The last ten (10) lots of the King's Green Subdivision (Phase 4) are ready for development and sale.  The City advertised a Request for Proposals (RFP) March 1 and 8, 2012, seeking a qualified development entity to design, construct, finance, manage development, market and sell each property to low-income homebuyers, coordinate the transfer of properties to buyers and other associated tasks that ensure the successful completion of the City of Billings’ affordable housing goals.

The RFP sought proposals to develop ten new, affordable, single family homes for low income residents of Billings on vacant lots owned by the City of Billings and located at (map attached):

903 Jackson Street
917 Jackson Street
931 Jackson Street
945 Jackson Street
954 Jackson Street
959 Jackson Street
973 Jackson Street
980 Jackson Street
1010 Jackson Street
1030 Jackson Street

The following organizations submitted responses to the RFP:

Real Estate Dynamics, Inc. 
Bodini Enterprises LLC
Asphalt Plus, Inc.
Discovery Meadows Inc. (received after the RFP submittal deadline)

A four-member RFP Review Committee reviewed each proposal, evaluated each proposal in accordance with the information, objectives, site information, key parameters, and proposal contents specified within the RFP, and ranked them accordingly using the attached RFP Decision Matrix created for this purpose. The Community Development Board (CD Board) reviewed the RFP and RFP Decision Matrix at their April 3, 2012, meeting. The CD Board subsequently voted to approve Real Estate Dynamics, Inc. (RED) as the Builder/Selling Agent for the Kings Green Subdivision, Phase IV, Affordable Housing Project, with the understanding that when Real Estate Dynamics, Inc. serves as both the buyer’s and seller’s agent, that the total commission will be 5% (instead of 3% for being the buyer’s agent and 3% for being the seller’s agent, making it a total of 6%).

Following CD Board approval of the Builder/Selling Agent, City staff negotiated the Housing Development and Construction Agreement with RED.

If approved by the City Council, RED will construct 10 homes similar to those built in the previous phases of the King Green Subdivision. RED anticipates building a mix of two-bedroom homes, three-bedroom homes, and four-bedroom homes. 100% of the houses will be targeted to families below 80% of Area Median Income (AMI).

1. Approve the CD Board recommendation of Real Estate Dynamics, Inc. as Builder/Selling Agent for the Kings Green Subdivision, Phase IV, Affordable Housing Project and approve the Housing Development and Construction Agreement with Real Estate Dynamics, Inc.

2. Do not approve the CD Board-recommended Builder/Selling Agent for the Kings Green Subdivision, Phase IV, Affordable Housing Project and do not approve the Housing Development and Construction Agreement with Real Estate Dynamics. Choosing this alternative would result in delaying the project and could increase the cost of construction as well as the final purchase price of the houses.

CDBG and HOME funds are provided to the City by HUD for affordable housing projects. HOME funds in the amount of $389,043 have been allocated for constructing site improvements for the Kings Green Subdivision, 3rd Filing, Phase IV, Affordable Housing Project. Site improvements are currently under construction under a separate contract. 

RED has received pre-approval of construction funding from 1st Interstate Bank to complete the project. This is the same lender who provided RED construction lending for Kings Green Subdivision, Phases I, II, and III. RED has also arranged for buyer mortgage financing with most mortgage lending banks in Billings to provide opportunities for buyer home financing.

RED's key personnel have also made available personal capital of $100,000 for initial funding for working capital support for this project.

RED has secured all necessary insurance coverage with Payne Financial, Hoiness LaBar Insurance Company.

Homebuyers using City of Billings First Time Home Buyers funds are eligible to use the Montana Board of Housing’s 5.5% set-aside for their primary mortgage. Alternatively, homebuyers could use FHA or conventional loans.

HOME Requirements Review

• The HOME 25% match requirement will be met through the mortgages secured by the purchasers of the houses.

• HOME requires all of the units be sold to households with 80% or less AMI.

• Because the Kings Green, Phase IV, Affordable Housing Project includes less than 12 HOME-assisted units, Davis-Bacon wage rates do not apply.

• Each home sold will be subject to recapture provisions and HOME funds will be secured through a Deed Restrictions Agreement and a Montana Trust Indenture, which will be signed by the purchasers at closing. These documents will ensure that HOME funds will return to the program, which will enable the City to assist other low income homebuyers in the future.

The City of Billings conducted a Housing Needs Assessment in December 2010. The combination of the household forecast and housing needs surveys were the basis for the housing needs assessment and the determination of the priorities to meet the needs in Billings. The Assessment indentified a high need for owner-occupied housing in the 51% to 80% of Median Family Income range. The change in the number of households in this category increases by approximately 36 per year; a total of 254 new affordable units are needed from 2008 to 2015.

The barriers to building new affordable housing are the increasing cost of construction and materials, and the increasing cost of infrastructure. Other barriers to homeownership are the lack of down payment assistance and a lack of knowledge regarding the home buying process and available assistance.

PROCEDURAL HISTORY

• February 1995 - Yellowstone County donated 14.5 acres of tax-deed property to the City of Billings. This land was donated by the County on the condition that it was used for the creation of affordable housing.
• June 12, 1995 - A public hearing was held by the City Council on the proposed sale of the land. Many neighbors expressed concern over the development of the property. In response, the City Council placed four criteria on the development of the land to assure a quality development that would compliment the existing neighborhood. These criteria included:
  1. Property to be used solely for affordable housing projects;
  2. Access must be provided to the adjacent park property;
  3. Development must mitigate negative impacts on the surrounding neighborhood; and
  4. All conditions will be enforced by a Development Agreement.
• June 1995 - City Council received a request for zone change. The project required a zone change from R5000 to R6000 which was opposed by the neighbors and the zone change was denied by the City Council.
• August 1995 - City staff issued a Request for Proposals (RFP) for the use of the land from area developers, builders and non-profit organizations with proposals due on October 13, 1995.
• October 1995 - Staff receives a proposal from Yellowstone Construction. Chuck Platt and Jerry Neumann were partners in Yellowstone Construction. The partnership is now dissolved and the new proposal was from Chuck Platt and Tim Hudson of Diamond Realtors and Laughlin Construction.
• December 1995 - Public Hearing held on selection of developer. Yellowstone Construction’s proposal accepted by City Council to build 68 homes.
• May 1996 - major plat accepted by City Council.
• August 1996 - Development agreement was approved and signed by Mayor Tooley.
• January 1997 - City received preliminary contract for site improvements costs of Phase I & II.
• May 1997- City quit-claimed first two lots to Yellowstone Construction to begin first phase.
• June 1997 to June 2000 - City experienced flooding problems in the area causing the footings of the first two homes to flood halting project. City received letter from Chuck Platt and Jerry Neumann stating that project at present is not feasible as currently designed. They expressed interest in finding a solution stating that storm drain concerns must be addressed for the project and the existing neighbors for a successful project. The City hired an engineer to evaluate solutions to storm drain problems in the area. Yellowstone Construction quit-claimed the parcels back to City. City staff met with the developer and Southwest Corridor Task Force chairman to discuss preliminary storm drain report. Twenty-seven different alternatives were explored and narrowed down to two alternatives for final analysis by the engineer. City received a grant of $300,000 to combine with other local resources to provide a storm water-retention facility for the area. Retention facility reviewed and closed out by State CDBG.
• December 2001 - New RFP was issued with due date of January 18, 2002.
• January 18, 2002 - One proposal was submitted by Diamond Realtors and Laughlin Construction.
• March 2002 - Neighborhood meeting held to discuss project and obtain feedback from people attending. Flood mitigation performed at site questioned as to its intended success.
• March 2002 - Community Development Staff met with Public Works staff to discuss concerns.
• April 2002 - Second neighborhood meeting held so that City Engineer could address storm drain concerns.
• June 2002 - Third meeting was held to discuss housing plans and to obtain feedback. No concerns were expressed regarding housing but Task Force still concerned about storm drain issues.
• August 2002 - Developer, City staff and Task Force Chairman meet at Kings Green site to discuss concerns and possible resolutions.
• August 22, 2002 - Resolutions to further mitigate fears discussed and received support from task force to proceed.
• September 3, 2002 - CD Board recommends approval of the project and entering into new development agreement.
• October 2002 - Staff, developer, and Engineering, Inc. staff worked on revising plat and submitting for approval.
• December 2002 - Revised plat submitted.
• December 2003 - Housing Development Agreement signed with Real Estate Dynamics, Inc.
• December 2004 - Final home in Kings Green, Phase I, is purchased.
• June 2005 - Kings Green, Phase II, RFP.
• August 2005 - Staff Recommendation to CD Board for Kings Green, Phase II.
• November 2007 - Final home in Kings Green, Phase II, is purchased.
• February 2008 - Kings Green, Phase III, RFP.
• March 2008 - Staff Recommendation to CD Board for Kings Green, Phase III.
• August 2010 - Final home in Kings Green, Phase III, is purchased.
• March 2012 – Kings Green, Phase IV, RFP.
• April 2012 – Staff Recommendation to CD Board for Kings Green, Phase IV.
• May 2012 – Staff recommendation to the City Council (this memo).

This project shows a strong partnership and commitment to achieving affordable housing goals for the City of Billings. As the developer of the previous phases, RED is familiar with all of the history and challenges associated with the project. RED also contributed a significant amount of time in working with staff and the Southwest Corridor Task Force to assure that the existing neighborhood had an ample opportunity for input and participation in the proposed project.