The Community Development Board and CD staff recommended allocating $1,200,000 in HOME funding to Mitchell Court LLLP for the new construction of the Mitchell Court Project. The allocation and expenditure of HOME funding will also assist the CD Division in meeting expenditure deadlines required by HUD.

Application
On October 13, 2023, an Affordable Housing Development Program application was submitted by Mitchell Court LLLP. Mitchell Court LLLP is requesting $1,200,000. Funding would be used to construct 32 affordable rental units. Extensive work with the applicant and City Legal on the agreement documents as well as other projects and programs under review delayed this item schedule into the middle of this year.

Project Site
Mitchell Court Project is a 32-unit project located at 4154 Mitchell Court in Billings; MT. The availability of units will be 14 one-bedroom, 14 two-bedroom, and 4 three-bedroom units. Mitchell Court LLLP has an accepted buy/sell for the property with a purchase price of $140,000. They are paying the seller $140,000 at the closing of the property. They have already paid $12,500 in earnest money that will be credited towards the $140,000 at closing and is non-refundable should the deal fall through.

Project Utilization and Beneficiaries

• Funding investments in this project will benefit low-income individuals and families that are up to the 60% area median income long-term.  
• The target populations for this project are Native Hawaiian/Pacific Islander, Black/African American and Asian households based on the project’s affirmative fair housing findings. 
• The use of existing infill land for the project site provides additional affordability. The applicant is willing to secure the City’s funding award through a development agreement, promissory note and a trust indenture, assuring the City will be repaid the full award if the project no longer serves the intended population or is sold. 
• The organization held three neighborhood meetings and a public notice was published in the Billings Gazette requesting comments to ensure beneficiary involvement. 

Procedural History

• July 13, 2023: GL Development, LLC. entered into a buy to/sell agreement with Aquoneering, LLC to purchase 4154 Mitchell Court which is to be used as affordable housing for low to moderate income households.
• July 20, 2023: A local community presentation and input session was held at the Southside Task Force.
• July 21, 2023: A local community presentation and input session was held at the South Park Senior Center.
• July 22, 2023: Neighborhood / stakeholder meeting was held at the Plaza of the Jackson Court apartments.
• October 13, 2023: Mitchell Court LLLP submitted an Affordable Housing Development Program application to the City’s Community Development Division requesting $1,200,000.00 for the construction of the 32-unit multifamily complex.
• November 7, 2023: Mitchell Court LLLP staff attended the Community Development Board to give a brief presentation on the project. The Board was also invited to take a tour of the project right after the meeting.
• November 21, 2023: Staff sent a memo detailing the project to the Community Development Board. 
• December 5, 2023: Mitchell Court LLLP staff reviewed the project with the Community Development Board during their regular monthly meeting. The Community Development Board unanimously voted to approve the project for HOME funding.
• Drafting and review of the development agreement and documents for the funding allocation took much of the spring.

Project Review 
The property is in the Southwest Corridor area and within Billings city limits. As part of the environmental review process, Division staff review locations for proximity to amenities, transportation, employment opportunities, food sources, education resources, etc. 

The property is near Optimist Park. It is also close to multiple churches, many employment opportunities at businesses such as Target, Albertsons, Wal-Mart, multiple fast-food restaurants, several large branch banks downtown, three credit unions and multiple convenience stores. The two larger retailers on the West-end have a pharmacy. Albertson’s, located 3.1 miles from the property, also has a pharmacy. There are two thrift stores in close proximity. Public transportation routes include a bus stop at the intersection of Mitchell Lane and Calhoun, as well as other bus routes in the vicinity. RiverStone Health is two miles distant, Billings Clinic is three miles, and St. Vincent’s Hospital is three miles away from the project.     

The site for this project has been a Code Enforcement complaint property for many years. Having the lots developed with quality housing would eliminate an eyesore and ongoing CE issue for the neighborhood.

Project Management, Developer Qualifications, and Portfolio Assessment

• Management: Mitchell Court LLLP will be the property owner and will oversee the project management in conjunction with the selected Architect group. Mitchell Court LLLP will maintain ownership and Syringa Property Management will oversee the management of the property.
• Qualifications: The applicant’s staff has significant experience in affordable housing development, construction, maintenance, and oversight. Gene Leauwer has been using HOME and CDBG since 1999 to deliver 21 affordable housing projects. All of Gene’s staff have many years of experience in working with HOME, CDBG and Tax Credit projects.

Market Analysis 
The property located at 4154 Mitchell Court is being purchased for $140,000. A property appraisal is to be completed as a requirement of the property sale.
Alignment with Consolidated / Annual Action Plan: As noted in the City’s Consolidated Plan, there were over 5,500 households on waiting lists for public housing. Over 2,000 people were waiting for single-person housing. The project addresses all the City’s Consolidated Plan goals: 

• Create, preserve, and expand affordable housing options 
• Neighborhood Revitalization
• Impact Poverty

FINANCIAL ANALYSIS

Leveraged Funding: To date, $10,833,850 million has been committed to the project (see below). The $6.5 million they are receiving in tax credits will generate $5,394,461 in equity for the project. They have applied for Tax Increment Funding (TIF). In the May TIF board meeting, $500,000 in funding was recommended. The funding request of $1,200,000 is 8.61% of the total leveraged amount and 9.30% of total project costs.
 - Total Tax Credit Equity $5,394,461
 - MBOH Coal Trust Multifamily Homes Loan $1,700,000
 - Montana Health Foundation Loan $750,000
 - State HOME Funds $1,650,000
- SBURA Tax Increment Funds $500,000
 - Deferred Developer Fee approximately $139,390
TOTAL $10,133,581

Fiscal Health: Funding has been secured to date for $10,133,851 and $1,550,000 has been applied for or will be applied for between City of Billings HOME funds and Tax Increment Funds, but not secured to date. Mitchell Court will partner with HomeFront to house households with housing choice vouchers. The project is being built with the goal of a tight, efficient, and durable building envelope for longevity and lower utility costs. Preliminary design concepts include crime deterrence to protect the buildings as well as maintain the safety of the residents.

Subsidy Layering Review: The list of proposed costs appears to be thorough and complete. Mitchell Court has management and maintenance plans in place to ensure the property’s long-term viability. The $1,200,000 in requested funding is a very small percentage of the overall project costs and funding under the maximum subsidy limits. The developer does have experience of developing housing with Federal funds and Low-Income Housing Tax Credits.

Procurement: Procurement has been completed for this project. If funded, Mitchell Court LLLC. Developer has followed procurement regulations as required to obtain additional, competitive estimates through a free, open, and competitive process. The overall project budget is reasonable, given the professional expertise available in Billings. There is a workforce and contractor availability shortage, and the cost of materials has greatly increased due to pandemic impacts.  PROJECT BUDGET
 

Item	Bids Received	Estimated Cost
Land Purchase	Buy/sell accepted	$140,000
Site Work	No bids	$1,427,007
Construction	No bids	$6,801,097
Professional Work & Fees (Architect, Attorney, Engineer)	No bids	$450,000
Construction Interim Fees	Business fees	$574,000
Permanent Financing Fees	Business fees	$84,500
Soft Costs	Business fees	$250,000
Syndication Costs	Business fees	$70,000
Developer's Fees	Business fees	$1,205,000
Project Reserves	Business fees	$182,247

TOTAL $11,183,850

Previous City Awards: The project is in alignment with previous awards granted by the City. The cost per unit for construction is $349,495 per unit. 
 

Project	# Units	City Award
Pheasant Home	16	$554,191
Southern Lights	20	$500,000
C & C Community	60	$540,000
Off The Streets	60	$450,000
Sioux Lane – Infrastructure	32	$262,000
Old Town Square	8	$242,000
Spring Gardens	16	$240,000
Westchester Square	3	$200,000
YWCA Gateway House	10	$182,400
Sage Towers	20	$175,000
Acme Hotel	19	$143,400

This project serves households seeking housing they can afford in Billings: those experiencing homelessness; at-risk of homelessness; All the individuals and families served by the project will have incomes under 60 percent of the area’s median income. Clearing this blighted property and redeveloping it will also benefit the neighborhood and City as a whole.

City Council may:

• Approve; or the $1.2 million funding award
• Not Approve the $1.2 million funding award. Not approving the project will reduce a great opportunity for affordable housing for low income residents of Billings which is in high demand and prevent an infill property from being redeveloped and revitilized in South Bilings.

Community Development (CD) staff recommend utilizing HOME funding type for this project. The Division has program income, FY 22-23 and FY 23-24 revenues bringing the total available to $1,441,904. 

An overall review of the application reveals the project is consistent with similar projects the City has funded in the past and is in alignment with the City’s Consolidated Plan. There is a demonstrated need for safe and affordable housing, as evidenced through data from the City’s recent Consolidated Plan, including the Housing Needs Assessment, Market Analysis and the Analysis of Impediments to Fair Housing Choice. The applicant also has extensive experience, both in developing and managing affordable housing projects, and they are knowledgeable about federal program requirements.  
 

An overall review of the application reveals the project is consistent with similar projects the City has funded in the past and is in alignment with the City’s Consolidated Plan. There is a demonstrated need for safe and affordable housing, as evidenced through data from the City’s recent Consolidated Plan, including the Housing Needs Assessment, Market Analysis and the Analysis of Impediments to Fair Housing Choice. The applicant also has extensive experience, both in developing and managing affordable housing projects, and they are knowledgeable about federal program requirements.