP to own and operate the Project The new partner, Hearthstone Housing foundation ("Hearthstone') will serve as the managing general partner and will provide supportive services to the residents. Hearthstone is anonprofit organization fonned in 1991. Hearthstone currently provides services to Hillside Apartments in San Diego and Spring Villa Apartments in Spring Valley. The Property The property is a 32 year old garden apartment complex with 100 affordable units for senior citizens originally financed through HUD. Features include multiple common areas including a library, kitchen, community room, and laundry room. A service coordinator is on-site that plans social gatherings, arranges transportation for medical appointments, shopping, etc. The Proposal With the age of the property, it is in need of rehabilitation to ensure continued long term use and viability. To take advantage of tax credits, the existing owner, Kiku Gardens, will sell the project to the new partnership formed by the Applicant named a California limited partnership that will acquire and rehabilitate the property using bond financing and tax credits. The scope of the proposed renovation includes full apartment interior renovations, new roof, mechanical systems, electrical system, plumbing system, and other exterior finishes. Income and Rent Restrictions For the bond financing, Section 1421(d) of the Internal Revenue Services Code requires either a minimum of 20 percent of the rental units in the Project to be available for occupancy by persons or families whose income does not exceed 50 percent of the area median income (AMI) for the San Diego Primary Metropolitan Statistical Area, or alternatively, at least 40 percent of the rental units are required to be available for occupancy by persons or families whose income does not exceed 60 percent of the AMI. The units are also to be made available at affordable rents established by the applicable State law. The project will exceed the affordability requirements by setting aside 30 units for very low income households at 50 percent of AMI, and 70 units for low income households at 60 percent of AMI. Kiku Gardens will continue to operate the entire project as an affordable project, with 100 units affordable to lower income households (1 unit reserved for resident manager). The bond regulatory agreement will restrict 100 units for low income households with 30 units at 50 percent of AMI and 69 units at 60 percent of AMI, with one unit set aside for the resident manager. The bond restricted rents will be based upon HUD income limits established for the year. Unit Description No. of Units Target Income Level Affordable Rent Limit Tenant Pays 1 Bd/l Ba 69 60% AMI $907 30% of their income I Bdll Ba 30 50%AMI $756 30% of their income I Manager - Total Restricted 100 November 13, 2013 Kiku Gardens Apartments Page 3 The Project also has an existing Section 8 financing contract with HUD. This allows the tenants to pay only 30% of their income, with HUD paying the remaining portion of the rent. The applicant has applied for a Section 8 rent increase based on post rehabilitation market rent which will increase the One Bedroom to $1,150. The request will not increase the amount currently paid by the tenants due to the HUD assistance. The Project proposes to maintain the income and rent restrictions for Kiku Gardens for aperiod not less than fifty-five years, exceeding the 30 -year term of the bonds. The income and rent restrictions outlined above are to be incorporated into the Regulatory Agreement for the bonds, which will be recorded against the property. Compliance with the income and rent restrictions will be subject annually to a regulatory audit and annual tax credit certification. Compliance with strict property management policies and procedures will ensure that income and rent restrictions will be maintained for the full 55 -year compliance period. I1V. Ft ANCIAL ASSISTANCE Form of Assistance The Property Owner will be using Tax Exempt Multi -Family Revenue Bonds and Low Income Housing Tax Credit financing to support the majority of the estimated $15.75 million total development cost of the Project. The Applicant has requested the Housing Authority consider the issuance of $12 million in tax exempt bonds to be made available as a public offering for short term tax exempt bonds, with a long teTz taxable loan from Freddie Mac, as guarantor and Citi Community Capital as servicer. The Applicant will also apply for approximately $4.6 million in Low Income Housing Tax Credits. The pernlanent Bonds and Tax Credits would cover almost 80 percent of the estimated cost. The balance is expected to be provided by seller financing. HTD will allow the financing and provide a 20 year Section 8 contract for the property. Bond financing is a self-supporting program with the borrower (Applicant) responsible for the payment of all costs of issuance and other costs and repa}anent of the bonds. All costs related to the issuance of the bonds will be paid for from bond proceeds. The bonds will be secured by the project and will not constitute a liability to or obligation of the City or Housing Authority. The City of Chula Vista Housing Authority will receive compensation for --its services in preparing the bond issuance by charging an origination fee of 1/8 of 1% of the bond issuance. The Housing Authority will also receive compensation for ongoing monitoring compliance of the regulatory restrictions from an annual administrative fee paid by the borrower (118 of 1% of the outstanding bond issuance). V. Exhibits 1. Locator Map Prepared by: Jose Dorado, Project Coordinator 11, Development Services Departnient, Housing Division EXHIBIT 2 - Kiku Gardens Presentation 11/13/13 1 nxnnn 5 wi n,. ..._ m .. . x1 RQ q`_ '.- CIO ...':.. ... C: ' a 11/13/13 1 EXHIBIT 2 - Kiku Gardens Presentation 11/13/13 2 EXHIBIT 2 - Kiku Gardens Presentation 11/13/13 EXHIBIT 2 - Kiku Gardens Presentation 11/13/13 EXHIBIT 2 - Kiku Gardens Presentation 11/13/13