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HomeMy WebLinkAbout11/24/15Ao"%hb.� NMM Wheat Ridge Housing Authority Minutes of Meeting November 24, 2015 A. CALL THE MEETING TO ORDER The meeting was called to order at 3:10 p.m. by Chair Thomson in the Second Floor Conference Room of the Municipal Building, 7500 West 29" Avenue, Wheat Ridge, Colorado. B. ROLL CALL OF MEMBERS Authority Members Present: Thomas Abbott Tim Fitzgerald Chad Harr Janice Thompson Jennifer Walter Authority Members Absent: None Also Present: Kenneth Johnstone, Community Development Director Jim Hartman, Hartman Ely Investments (HEI) Susan Ely, Hartman Ely Investments (HEI) Eric Clayman, Rocky Mountain Charcuterie Tammy Odean, Recording Secretary C. APPROVAL OF MINUTES: 1. September 22, 2015 It was moved by Mr. Abbott and seconded by Mr. Harr to approve the minutes of September 22, 2015 as amended. Motion approved 4-0-1, Tim Fitzgerald abstained. D. OFFICERS REPORTS There were no officers' reports. Housing Authority Minutes November 24, 2015 E. PUBLIC FORUM There was nobody present from the public to speak. F. NEW BUSINESS G. OLD BUSINESS 1. Fruitdale School - Update and Next Steps Mr. Johnstone gave a brief introduction into what has happened in the past with the Fruitdale School project. Wheat Ridge Housing Authority (WRHA) has entered into an agreement with Hartman Ely Investments (HEI). We have initiated a quite title and initiated a subdivision Plat, but we have not yet initiated rezoning. We have a good Pro Forma analysis, it just needs more information. There will be a $640,000 long term gap to fill and WRHA agreed in September 2015 to put $170,000 on the table. The real estate and business deal are getting firmed up. The fundamentals have not changed, just been refined; the plan still includes affordable housing and an artisanal meat business. There is a larger short term funding gap and will require a bridge loan. The meat business needs to be built up over a period of six months; the processing of the meat takes at least that long and needs to be paid up front. The Project Team is asking for $3.3 million for a bridge loan which they are proposing to pay back with $2.1 million being paid back in years two and three. The City payback will go more quickly from tax credits and home funds which some of those funds can only be paid back once the project is completed. Housing Authority has $645,000 in reserves and is being asked to execute a Development Agreement with Fruitdale School Partners to authorize a cash loan for $400,000, on top of the $170,000 asked for in September which will leave $75,000 in reserves to cover staff and other costs. Some of this payback will come from a profit sharing with the meat company beginning in 2021. It is not only the decision of WRHA, but also that of City Council which will have a Study Session on December 7, 2015 and meeting to follow on December 14, 2015. Mr. Hartman, with HEI, added a brief description of his own. He stated along with himself, Ms. Ely, Mr. Clayman and their team they have been working intensively over the past few months on a couple of items and one has been number crunching. We still need to ink a deal with a tax credit buyer and guarantor. Mr. Hartman also stated that HEI has made a few minor refinements to the development program. The number of residential units has decreased to 8 affordable and market rate housing units to save money and we still plan on a live/work program for an apprentice. The numbers crunched also include an emergency generator so there is no gap in temperatures for the meat refrigerators. Also, there is a need for more automated equipment in the meat business and this adds $350,000 more to the financial plan. Housing Authority Minutes 2 November 24, 2015 Mr. Clayman reiterated that for the first 6 months the meat company will have meats in different stages of curing before it can go to market; this is the hardest part of the business before we can start selling. Mr. Abbott asked about the new plan for the apartments and wondered if the number of affordable units changed. Mr. Hartman said they stayed the same, now there will be 6 affordable units out of 8 total units. Previously there were going to be 6 affordable units out of 13 total units. There will ultimately be 3 types of units: affordable, market rate and one will be for the onsite manager of the meat business. Mr. Thompson asked what the rate is for affordable rent. Mr. Hartman said that depending on income the high end of an affordable 2 -bedroom is $955, and affordable 1 -bedroom is $725 and a very affordable 1 -bedroom is $580. Mr. Fitzgerald asked if there is going to be any retail with the meat business. Mr. Hartman stated that it is a possibility, but mostly will be wholesale and will cater to local restaurants and butcher shops. Mr. Clayman stated there is not a population yet for this type of retail. He also said that charcuterie is a dying art and a better use for the space is to have a classroom. It will be good to have an apprenticeship at Fruitdale because it can be hard to teach in a USDA facility. Ms. Thompson asked if there will be a kitchen in the classroom. Both Mr. Hartman and Mr. Clayman replied yes there will be a kitchen and it will function like a catering kitchen. Ms. Thompson asked about the shared parking with the school and is concerned the school may take over the parking spaces. Mr. Hartman stated that with new site plan a few more parking spaces were added for a total of 55. The apartments will have probably 12 (1 '/z per unit, dedicated) and the meat business only needs 5-10 spaces so we have at least 30 to share with the school. Mr. Harr asked for a breakdown of the construction timeline. Mr. Hartman said that once the financial plan is agreed upon then construction can start in July 2016 and would take 7-8 months to complete. Mr. Fitzgerald stated he really likes the vision of Fruitdale, but is very concerned about the money side of everything. He feels the loan is not a bridge loan but an Housing Authority Minutes November 24, 2015 unsecured loan and the interest rate has yet to be negotiated. He would like to know what security the city has. Mr. Hartman stated that right now he does not have that answer. He said it is an important question and we need to get an answer to that as part of the development agreement. Mr. Hartman stated that the likelihood to have a personally guaranteed secured loan is very low, so the loan will be unsecured. Mr. Johnstone added that the deal is not done yet and we don't grant this money up front. We have to wait until the home funds and tax credits are committed. Mr. Hartman said there is no risk to the Housing Authority or the City until HEI purchases the property and that is when the funds need to be paid. Mr. Harr asked if HEI needs a commitment from the City and Housing Authority. Mr. Hartman said yes; this project is not close to being financially feasible without Housing Authority and the City. HEI is already into the project for $150,000 which is high risk equity for us also. Mr. Johnstone pointed out an important factor that the Is` payment is not due until July 2016 when construction begins; the 2nd payment will be due upon perfonnance and the 3rd payment upon completion. Mr. Hartman stated that one of the things they have to plan for is if the meat company fails. The good thing is, if it does fail, than we have a great property with a USDA approved refrigerated warehouse facility which is hard to find. Ms. Thompson asked Mr. Fitzgerald how he felt about there being no property taxes, long term. Mr. Fitzgerald stated that he and City Council love the vision as much as Mr. Hartman. We want to renew the building and develop it. Council is willing to make investments that will jump start the city. What worries me is the risk that the city will be taking and second, we have to find the money. But Council has already indicated a willingness to forego some taxes. Mr. Hartman stated there will be full revenue a couple of years after completion. There is also a local company showing interest in 5,000 sq. ft. in the back of the property for a fish farm as well as garden growing facility. This will be an indoor facility. Ms. Thompson asked if anybody in the community would be able to use the free electrical car charging station. Housing Authority Minutes 4 November 24, 2015 Mr. Hartman said yes, anyone could use it, but hopefully it will be used only by the residents in one of the apartments or somebody who works at the facility. It will be solar charged. Mr. Abbott wanted to make sure he understood things by restating that the WRHA and the City are getting value out of this project to offset the loss of property taxes and the money being loaned. An important item is the building will be saved, especially since it is a historic building. The building is also an investment and is an economically viable enterprise and helps protect the building from demolition. Ms. Thompson asked about the original reverter clause and its progress. Mr. Johnstone said the attorney has been given authorization and the paperwork has been initiated. It is realistic that by March 16 the reverter clause can be removed. Ms. Walter asked if the grant is still $640,000 Mr. Hartman confirmed this. Ms. Thompson asked Mr. Fitzgerald, from a City Council point of view, is there anything to help HEI with their presentation to City Council. Mr. Fitzgerald said there are three new members on City Council and he doesn't have experience on how they would feel, but his guess is he thinks one of them may not be inclined to take the risk. He does not believe the city will want to break into their reserves. Mr. Harr stated that he has always been on the fence about the WRHA's funds being depleted. He thinks this is a great project, just doesn't want to see the WRHA out of money. He also wants to know how we will obtain future funding. Mr. Johnstone stated that the County has been a great partner and WRHA can apply for CDBG funds. The County is excited about this project because it is a partnership which will definitely help. Mr. Abbott likes the perspective of CDBG Funds. He doesn't feel there is any good answer right now on how to fill the gap and he is not on the fence and thinks this is a good use for WRHA money. He doesn't want to leave the money sitting in a bank account earning very little money. Ms. Walter stated is does make her nervous to deplete the WRHA bank account, but at the same time she doesn't want to miss out. She loves this project for Fruitdale and is willing to take the risk. Ms. Walter stated that if the building sits, it is also going to cost the HA money also. Housing Authority Minutes November 24, 2015 Ms. Thompson stated that the city is going to gain 14,000 sq. ft. that will not be sitting dormant and she likes the partnership with Jefferson County Public Schools. Ms. Thompson also likes the prospect of events being held at Fruitdale. She believes the events will bring people to the area; people that have not previously been to the City of Wheat Ridge. She definitely wants enough money left in the account to pay staff, and feels this project will pay WRHA and the City back. Ms. Thompson says the risk needs to be taken to make the money, especially if there is an opportunity. Mr. Fitzgerald wanted to confirm that we aren't going to risk any money until the point that all the contracts are signed. Mr. Johnstone stated that we haven't developed all the deal points yet. There is no deal until things are firmed up and the Pro Forma works. Both Mr. Hartman and Mr. Johnstone agreed, that with each step and agreement that is achieved, the risk for all drops. Ms. Thompson asked how desirable this location is for a live/work property and will people want to rent here at Fruitdale. Mr. Hartman said absolutely, this is the easy part. The hard part will be getting the meat co. established. Craig Horlacher — Fruitdale Roof Maintenance Assoc. Inc. (HOA) Mr. Horlacher was asked by Ms. Thompson if he had any questions. She said it is extremely important to have the neighbors' opinions. Mr. Horlacher stated he has kept his membership appraised about the ongoing discussions about the Fruitdale project and have had little feedback from the owners. The only concerns seem to be the line of sight from the second story apartments and being able to do maintenance on the fence; depending on the closeness of the buildings. It was moved by Mr. Abbott and seconded by Mr. Harr to authorize staff to negotiate and execute a Development Agreement between Fruitdale School Partners and the WRHA which authorizes a WRHA contribution of $170, 000 in cash grant funds and $400,000 in cash loan funds for the purpose of redevelopment of the Fruitdale School property at 10803 W. 44`h Avenue for an artisanal meat company, affordable housing and public and education space. I further move to authorize the Board Chair to execute said Development Agreement on behalf of the full board. Motion carried 4-1 with Mr. Fitzgerald opposed. H. OTHER Housing Authority Minutes 6 November 24, 2015 I. ADJOURNMENT It was moved by Mr. Fitzgerald and seconded by Ms. Walter to adjourn the meeting at 4:58 p.m. Motion carried 5-0 Janice Thompson,air Tammy Odea -recording Secretary Housing Authority Minutes 7 November 24, 2015