Title
ADD-ON - Loan Federal HOME Funds for Stepping Stone Phase III Affordable Housing Development (Ordinance S-44398)
Description
Request authorization for the City Manager, or his designee, to enter into an Affordable Housing Loan Program agreement for up to $620,000 in federal U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnerships Program (HOME) funds with Native American Connections, Inc. (NAC), through Stepping Stone Phase III, LP, or a City-approved nominee, for the Stepping Stone Phase III affordable housing development project, and to take all actions and execute all documents to complete the loan. Authorization is also requested for the City Controller to disburse the funds for the life of the contract. There is no impact to the General Fund.
Report
Summary
On Nov. 3, 2017, the Housing Department issued a Call for Interest (CFI) seeking proposals for the acquisition, new construction, and/or rehabilitation of affordable rental housing based on the Affordable Housing Community Priorities approved by City Council on Nov. 1, 2017. The Priorities are: 1) Projects that focus on homeless or special needs populations (such as veterans, persons with disabilities, and victims of domestic violence), and that provide appropriate services to assist and sustain these populations; 2) Projects submitted by qualified Community Housing Development Organizations (CHDO); 3) Rehabilitation projects owned by nonprofit developers, and currently or previously funded by the City; and 4) Down payment and closing cost assistance for households earning up to 80 percent of the Area Median Income (AMI).
Procurement Information
Thirteen proposals were received and reviewed by an evaluation committee comprised of City staff from the Human Services and Neighborhood Services departments, along with the City of Mesa Housing and Community Development Director, and the Director of National Operations for Cloudbreak Communities, a company that specializes in special needs and veterans housing. The proposals were evaluated on a 500-point scale, and were scored based on the following evaluation criteria: Developer Experience; Project Merit/Approach; and Financial Feasibility. The evaluation panel scored the proposals as follows:
- Center Court (Native American Connections, Inc.): 470.75 points.
- Stepping Stone Phase III (Native American Connections, Inc.): 458.75 points.
- Northern Gardens II (WESCAP Investments, Inc.): 373.75 points.
- Acacia Heights Apartments (FSL Real Estate Services): 363.75 points.
- Courtyard at Mission Lane (Gorman Holdings, Inc. and Trellis): 338.75 points.
- Rehoboth Place II (Gorman Holdings, Inc. and Rehoboth CDC): 310.00 points.
- El Molino Place (Cardinal Capital Management and Arizona Housing, Inc.): 302.50 points.
- South 7th Village (Helping Hands Housing Services/UMOM): 287.50 points.
- St. Gerard House (Housing for Hope, Inc./Catholic Charities): 280.25 points.
- Campesina Commons (Cesar Chavez Foundation): 238.75 points.
- Garfield Veterans Housing (Garfield Veterans Housing, LLC): 208.75 points.
- El Caro Townhomes (Gardner Capital, Inc.): 166.25 points.
- 19 Apartments (Camelback at the Stop, LLC): 126.25 points.
Based on funding availability, the five highest scoring proposals were recommended for funding, which includes Stepping Stone Phase III.
Stepping Stone Phase III, located at 1325 N. 14th St. (District 8), consists of acquisition, demolition, and new construction of a 42-unit permanent housing community. NAC, a nonprofit CHDO, through Stepping Stone Phase III, LP, requested $620,000 to assist with this project. All units will serve households with incomes at or below 60 percent of AMI with five units serving chronically-homeless persons. Supportive services will be provided by NAC and will include benefits assistance, educational and vocational opportunities, family reunification, medical care, recreational and social programs, life skills, support groups and access to NAC's outpatient services. Other funding for this project includes Low Income Housing Tax Credit (LIHTC) equity, seller carryback note, and a deferred developer fee.
Project award is contingent on full underwriting, environmental release of funds, commitments of other financing, availability of federal funds and City Council approval. The overall loan structure will be consistent with the Housing Department's Underwriting Guidelines for affordable rental housing projects.
Financial Impact
There is no impact to the General Fund. HOME is a federally-funded program. Funding for this CFI is made available from 2017 HOME funds, a forward allocation of 2018 HOME funds, and available HOME Program Income funds. Funding commitments for projects with LIHTC equity are contingent upon receiving a LIHTC award from the Arizona Department of Housing in the 2018 competitive round. Funding is budgeted in the Housing CIP.
Public Outreach
All applicants were required to hold at least one community meeting with the surrounding neighborhood to inform them of their proposed housing development.
Location
1325 N. 14th St.
Council District: 8
Concurrence/Previous Council Action
This item was heard at the Sustainability, Housing, Efficiency and Neighborhoods Subcommittee meeting on March 21, 2018.
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Housing Department.