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Title:
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Loan Federal HOME Funds for Alex Apartments Affordable Housing Development (Ordinance S-51916) - District 4
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Title
Loan Federal HOME Funds for Alex Apartments Affordable Housing Development (Ordinance S-51916) - District 4
Description
Request to authorize the City Manager, or his designee, to enter into an Affordable Housing Loan Program Agreement. The agreement is up to $1,980,000 in federal U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnerships Program (HOME) funds with Alex Apartments LP, or a City-approved nominee, for the Alex Apartments affordable housing development project. Further request 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 November 18, 2024, the Housing Department issued a Call for Interest (CFI) seeking proposals for the acquisition of new construction, and/or rehabilitation of affordable rental housing based on the Affordable Housing Community Priorities.
The Community Priorities are:
Acquisition, rehabilitation, and/or new construction of properties that focus on homeless or special needs populations, and that provide appropriate services to assist and sustain these populations; and
Acquisition, rehabilitation, and/or new construction of properties where the developer qualifies as a Community Housing Development Organization (CHDO) as defined by the HOME Program.
Procurement Information
Seven proposals were received and reviewed by an evaluation committee. 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. Five projects were recommended for funding, as follows:
41st & Thomas East - (The Richman Group)
Alex Apartments - (Excelerate Housing Group)
Northern Commons - (Resource Housing Group)
Salamanca Square - (Helping Hands Housing Services)
Verano Terrace II - (Bethel Development, Inc.)
Alex Apartments, located at 77 E. Weldon Avenue (District 4), includes the new construction of a 59-unit affordable housing community. Excelerate Housing Group, a for-profit developer, through Alex Apartments LP, requested $1,980,000 to assist with the development of this project. All units will serve households with incomes at or below 60 percent of the Area Median Income (AMI) with at least 10 City HOME units serving households at or below 40 percent of the AMI. Other proposed funding for this project includes permanent debt financing, Low Income Housing Tax Credit (LIHTC) equity, and State Housing Trust Funds. Total development cost is estimated at $33,427,765.
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.
Financial Impact
There is no impact to the General Fund. HOME is a federally funded program. Funding for this CFI is made available from 2024 HOME funds, and a forward allocation of 2025 HOME funds. Funding commitments for projects with LIHTC equity are reliant upon receiving a LIHTC award from the Arizona Department of Housing. Funding is budgeted in the Housing Department’s Capital Improvement Plan budget. 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.
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
77 E. Weldon Avenue
Council District: 4
Department
Responsible Department
This item is submitted by Deputy City Manager Gina Montes and the Housing Department.