HomeMy WebLinkAboutItem 12 CDBG Interim Loan AGENDA ITEM SUMMARY Meeting Date: 10/21/2019
Meeting Type: Regular Meeting Staff Contact/Dept.: Erin Fifield / DPW Staff Phone No: 541-726-2302
Estimated Time: 10 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) INTERIM LOAN
ACTION REQUESTED:
1) Allocate $750,000 in CDBG funds as an interim loan to Homes for Good for the Hayden Bridge Meadows project 2) Authorize the City Manager Pro Tem to negotiate and execute a CDBG loan agreement with Homes for Good
ISSUE STATEMENT: Homes for Good desires to borrow $750,000 in available CDBG funds to help acquire land for Hayden Bridge Meadows.
Due to federal requirements, a portion of the City’s CDBG funds are at risk of being lost if not spent by May 2020. City Council has prioritized CDBG funds
toward St. Vincent de Paul (SVDP)’s concept for a new Manufactured Dwelling Park; however, SVDP will not be able to acquire land by the May 2020 deadline. This loan would help retain the CDBG funds for a new Manufactured Home Park in the future, meet the CDBG timeliness test, and assist Homes for Good on a short-term basis.
ATTACHMENTS: Attachment 1: Council Briefing Memo Attachment 2: Hayden Bridge Meadows summary
DISCUSSION/ FINANCIAL IMPACT:
There is about $750,000 available in prior year CDBG funds allocated toward the strategy to “increase the supply of affordable housing.” During the 9/16/2019 Council Regular Session, Council allocated $300,000 of these funds as a CDBG loan to Homes for Good for the Hayden Bridge Meadows project,
70 new units of affordable housing on 5th Street, north of Fred Meyer. This loan gave the City certainty in meeting the CDBG timeliness test. In the meantime, Homes for Good has been moving forward on closing three separate affordable housing transactions (delivering 218 newly constructed affordable housing units to the metro area) and is experiencing a cash flow challenge.
An increased short-term CDBG loan to $750,000 to Homes for Good for Hayden Bridge Meadows would help cover a short-term financing gap without impacting the City’s other priorities.
The City does not have a project ready for the use of these CDBG funds, though staff is continuing to work with SVDP toward a site for a new Manufactured Dwelling Park. The short-term loan would be repaid in full over the next year in time for use on a
future project.
M E M O R A N D U M City of Springfield
Date: 10/21/2019
To: Mary Bridget Smith COUNCIL
From: Tom Boyatt, DPW Community Development
Division Director
Erin Fifield, Community Development Analyst
BRIEFING
Subject: Community Development Block Grant (CDBG)
Interim Loan MEMORANDUM
ISSUE: Homes for Good desires to borrow $750,000 in available CDBG funds to help acquire
land for Hayden Bridge Meadows.
Due to federal requirements, a portion of the City’s CDBG funds are at risk of being lost if not
spent by May 2020. City Council has prioritized CDBG funds toward St. Vincent de Paul
(SVDP)’s concept for a new Manufactured Dwelling Park; however, SVDP will not be able to
acquire land by the May 2020 deadline.
This loan would help retain the CDBG funds for a new Manufactured Home Park in the future,
meet the CDBG timeliness test, and assist Homes for Good on a short-term basis.
COUNCIL GOALS/
MANDATE:
Provide Financially Responsible and Innovative Government Services
BACKGROUND:
The City has about $750,000 available in prior year CDBG funds allocated toward the strategy
to “increase the supply of affordable housing.”
Loaning CDBG funds to Homes for Good to meet the timeliness test
During the 9/16/2019 Council Regular Session, Council authorized $300,000 as a CDBG loan to
Homes for Good for their affordable housing Hayden Bridge Meadows project, 70 new units on
5th Street, north of Fred Meyer. City Council had already reviewed and approved the Hayden
Bridge Meadows project for the allocation of HOME funds.
Other City housing projects
In Spring 2019, the City issued a Request for Concepts, looking to award existing CDBG funds
toward projects that would increase the supply of affordable housing. While not ready to proceed
at the time, Council indicated their priority for the funds to be awarded to the SVDP concept for
a new Manufactured Dwelling Park.
SVDP has since sought out available land for purchase, and has identified a site that could
possibly work. However, there is a considerable amount of due diligence that will need to occur
prior to purchase, and SVDP will not be in a position to buy the property by the May 2020
deadline, as required for the City to meet the timeliness test for spending down our CDBG
funds. It is anticipated that SVDP may be in a position to buy property in Fall 2020, following
federal and state environmental review and mitigation requirements.
Attachment 1, Page 1 of 2
MEMORANDUM Page 2
Loaning additional CDBG funds to assist Homes for Good
While Homes for Good did not initially ask for the CDBG loan, and has been glad to assist the
City in expending funds in a timely manner, they are now asking to borrow $750,000 as a short-
term loan. The increased loan amount would be helpful as Homes for Good is closing on 3
separate affordable housing transactions that will deliver 218 units of newly constructed
affordable housing to the metro area (including 70 units at Hayden Bridge Meadows), and is
constructing a new administrative building. A short-term CDBG loan would help Homes for
Good’s overall cash flow management, in particular with pre-development costs for the
affordable housing projects.
Increasing the loan to Homes for Good would not impact other City housing projects
This short-term loan would not impact other City efforts for affordable housing. Currently, there
is no housing project ready to proceed to use CDBG funds. With the short-term loan, funds will
be repaid over the next year, a portion of which is expected to be repaid in early 2020. Thus,
funds could be available then for any of the Request for Concept proposals as applicants
continue to plan for their projects.
There are other funds available for affordable housing in Springfield: currently, the City has
about $1 million in HOME funds available and is currently requesting proposals. Additionally,
the City is expected to receive more CDBG funds in July 2020 and Council can allocate those
funds to affordable housing if desired.
Ensuring a new Manufactured Dwelling Park is built in Springfield
Staff continues to work with SVDP to identify a site for a new Manufactured Dwelling Park that
is ready to proceed.
RECOMMENDED ACTION: Allocate a total of $750,000 in CDBG funds as an interim loan
to Homes for Good for the Hayden Bridge Meadows affordable housing project.
Attachment 1, Page 2 of 2
Hayden Bridge Meadows
Homes for Good Housing Agency
1975 5th Street, Springfield
New construction
70 units: 17 one bedroom, 19 two-bedroom, 34 three bedroom
52 units for 50% AMI, 17 units for 60% AMI & 1 on-site manager
52 RAD households pay no more than 30% of income for rent
Part of the Homes for Good Rental Assistance Demonstration (RAD) conversion from scattered single family rentals to consolidated developments
Five units targeted to persons with HIV/AIDS and other special needs
12 residential buildings, community building, playground, bike storage, 105 parking spaces
Community building with large meeting room, kitchen, laundry, and offices
HOME funds : $750,000
Total development cost: $18,090,164
Cost per unit: $258,431
Other funding sources: 4% Low-Income Housing Tax Credits, state residential subsidy preservation bonds, private bank loan, single family home sales proceeds, deferred developer fee
Attachment 2, Page 1 of 1