Title
Amendment to Contract with FSL Real Estate Services for Redevelopment of Residential Properties in South Phoenix Village Neighborhood Initiative Area (Ordinance S-44320)
Description
Request to authorize the City Manager, or his designee, to amend Ordinance No. S-41709 to fund the construction and total development related costs for the South Phoenix Village (SPV) single-family detached infill housing using available Neighborhood Stabilization Program (NSP) program income, with the gross funding not to exceed $28.5 million and the final net subsidy not to exceed the original approved budget of $5,368,222. Further request authorization for the City Controller to disburse all funds related to this item and City Treasurer to accept funds received as program income.
Report
Summary
In May 2015, Phoenix City Council unanimously approved Neighborhood Services Department’s (NSD) request to enter into contract with FSL Real Estate Services (FSL RES), Ordinance S-41709 for completion of 121 homes in an amount not to exceed $5,368,222. This dollar amount was to cover the gap between total development costs and the revenue generated from the sale to a new homeowner. The project is funded entirely by the U.S. Department of Housing and Urban Development (HUD) Neighborhood Stabilization Program (NSP) funds and is open to eligible homebuyers at 120 percent or below the area median income. As part of its proposal submitted in Sept. 2014, FSL RES estimated that the SPV Project would require a gap outlay of $5,368,222.
The City’s NSP Program has available NSP funds from program income generated from other projects as well as from the sales of the new SPV homes. These available funds can, and according to HUD regulations should, be used to continue funding the SPV Project. If the City funds the remaining construction costs with the available and projected NSP funds, the City will save an estimated $640,000 of unnecessary finance costs to complete the SPV Project. These funds could then be used to redevelop more NSD owned properties.
Staff is requesting to amend Ordinance No. S-41709 to provide FSL RES continued funding for the SPV Project construction and total development related costs in a gross amount not to exceed $28.5 million so long as the net amount expended, as offset by program income generated by the sales to new home owners, does not exceed the original subsidy of $5,368,222. By calculating the contract ceiling using net expenditures, the City can avoid paying financing costs as required by HUD regulations and use the available funds on future infill housing projects that benefit low-moderate-medium income buyers.
Contract Term
The contract term remains unchanged and is for a three-year period, effective Feb. 10, 2016 with two one-year options to extend.
Financial Impact
There is no impact to the General Fund; this project is funded by U.S. Department of Housing and Urban Development (HUD) Neighborhood Stabilization Program (NSP) funds.
Concurrence/Previous Council Action
This item was recommended for approval by the Sustainability, Housing, Efficiency and Neighborhoods Subcommittee at the Feb. 20, 2018 meeting by a vote of 3-0.
Location
The infill project boundaries are from Broadway to Roeser roads, between 24th and 32nd streets.
Council District: 8
Department
Responsible Department
The item is submitted by Deputy City Manager Mario Paniagua and the Neighborhood Services Department.