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HomeMy WebLinkAboutC34970A - ARC Village One-time SubsidyCITY OF PALM DESERT STAFF REPORT REQUEST: APPROVAL OF AN AGREEMENT WITH ALLIED AFFORDABLE HOUSING, LLC TO PROVIDE A ONE-TIME SUBSIDY FOR UP TO 5 UNITS IN THE ARC VILLAGE DEVELOPMENT IN AN AMOUNT NOT TO EXCEED $250,000 SUBMITTED BY: Janet M. Moore, Director of Finance DATE: June 9, 2016 CONTENTS: Request from Allied Affordable Housing Recommendation By Minute Motion, that the City Council, 1) Approve an agreement with Allied Affordable Housing, LLC, to provide a subsidy for up to 5 units within ARC Village, in an amount not -to -exceed $250,000, for income restricted households in which at least one member is an employee within the jurisdictional boundaries of the City of Palm Desert; and 2) Authorize legal counsel to prepare and finalize an agreement to effectuate the intent of the actions taken herein; and 3) Appropriate $250,000 from the Housing Mitigation Fund to account 2144490- 4390101; and 4) Authorize the Mayor and/or the City Manager to execute any documents consistent with the actions taken herewith. Executive Summary On May 17, 2016 the Planning Commission approved a 36 unit affordable housing project for households with restricted incomes including adults with special needs. The entire project will be affordable. The property is leased to Allied Affordable Housing, LLC ("Allied") by the Palm Desert Housing Authority for the sole purpose of developing the property in this manner. Allied is requesting financial support from Palm Desert in addition to the long- term lease in exchange for reserving up to 5 units as a first option for households in which at least one member is an employee within the jurisdictional boundaries of the City of Palm Desert. Allied will also be applying under the competitive tax credit program for funding for the development. As a part of the application, Allied will be showing all sources of funding applied for, including the value of the lease, any subsidies from the City, the State of California as well as private funds. A project that receives funding from multiple sources in order to leverage the tax credit allocation is more competitive in the process. Including the value of the leased property and the $250,000 contemplated herein, the total contribution from Palm Desert equates to approximately eleven percent (11 %) of the total project. Staff Report Approval of an Agreement for Subsidy June 9, 2016 Page 2 Discussion Allied has been approved to develop a 36 unit affordable rental project for restricted income households that will include adults with special needs. Depending on the type of funding Allied is able to secure, most tenants are expected to be below sixty (60%) percent of the area median income. Many of the tenants that Allied expects to apply for housing are employees that work within the jurisdictional boundaries of Palm Desert. Staff believes that based on the proximity to Desert Arc, that many of the residents will be employees of Desert Arc. Because this may provide housing opportunities to employees that currently do not reside in Palm Desert to live near their employment, staff believes this is an opportunity to provide a one-time subsidy for up to 5 units for this purpose as a first option. In the event the unit remains vacant for an extended period of time (30-60 days) due to the employment requirement, Allied will be allowed to rent to another income qualified household without the employee restriction. Previously staff had indicated that it was expected that Allied would construct and operate the facility without additional funding from the City, however, the fact that this will provide additional housing opportunities for employees in Palm Desert, suggests that their request should be considered. Staff therefore recommends that the City Council authorize legal counsel to prepare an agreement to subsidize up to 5 units for an amount not to exceed $250,000 from the Housing Mitigation Fund and further authorize the Mayor or City Manager to execute the agreement and any documents necessary to facilitate the agreement. Fiscal Analysis The fiscal impact of this project is the cost of the one-time subsidy. The units will count toward the City's affordable housing production in the extremely low, very low and low income categories. Submitted by: I Janet . Moore, Director of Finance Approval: 11 McCarthy, Interim CAi Manager G ,HOCSI\G'.PAI_I Y ITOMJMM'S I AFF RF.POR'I CITY 01' PALM DF.SER'I DESERT AR(' 6-9-16`.SR ARCVILLAGF. SUBSIDY DOC Allied ALLIED AFFORDABLE HOUSING May 27, 2016 Attn: Janet Moore Director of Finance City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Dear Mrs. Moore, On behalf of Arc Village, Allied Affordable Housing, would like to submit this request for financial support from the City of Palm Desert for the development of Arc Village. To be competitive for a low income housing tax credit application through the State of California Tax Credit Allocating Agency, the project requires a substantial amount of local government funds to leverage the tax credit allocation to be competitive amongst all State projects. The large majority of the financing will come from the sale of the tax credits; however, to be competitive the team will need to align additional resources. We are grateful with the City's and Community's support towards this project which will provide much needed affordable housing for employees and residents of the City of Palm Desert. Enclosed is a project description and details on the financing and development team. Thank you in advance for your time and consideration. Should you have any questions you can reach me at (310) 906 4936. ?nne ely, g4 do Delgadillo Director of Community Development 409 Allied �. ALLIED AFFORDABLE HOUSING Project Summary Arc Village entails the development of a 36-unit affordable housing property located in Palm Desert, which is in the Coachella Valley of Riverside County, California. This project is a collaborative effort between the City of Palm Desert, Desert Arc, Foundation for Affordable Housing and Allied Argenta. The goals of this development include: • To develop 36 units of affordable housing in the City of Palm Desert; • To provide affordable housing options for individuals with developmental disabilities; • To provide affordable housing options for residents and employees of the City of Palm Desert; • To build high quality, energy efficient 1- and 2- bedroom units with common areas and community space for all residents to enjoy; • To leverage services, amenities, and opportunities already available for at -risk populations, and; • To maximize the use of a currently underutilized parcel of land. Allied Argenta, LLC, the project sponsor and developer, has an extensive background in affordable multifamily acquisitions, finance, operations, construction and community development. Allied has also been focusing on an initiative to develop housing for adults with developmental disabilities in collaboration with key stakeholders. Desert Arc, project partner and supportive services provider, is one of the largest and oldest non-profit organizations in the Coachella Valley. Founded in 1959 by parents of adult children with developmental disabilities, Desert Arc today serves over 600 adults with disabilities such as Autism, Cerebral Palsy, Down Syndrome, Epilepsy as well as other behavioral and medical conditions. Desert Arc's mission is to "Enhance the quality of life and create opportunities for people with disabilities." Property Description Arc Village is a 36-unit project that will be constructed within a 1.83 acre parcel in Palm Desert, CA (leased by the City for the development). The development will consist of a mix of one - bedroom, and two -bedroom garden -style units and will have a clubhouse with offices, a fitness center, community kitchen and dining room, as well as room for social gatherings. It will also include other outdoor recreational facilities such as sport court, swimming pool, fitness track, barbecue area, and approximately 25 parking spaces. The unit mix will be as follows: 409 S,-, J ..o Allied. N11ALLIED AFFORDABLE HOUSING 1-bed/1 bath 2-bed/2 bath TOTAL: # units % units Unit SF 32 89 570 4 11 870 36 100% 21,720 The development has a 55-year ground lease with 20-year extension option from the City of Palm Desert to build this project on the currently vacant land (see site map below). Proposed Development Allied Argenta and its partners propose the development of Arc Village. The total anticipated hard cost for the housing units is $8.7 million, or about $242,000 per unit including all common area buildings and amenities. One bedroom units are estimated to be 570 square feet, 2- bedroom units 870 square feet with approximately 7,500 square feet in common area/community space. Please see the latest site plan below. To comply with federal accessibility requirements all public spaces will be made accessible for those with mobility impairments. Project Financing / Schedule The proposed project financing for Arc Village is equity from the sale of 9% Low Income Housing Tax Credits; City of Palm Desert land donation and funding; private/foundation donations and/or other form of subordinate gap financing; and deferred developer fees. The total development cost (including the community room) based on the latest estimates is $10.8 million, or about $300,000 per unit. The current estimated value of the City's land donation is $1 million based on an appraisal conducted by R.F. Sweet Appraisals November 15, 2010. Novogradac is currently appraising the property to assess the latest value, current development estimates include that amount. The team will be submitting 9% low income housing tax credit application June 29, 2016. We estimate notification to close by December 2016, with construction completion in March 2018. Target Resident Population / Relocation All of the units will be available to households with incomes at or below 60% of area median income which, in 2016, is $26,800 for an individual. Arc Village will work with Desert Arc and the Riverside Regional Center and Housing Authority to qualify residents into the Section 8 voucher program. Allied will incorporate the special needs preference into its Tenant Selection Plan, which will be finalized prior to financial closing. No relocation will be required as a new construction project. Development and Support Services Team ny Sd :.`:� Allied '.. ALLIED AFFORDABLE HOUSING Allied Argenta, LLC The Allied Argenta family of companies has extensive experience with Low Income Housing Tax Credit (LIHTC) properties and is focused on the acquisition of multifamily housing to create affordable housing communities where people of moderate resources can make a home. Allied works closely with its partners to develop value added solutions matching the unique property characteristics and intended housing goals of the project. The Leadership Team for Allied Argenta has an extensive background in multifamily acquisitions, finance, operations, construction and rehabilitation, and community development. Allied Argenta's leadership team has: • In the past three years, provided affordable housing to over 3,000 low-income residents • Completed Over $1 Billion in Real Estate Transactions; • Completed Transactions in Over 12 Different States; • Financed Over $300 Million in Multifamily Projects; • Secured Tax Exempt Bond Financing on Over 50 Projects; • Underwritten over 150 Tax Credit Properties Resulting in Over $800 Million in Equity Investments; • Worked directly with over 10 Housing Authorities developing financing strategies to meet their capital needs; and, • Has secured millions of dollars in federal, state and foundation grants. In 2013, the Allied team committed to developing caring communities for adults with complex language, learning, and cognitive disabilities. These communities would provide residents with safe, quality, affordable housing and an environment where residents may thrive and further develop their social and independent living skills. We feel that in order to provide such housing we need to partner with other agencies willing to assist Allied in developing a safe and active living environment for our residents which is why Allied, Desert Arc and the City of Palm Desert have joined forces to move this project forward. Foundation for Affordable Housing: Co -developer Foundation for Affordable Housing (FFAH) is a tax-exempt 501(c)(3) public benefit nonprofit corporation that creates safe, comfortable, high -quality, affordable homes that enrich the lives of its residents and add stability to the surrounding community. With expertise, experience, and care, we ease the burden of State, County, and Local Housing Authorities through the construction, acquisition, and operation of low-income and senior housing. Their goal is to use years of experience to make the process as straightforward as possible. By focusing on the profitability and sustainability of each of their projects, they have been able to build safe and comfortable housing for those who need it most. Allied ALLIED AFFORDABLE HOUSING FFAH works with a select network of developers who are leaders in the affordable housing industry. They own and manage over 64 family properties and 39 senior properties, 96% of them are California projects. Desert Arc: Support Services Partner Desert Arc is one of the largest and oldest non-profit organizations in the Coachella Valley. Founded by parents of developmentally disabled adult children in 1959, Desert Arc today serves 600+ adults with disabilities such as autism, cerebral palsy, Down syndrome, epilepsy and other behavioral and medical conditions. Desert Arc's mission is to "Enhance the quality of life and create opportunities for people with disabilities." Desert Arc's main campus is on Country Club Drive just east of Monterey in Palm Desert. There are two additional facilities — a satellite campus in Yucca Valley serving the Hi -Desert with 100 clients and 30 staff, and a new Recycling Center in Indio with 30 clients employed on a full-time basis. Desert Arc's clients come from all over the Coachella Valley and the Hi -Desert extending for certain services from Corona to Blythe, over to Temecula and Hemet, up to Yucca Valley, Joshua Tree and Twenty -Nine Palms. To accommodate its clients, Desert Arc operates a large transportation system including 24 large buses and 18 vans providing door-to-door service for its clients on a daily basis as well as transportation to and from job sites and outings for social relation activities. With an overall staff of 250 dedicated personnel, Desert Arc provides vocational training and employment opportunities as well as a year-round program of sports, art & music, outings and social activities for its disabled clients. Desert Arc clients are primarily trained for landscaping, janitorial, kitchen and recycling tasks. Clients work off -site in work teams at Eisenhower Medical Center, Desert Regional Medical Center, JFK Memorial Hospital, Hi -Desert Medical Center, Ernie Ball Guitar Strings, Sunnylands, all eight city parks in Yucca Valley, various other maintenance and landscaping sites around the community, restaurants, supermarkets and retail stores too. With greater training and ability, clients are placed as Individual Placements (IPs) with employers such as Mario's Italian Cafe restaurants, Carl's Jr, Applebee's, Home Depot, Walmart, Lowe's, etc. With a large industrial kitchen and dining room at its Palm Desert campus, Desert Arc trains 15-20 clients in kitchen skills so that they can obtain Food Handler's cards to find employment at restaurants, hotels, and country clubs in the area. Desert Arc clients are all 18 years of age or older. They are referred to Desert Arc by the Inland Regional Center or the Department of Rehabilitation. Usually people with disabilities are held in public high schools until they reach the age of 22 in California. Then they are referred to the Regional Center where they are assessed and then referred to the appropriate service provider like Desert Arc in their home communities. Desert Arc does its own assessment to assure that the prospective clients are suitable for one of Desert Arc's fourteen client services. Once accepted at Desert Arc, the clients can choose which activities they want to participate in on a voluntary basis, which skills they would like to (and can) learn, to become employable in a skill a�.