HomeMy WebLinkAbout01-24-22 - SPECIAL Study Session Agenda PacketSPECIAL STUDY SESSION AGENDA
CITY COUNCIL
CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO January 24, 2022
To commence at the conclusion of the Regular City Council Meeting
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Public Comment on Agenda Items
1. Delegation of Private Activity Bond Cap to Foothills Regional Housing
2. Staff Report(s)
3. Elected Officials’ Report(s)
ADJOURNMENT
Memorandum
TO: Mayor and City Council
FROM: Patrick Goff, City Manager DATE: January 19, 2022 (for January 24, 2022 Study Session) SUBJECT: Delegation of Private Activity Bond Cap to Foothills Regional Housing
ISSUE:
The City of Wheat Ridge has received an allocation of $1,789,050 for the purpose of issuing Private Activity Bonds (PABs) in 2022 under the state ceiling imposed by the Tax Reform Act of 1987. Staff recommends assigning 100 percent of the City’s allocation to Jefferson County Housing Authority d/b/a Foothills Regional Housing (FRH) which has agreed to issue PABs for
the produce new affordable housing units on two sites within the City of Wheat Ridge. Due to
ongoing negotiations regarding land acquisition, FRH is unable to publicly provide greater specificity on site location. However, project summaries for both sites can be found in the attached PAB request letter from FRH.
PRIOR ACTION:
The City of Wheat Ridge has traditionally assigned the City’s PAB allocation to either the Colorado Housing and Finance Authority (CHFA) or the Metro Mayors Caucus for single family mortgage revenue bonds. The last allocation assignment was approved in 2011 to CHFA. Since 2011, neither CHFA nor the Metro Mayors Caucus were accepting applications for allocations
because of the decline in the financial markets and the impact that has had on investor interest in
PAB. Between 2012 and 2018, the City’s allocation was relinquished to the statewide balance for distribution to applicants by the Department of Local Affairs. City Council assigned the City’s 2019 and 2020 PAB cap to FRH for the Caesar Square
Apartments project and the City’s 2021 PAB cap to FRH for the Allison Village project.
FINANCIAL IMPACT: There is no direct financial impact to the City of Wheat Ridge. However, injecting PAB capital into the community has a direct impact on real estate, construction, and financial markets by
stimulating economic activity and jobs.
BACKGROUND: PABs are tax exempt bonds designed to offer low-cost financing to private sector borrowers for projects that create jobs and expand the tax bases of local communities. PABs may be used to
finance a broad array of community development projects including housing, manufacturing,
higher education, infrastructure, and environmental projects. The bonding authority which allows the issuance of PABs is Volume Cap, created under the federal Tax Reform Act of 1986. The federal government allocates a maximum amount of Volume Cap use to each state annually,
Delegation of Private Activity Bond Cap Page 2 based on population. Per Colorado statute, the Department of Local Affairs (DOLA) administers the state’s allocation
of Volume Cap. Under the statute, 50 percent of Colorado’s allocation is given to five statewide authorities, with DOLA deciding the proportional allocation of each. As a political subdivision of the state and an authority, CHFA is eligible to receive an allocation of Volume Cap, which it uses to issue tax exempt bonds throughout Colorado. CHFA uses its
annual allocation to issue tax exempt bonds for single family mortgages, multifamily rental developments, manufacturers, and mortgage credit certificates. The remaining 50 percent of annual Volume Cap is allocated to local issuing authorities. A local issuing authority consists of “any city, town, county, or city and county which has a population
in any year which would result in the local issuing authority having any allocation of the state ceiling in excess of one million dollars” (CRS 24-32-1702-8). After allocating Volume Cap to local issuing authorities, any remaining balance becomes available by application to the statewide balance.
RECOMMENDATIONS:
Staff recommends assigning the City’s PAB allocation to Foothills Regional Housing for future affordable housing projects in Wheat Ridge. ATTACHMENTS:
1. Memo from FRH 2. PAB Allocation letter from DOLA
11941 West 48th Avenue, Wheat Ridge, CO 80033 ∙ Phone: 303.422.8600 ∙ Fax:
303.422.3229
Admin. Fax 720.974.5808 Colorado Relay 711 ∙ Web: www.foothillsrh.org
January 18, 2022
Patrick Goff, City Manager
City of Wheat Ridge
7500 W 29th Ave
Wheat Ridge, CO 80033
RE: Request for 2022 Private Activity Bond Cap to Support Affordable Housing
Dear Mr. Goff,
The Jefferson County Housing Authority d/b/a Foothills Regional Housing (FRH) is the housing authority
serving Colorado’s 774 square mile Jefferson County. FRH provides housing opportunities including
affordable apartments, rental assistance vouchers, emergency home repairs, housing navigation, new
development and redevelopment in both incorporated and unincorporated areas of Jefferson County.
Our mission is to create vibrant, stable communities in areas of opportunity, via bold and strategic
initiatives, and to provide families and individuals with housing options driven by compassion and
respect throughout Jefferson County. FRH’s portfolio includes 21 rental properties with 1200+ units.
Our mission is not achievable without the partnership of entities such as the City of Wheat Ridge.
FRH is currently working through pre-development activities to produce new affordable housing units on
two sites within Jefferson County and anticipates being able to submit applications to the Colorado
Housing and Finance Authority for an allocation of Low-Income Housing Tax Credits (LIHTC) for one or
both within the next 12 months (bond cap allocations can be carried forward for 3 years). Due to ongoing
negotiations regarding land acquisition, I am providing a somewhat limited description of each project in
this request, but will happily provide more information as it becomes available and distributable. Both
sites are located in Wheat Ridge and will be referred to herein as Site 1 and Site 2.
Site 1- This site is located on a major throughfare with public transit access running north/south through
Wheat Ridge. FRH already owns part of the site and the zoning is in place as use-by-right to allow
affordable housing at an acceptable density per our current project plans. FRH is currently pursuing
acquisition of neighboring parcels to expand the site and increase the number of units to be constructed,
likely in a phased approach. Currently, this site is anticipated to house, at least in part, a particularly
vulnerable population to which services are anticipated to be provided on site via established case
management/service partners, led by the Jefferson Center for Mental Health. Without the acquisition of
any adjacent parcels, the FRH-owned portion of the site is currently the subject of initial development
applications to construct approximately 50 long term (40+ years) affordable housing (rent and income
restricted) units. Should the acquisition of adjacent parcels occur, up to 220 units may be feasible but PAB
ATTACHMENT 1
cap would likely to be required to reach the potential density desired on an aggressive development
schedule. All units will be for households earning, on average, less than 60% of Area Median Income.
Site 2- This site is the subject of active negotiations and is to be purchased (pending receipt of all required
approvals and satisfactory due diligence) from the State of Colorado. It is located across the street from
a major light rail station (Transit-Oriented Development). This is a particularly large site and is anticipated
to be able to allow for siting of not just 300 long term affordable residential units, but also mixed-use
space that could accommodate the co-locating of partners such as Red Rocks Community College, Stride
Community Health, and Jefferson County Human Services. All residential units will be set aside for
households earning, on average, less than 60% of the Area Median Income. A site rezone would be
required, as will some demolition/remediation of existing blighted structures.
The city’s support of these projects will directly benefit the local economy in generating tens of millions
in construction costs alone, including many job creation opportunities. This investment will allow FRH to
secure affordability and increase housing supply by building new Transit-Oriented, environmentally
sustainable, services-enriched units in Jefferson County. By doing so, we will create a long-term, high
quality affordable assets that will serve as a welcoming place to call home for lower-income Jefferson
County residents for decades to come.
To meet the federal requirements of the 4% LIHTC that will finance these investments, FRH requests that
the City of Wheat Ridge assign the entirety ($1,789,050) of its 2022 Private Activity Bond (PAB) cap to
FRH. FRH has also requested and received assignments of 2020 and 2021 PAB cap from Golden and
Jefferson County in an effort to reach the necessary total. Additionally, FRH routinely contributes over a
million dollars towards its redevelopments by deferring developer fees and land carryback loans as
construction capital sources. FRH is also anticipating (and prepared to meet) the need to provide project
based rental assistance vouchers to support the set aside of deeply rent restricted units for particularly
vulnerable residents. The remaining developer fee netted by FRH will be used as leverage to expand our
portfolio of affordable housing and to stabilize existing affordable Jefferson County properties.
FRH is authorized under the relevant statutes, cited in the attached Assignment Resolution, to issue
housing revenue bonds as private activity bonds for this or other (third party) qualifying “projects”
within the statutory definition and agrees to pay all legal costs and meet all requirements of state and
federal statutes related to this assignment and any subsequent carryforward. FRH agrees to handle the
issuance, assignment, and carryforward of any excess bond cap not utilized in a timely manner to
finance these projects by assigning it other qualifying projects with a sequential preference for
affordable FRH portfolio projects (several rehab or infill projects are currently under consideration within
FRH’s affordable portfolio), City of Wheat Ridge affordable projects, Jefferson County affordable
projects, and finally Colorado affordable projects.
We look forward to the opportunity to present this request to Wheat Ridge City Council.
Sincerely,
Amy Case
Chief Financial Officer
January 12, 2022
Patrick Goff
City Manager
City of Wheat Ridge
7500 West 29th Ave.
Wheat Ridge, CO 80033
Re: Private Activity Bond Allocation of $1,789,050
Dear Mr. Goff:
I hereby certify that the above amount will be allocated to the respective local government for
the purpose of issuing Private Activity Bonds (PAB) in 2022 under the state ceiling imposed by the Internal
Revenue Code of 1986, as amended.
In accordance with the provisions of C.R.S. 24-32-1709.5, a fee on bonds issued is due to DOLA for
the portion of each issuance that originated from a direct allocation. The amount of this fee is subject
to revision, but is currently 0.027% of bonds issued. This fee is also due within five working days of the
bond closing. In the event that the full allocation amount is not issued, or the fee rate changes, the fee
will be recalculated to reflect the actual amount issued and the rate in effect at the time of closing.
If you have any questions, please contact Wayne McClary at (303) 864-7819 or wayne.mcclary@state.co.us.
Sincerely,
Rick M. Garcia
Executive Director
ATTACHMENT 2