Title
Amend Ordinance S-50808 for the Wild Rose Flats Affordable Housing Project (Ordinance S-52104) - District 4
Description
Request authorization for the City Manager, or his designee, to amend Ordinance S-50808 to modify the entity who will enter into the Affordable Housing Loan Program Agreement to Wild Rose Owner LLC, an affiliate of Ulysses Development Group, and to take all actions and execute all documents to complete the loan.
Report
Summary
On May 1, 2024, City Council approved entering into an affordable housing loan program agreement for an award of up to $1 million in federal HOME Investment Partnerships (HOME) Program funds with BNB Development, LLC, or a City-approved nominee, for the development of Kazan Apartments (renamed Wild Rose Flats) affordable housing project, a 72-unit permanent multifamily housing community serving low-income households that was recommended for funding by the Housing Department after a competitive solicitation.
When the original applicant, BNB Development, LLC, did not separately receive a competitive nine percent Low Income Housing Tax Credit (LIHTC) award, it decided not to move forward with the Wild Rose Flats project; however, Ulysses Development Group (UDG) has since approached the City, wishing to substitute its affiliate, Wild Rose Owner LLC, to take over this funded project, effectively becoming a City-approved nominee to enter into the affordable housing loan program agreement and execute all other documents necessary to complete the loan with the same terms and conditions presented to BNB Development, LLC.
Wild Rose Flats, located at 2911 and 2941 N. 43rd Avenue, will continue to provide 72 units with all units serving individuals with incomes at or below 60 percent of Area Median Income (AMI). At least 11 of those units will be City HOME units serving households at or below 40 percent of the AMI. The total estimated development budget is $30,941,125. Other funding for this project includes LIHTC equity, HOME-ARP funding from the Arizona Department of Housing (ADOH), permanent debt financing, and a deferred developer fee.
Project awards are contingent on full underwriting, environmental release of funds, commitments of other financing, and availability of federal funds. The overall loan structure will be consistent with the Housing Department's Underwriting Guidelines for affordable rental housing projects.
Procurement Information
Pursuant to Ordinance S-50808, six proposals were received and reviewed by an evaluation committee comprised of two city staff and one community representative. The proposals were evaluated on a 1,000 point scale based on the following criteria: Developer Experience; Project Merits/Approach; Financial Feasibility; and Project Impact. All six projects were recommended for funding. In accordance with Administrative Regulation 3.10, a determination memo based on Special Circumstances Without Competition has been approved to authorize Wild Rose Owner LLC to take over the awarded Wild Rose Flats affordable housing project from BNB Development, LLC. These unique circumstances would allow the awarded project as envisioned to continue under a new City-approved nominee.
Financial Impact
There is no impact to the General Fund. HOME is a federally funded program. Funding commitments for projects with LIHTC equity are reliant upon receiving a LIHTC award from ADOH. Loan execution is anticipated for Fiscal Year 2025-26, and the loan will be paid to the developer over a two-to-four year period.
Concurrence/Previous Council Action
Original action was approved on May 1, 2024 by City Council through Ordinance S-50808.
On February 19, 2025, City Council approved, through Ordinance S-51653, purchase and sale agreements with Isaac School District for the acquisition and immediate resale of property to facilitate the development of the Wild Rose Flats affordable housing project.
Location
2911 and 2941 N. 43rd Avenue
Council District: 4
Department
Responsible Department
This item is submitted by Deputy City Manager Gina Montes and the Housing Department.