Title
Loan Federal HOME Funds for Verano Terrace Apartments Affordable Housing Development (Ordinance S-45578)
Description
Request to authorize the City Manager, or his designee, to enter into an Affordable Housing Loan Program agreement for up to $1 million in federal U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnerships Program (HOME) funds with Verano Housing, LLC, or a City-approved nominee, for the Verano Terrace Apartments 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. 16, 2018, 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. 14, 2018. The priorities are: 1) 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 2) 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
Six proposals were received and reviewed by an evaluation committee comprised of staff from the City of Phoenix Neighborhood Services and Housing Departments, Maricopa County, and Downtown Phoenix, Inc. The proposals were evaluated on a 500-point scale, and were scored based on the following evaluation criteria: Developer Experience; Project Merits/Approach; Financial Feasibility; and Project Impact. The evaluation panel scored the proposals as follows:
- Mesquite Terrace (Four Corners Development and Catholic Charities): 459 points.
- Avalon Villas (Atlantic Development): 450 points.
- Trellis at Mission (Trellis): 414 points.
- Red Mountain Place Apartments (G.A. Haan Development): 402 points.
- Verano Terrace Apartments (Bethel Development): 388 points.
- Garfield Senior Housing (McCormack Baron Salazar): 304 points.
Based on funding availability, all six projects were recommended for funding.
Verano Terrace Apartments, located at 1320 W. Indian School Road (District 4), includes the new construction of a 88-unit permanent housing community. Bethel Development, Inc., a for-profit developer, through Verano Housing, LLC, requested $1 million to assist with this project. All units will serve households with incomes at or below 60 percent of the Area Median Income (AMI) with 11 units serving persons with disabilities. Supportive services will be provided to increase life skills, self-determination, and residential stability. Other proposed funding for this project includes permanent financing, developer equity, Low Income Housing Tax Credit (LIHTC) equity, 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.
Financial Impact
There is no impact to the General Fund. HOME is a federally-funded program. Funding for this CFI is made available from 2018 HOME funds, and a forward allocation of 2019 HOME funds. Funding commitments for projects with LIHTC equity are reliant upon receiving a LIHTC award from ADOH in the 2019 competitive round. Funding is budgeted in the Housing CIP. Loan execution is anticipated for FY 2019-2020 and the loan will be paid to the developer over a two-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. Per the evaluation criteria, applicants that held more than one community meeting were given additional points.
Location
1320 W. Indian School Road
Council District: 4
Concurrence/Previous Council Action
This item was recommended for approval at the Planning and Economic Development Subcommittee meeting on April 2, 2019, by a vote of 4-0.
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Housing Department.