Low Income Housing Tax Credits Applications for Housing Committee

Transcription

1 Low Income Housing Tax Credits Applications for 2008 A Briefing To The Housing Committee Housing Department March 3, 2008

2 Purpose Consideration support of three 9% tax credits projects LifeNet Supportive Housing Single Room Occupancy (SRO) Project Fiji Senior and Frazier Berean Senior Projects both received final approval from the City of Dallas on February 28, 2007, but were not awarded 9 % tax credits by the Texas Department of Housing and Community Affairs (TDHCA) for 2007 Both projects reapplied to TDHCA for 9% tax credits for the 2008 funding year All three projects fit priority 3 which is special needs projects such as transitional housing for the homeless and seniors 2

3 LifeNet Supportive Housing SRO Project 2734 Clarence Street, Council District units for families for rehabilitation 121 SRO Efficiency and 4 one-bedroom 100 units for households at or below 50% area median family income 25 units for households at or below 60% area median family income Rents will be further restricted to 50%, 40% and 30% and below to meet requirements for additional sources of funding Rents set at tax credit rents based on income levels Applicant LifeNet-Supportive Housing SRO Community, L.P. Tax credit investor will be limited partner Developer LifeNet Community Behavioral Health has developed between 1300 and 1400 units of multifamily financed with Low Income Housing Tax Credits state-wide, including Churchill at Pinnacle Park (200 units) on Cockrell Hill Road in Dallas where they are the General Partner Property Manager Churchill Residential Management, L.P. 3

4 LifeNet Supportive Housing SRO Project (Cont d) Developer applied to the City for $1Million in 2005 Proposition 14, General Obligation Bond Funds (Homeless) Bond proceed will be used for acquisition of land and substandard properties Quality of Life Committee was briefed on this request Two Community Meetings were held and received positive support from local residents for the development of a SRO project Supportive services to tenants will include; home health care and mental health services, case management, storage areas, 24 hr front desk, secured doors, common courtyards and decks and 12 step program meeting rooms 4

5 Issues: LifeNet Supportive Housing SRO Project The Developer is seeking a partnership with DHA for the purposes of obtaining a 100% ad valorem tax exemption 5

6 Map of LifeNet Supportive Housing Project 6

7 7

8 8

9 Site Plan: LifeNet Supportive Housing SRO Project 9

10 Renderings: LifeNet Supportive Housing SRO Project 10

11 Renderings: LifeNet Supportive Housing SRO Project 11

12 Renderings: LifeNet Supportive Housing SRO Project 12

13 Renderings: LifeNet Supportive Housing SRO Project 13

14 LifeNet Supportive Housing SRO Sources and Uses SOURCES Tax Credit Equity $6,144,000 Conventional Loan 500,000 City G O Bonds 1,000,000 AHP Loan-Life Net 500,000 Private Fund Raising 800,000 Deferred developer fee 260,048 TOTAL SOURCES $9,204,048 USES Land Acquisition $ 900,000 Site work 100,000 Hard Construction Costs 4,958,282 Indirect Construction Costs 790,000 Architech/Engineering 600,000 Construction Loan 71,250 Operating Deficit 223,022 Financing Costs 257,346 Development Consulting Fee 75,000 Soft Cost Contingencies 100,000 Developer Fee 829,148 Operating Reserve 300,000 TOTAL USES $9,204,048 14

15 Fiji Senior and Frazier Berean Projects Resubmitted TDHCA 9% Tax Credits Applications for 2008 Both the Fiji Senior and the Frazier Berean Senior Projects received approval from the City of Dallas for 9% tax credits on February 28, 2007 Neither of these senior projects was awarded 9% tax credits by TDHCA in 2007, therefore the developersowners resubmitted their applications to TDHCA for 9% tax credits for the 2008 funding year 15

16 Fiji Senior Project 201 Fran Way, Council District new construction units for seniors 65 one-bedroom and 65 two-bedrooms 52 units for households at or below 50% area median family income 130 units for households at or below 60% area median family income Rents set at tax credit rents based on income levels Applicant SDC Fiji Senior, L.P. Fiji Villas, LLC, General Partner LLC ownership Initial members 60% owned by Jay Oji and 40% owned by Joseph Ogumadu Tax credit investor will be limited partner Developer Sphinx Development Corporation has developed 740 units of multifamily in the City of Dallas that were financed with Low Income Housing Tax Credits Property Manager Alpha Barnes 16

17 Fiji Senior Project City approved $1.2M in CDBG Funds Project site acquired on November 30, 2007 in the amount of $830,400 Demolition of the 3 industrial buildings to commence March 2008 Project received a total of $3.5M; $2.8M from the North Texas Council of Governments and $702,997 from City of Dallas Public Infrastructure funds in December 2006, representing the City s 20% required match for Transit Oriented Development (TOD) The pre-application waiver was granted by the Dallas City Council on February 13, 2008 This TOD project could also qualify under priority 4 new construction for families with a priority given to TODs 17

18 Fiji Senior Project (Cont d) The applicant held two community meetings with approximately 15 attendees at each. There was no opposition to the planned development. Supportive services to tenants will include; health care screenings, cultural programs, activity rooms, financial counseling, needs assessments, and notary services 18

19 Map: Fiji Senior Project 19

20 Fiji Senior Project 20

21 Fiji Senior Project 21

22 Site Plan: Fiji Senior Project 22

23 Renderings: Fiji Senior Project 23

24 Fiji Senior Project Sources and Uses SOURCES Tax Credit Equity $ 9,839,016 Taxable Debt 3,376,000 City Funding 1,525,000* Deferred Developer Fee 310,768 TOTAL SOURCES $15,050,784 USES Land Acquisition $1,074,650 Off-site Costs 325,000 Tax Credit Costs 69,850 Hard Construction Costs 9,296,904 Soft Costs 1,193,427 Financing Costs 1,157,063 Reserves 275,650 Developer Fee 1,658,240 TOTAL USES $15,050,784 *The $1.5M includes $325,000 of North Texas Council of Governments funding for roadways 24

25 Issue: Fiji Senior The City took the risk to fund the acquisition and demolition loan prior to Sphinx Development Corporation getting an award of 9% tax credits from TDHCA 25

26 Frazier Berean Senior Project 3326 Mingo Street, Council District new construction units for seniors 127 one-bedrooms and 23 two-bedrooms 8 units for households at or below 30% area median family income 53 units for households at or below 50% area median family income 89 units for households at or below 60% area median family income Rents set at tax credit rents based on income levels Applicant Carpenter s Point, L.P. Hebron Development, LLC, General Partner LLC ownership Affiliate of the Frazier Berean Group Tax credit investor will be limited partner Developer and/or Co-Developer Carleton Residential has developed 2,166 units state wide and 1,685 new multifamily units in the City of Dallas that were financed with Low Income Housing Tax Credits Property Manager To be determined 26

27 Frazier Berean Senior Project (Cont d) Developer has re-applied to the City for up to $928,473 Project approval on June 27, 2007 included commitment for $750,000 in CDBG funds Reprogrammed from the Section 108 Intown Housing Loan Program repayments When project did not receive the 9% tax credits award from TDHCA, the $750,000 was reallocated A $928,473 HOME funding commitment would require reprogramming of Mortgage Assistance Program (MAP) funds to a new use for this project The increase to $928,500 represents 7% of the total construction budget to provide the necessary points needed to make it competitive 27

28 Issues: Frazier Berean Senior Project (Cont d) The FY07-08 MAP was allocated $4.74 with a carry-forward of $449,000 for a total of $5.2M MAP closings are projected to be 375 homes with an expenditure of $3.75M, leaving a $1.45M balance The Department also received a request from The Enterprise Community Partners, the sub-recipient administering MAP for the City, requesting $500,000 of the available balance for additional MAP funding to provide up to $15,000 for their EHOP, a HUD program that makes foreclosed homes available to eligible residents. Homebuyers need additional equity assistance due to the depressed areas that the EHOP homes are located in. By funding the $928,473 from the MAP HOME allocation, there may be a gap at the end of the fiscal year resulting in MAP not being available to prospective homebuyers, based upon projections 28

29 Frazier Berean Senior Project (Cont d) The applicant has requested that the in-kind social service requirement be increased to 100% (this is an exception of the 50% requirement) of the 200 per unit for a minimum of $40,000 due to the limited amount of cash flow and the ability of The Frazier Berean Group to provide a majority of the in-kind contributions The applicant held a community meeting with approximately 15 attendees. There was no opposition to the proposed development 29

30 Map: Frazier Berean 30

31 31

32 32

33 Site Plan: Frazier Berean 33

34 Renderings Frazier Berean 34

35 Frazier Berean Senior Project SOURCES Tax Credit Equity $ 9,960,000 Conventional Loan 2,120,217 City Funding 928,473 In-kind developer fee 255,215 TOTAL SOURCES $13,263,905 USES Land Acquisition $ 100,000 Site work 896,271 Hard Construction Costs 6,869,069 Ancillary Hard Costs 1,410,408 Indirect Construction Costs 988,500 Financing Costs 1, 058,529 Reserves 300,000 Developer Fee 1,641,128 TOTAL USES $13,263,905 35

36 Recommendation For % Tax Credit Projects Recommend providing support letters to TDHCA for: LifeNet Supportive Housing SRO subject to $1M in GO Bond Homeless funds to be used by for acquisition land and substandard properties to be approved by City Council Frazier Berean Senior Project subject to $928,473 in federal HOME funds for construction approved by City Council Fiji Senior Project 36

37 Next Steps March 26, Council consideration of the support of the tax credits and support for additional City funding, where applicable March 31, Support letters are sent to TDHCA 37

38 Addendum: Market Condition Comparison Understanding Dallas tax-exempt bond and tax credit multifamily market in 2005 compared to the changes that have occurred in 2007 In 2005 there were fifteen projects (2,925 units) under construction and in 2007 there are only three projects (544 units) under construction In 2005, an additional six projects (846 units) had not closed on their interim construction loans with one construction closing pending for City Walk at Akard in 2008; and In 2005, ten projects (1,986 units) that had not reached stabilization and in 2008, 6 projects (964 units) have not reached stabilization The overall average gross occupancy level in 2005 city-wide was 92.2% and in 2007 it increased to 94.3% average gross occupancy city-wide The average occupancy for tax credit financed projects that have reached stabilization is currently 96% Includes projects with bonds issued by the TDHCA, the Dallas Housing Finance Corporation (DHFC) and Housing Options, Inc. (Dallas Housing Authority) 38

39 Market Analysis The main submarkets with concentrations of tax credit financed projects are South Dallas, Southwest Dallas and Oak Cliff The weighted average occupancy level for tax credit transactions in South Dallas is currently 91% versus the gross market average of 89.5% The weighted average occupancy level for tax credit transactions in Southwest Dallas is 97.8% versus the gross market average of 91.7% The weighted average occupancy level for tax credit transactions in Oak Cliff is 93.7% as is the gross market average of 93.7% 39

40 MAP 40

41 Addendum Market Analysis M/PF Research 4 rd Quarter rd Quarter 2008 Forecast 4 rd Quarter 2007 Existing Apartment Annual Apartment Completions Apartment Unit Absorption Average Gross Occupancy Average Monthly Rent 4 rd Quarter 2008 Forecast Annual Apartment Completions Apartment Unit Absorption Dallas Area 4 rd Quarter ,786 6, % $764 4 rd Quarter 2008 Forecast 7,700 7,300 Average Gross Occupancy 94.1% 41

42 Occupancy Comparison of Projects Approved Since 2001 South Dallas Projects per South Dallas Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Ewing Villas 801 S. Ewing Ave CD % 89.5% 2. Rosemont Pemberton Hill 220 Stoneport CD % 89.5% 3. Oak Hollow 2965 E. Ledbetter CD % 89.5% 4, Prairie Commons 9600 Military Parkway CD % 89. 5% 5. Cedar Crest 3303 Southern Oaks Blvd. CD % 89.5% 6. Murdeaux 7400 Loop 12 CD % 89.5% 7. Meadow Lane 4701 Meadow Lane CD % 89.5% 8. Frazier Fellowship Hatcher CD % 89.5% 9. Delafield 8200 Hoyle Ave. CD % 89.5% 42

43 Occupancy Comparison of Projects Approved Since 2001 South Dallas Projects per South Dallas Submarket Address Council District # of Occupancy of Project Submarket Occupancy Mission Trails 330 E. Camp Wisdom CD 5/ CD % 89.5% 11. The Masters 1180 N. Masters CD % 89.5% 12. Champion Homes of Pecan Grove 3111 Simpson Stuart Road CD % 89.5% 13. Sierra Vista 9901 Scyene Road CD % 89.5% 14. St. Augustine Seniors N.E. Corner Bruton & St. Augustine CD % 89.5% 15. Pleasant Village 378 N. Jim Miller CD % 89.5% 16. Grove Village 7203 S. Loop 12 CD % 89. 5% 43

44 Occupancy Comparison of Projects Approved Since 2001 In Lease-up South Dallas Projects per South Dallas Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Reese Townhomes 1201 S. Ewing CD % 89.5% 44

45 Occupancy Comparison of Projects Approved Since 2001 Under Construction South Dallas Projects per South Dallas Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Wahoo Frazier Hatcher CD n/a 89.5% 2. Mill City Parc Frazier Hatcher CD n/a 89.5% 45

46 Occupancy Comparison of Projects Approved Since 2001 Southwest Dallas Projects per Southwest Dallas Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Rosemont@ Timbercreek 801 Beckleymeade CD % 91.2% 2. Bluff Ridge 8125 Clark Rd CD % 91.2% 3. Hickory Trace 8629 Old Hickory Trail CD % 91.2% 4. Providence on the Park 8501 Old Hickory CD % 91.2% 5. West Virginia 7600 West Virginia Dr. CD % 91.2% 6. Artisan Ridge 5000 Preakness Lane CD % 91.2% 7. Homes of Mountain Creek SW Corner of Skyline and S.E. 14 th St. CD % 91.2% 46

47 Occupancy Comparison of Projects Approved Since 2001 Oak Cliff Projects per Oak Cliff Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Madison Point 3600 S R L Thornton CD % 94.0% 2. Potters Primrose 2515 Perryton CD % 94.0% Lakewest 3030 N. Hampton CD % 94.0% 4. Churchill@ Pinnacle Park 1400 N. Cockrell Hill CD % 94.0% 5. Village Fair 5151 Village Fair Drive CD % 94.0% 47

48 Status by Submarket Since 2001 In Lease-up Oak Cliff Projects per Submarket Address Council District # of Occupancy of Project Submarket Occupancy 1. Luxor Townhomes NE Quadrant of Cockrell Hill Westmoreland CD % 94.0% 48