12.B.
City Council Meeting - FINAL
- Meeting Date:
- 03/19/2024
- From:
- Jennifer Mikelson, Housing Planning Manager
Information
TITLE:
Consideration and Approval: Rental Incentive Bond Program Awards
STAFF RECOMMENDED ACTION:
Approve two Rental Incentive Bond Program Awards totaling $3,330,000 resulting in 139 affordable rental units, as recommended by the Ranking Committee.
Executive Summary:
The Rental Incentive Bond Program (RIBP) was approved by Council in November 2023 and a subsequent Notice of Funding Availability (NOFA) process was conducted in February 2024. Two affordable rental project applications were determined eligible to be considered for funding and were scored by a Ranking Committee. Staff is requesting Council’s approval of funding awards, per the Committee’s recommendation.
Project details and recommended award amounts are as follows:
Project details and recommended award amounts are as follows:
- San Francisco Square Apartments
- Foundation for Senior Living
- 70 units
- Serving seniors below 80% AMI
- $1,680,000
- Aspen Lofts Apartments
- Foundation for Senior Living
- 69 units
- Serving individuals and families below 60% AMI
- $1,650,000
Financial Impact:
This program is budgeted in the Housing General Obligation Bond Fund, 411-05-105-0354- for rental assistance. Loans will utilize general obligation bond funds, as approved by Flagstaff voters in the November 2022 election. The bonds will be paid back with Secondary Property Tax levies as approved by the voters. A total of five million ($5M) in bond funds are available under the RIBP. Loans will have no financial impact on the city’s general fund.
Policy Impact:
N/A
Previous Council Decision or Community Discussion:
City Council placed Proposition 442 on the ballot for the November 2022 election with one of the funding items being “Incentivizing the Private Sector to Incorporate Affordable Rental Housing in New Developments.” Work Session on the RIBP held October 24, 2023 Resolution 2023-51 adopting the RIBP approved November 7, 2023
Options and Alternatives to Recommended Action:
- Approve staff's recommendation.
- Modify staff's recommendation.
- Reject staff's recommendation, understanding that rejecting the recommended award amounts or delaying approval of awards will jeopardize FSL's competitiveness in its application for Low-Income Housing Tax Credits for Aspen Lofts, due on April 1, 2024.
Background and History:
Housing Bond Background
Proposition 442 – authorizing the use $20 million dollars of general obligation bonds for “Creating Rental and Ownership Opportunities for Residents of Flagstaff” was approved by the voters in the November 2022 General Election. Proposition 442 identified four affordable housing spending categories, including “incentivizing the private sector to incorporate affordable rental housing into new developments.”
Rental Incentive Bond Program Overview
Approved by City Council in November 2023, the RIBP is intended to provide loans to eligible developers of rental housing choosing to include a minimum of 10% affordable units in new rental projects serving households at or below 80% area median income ($65,450 for a household of 3) in Flagstaff.
NOFA and Evaluation Process
Purchasing staff published a Request for Proposals solicitation for the Notice of Funding Availability Rental Incentive Bond Program in the Arizona Daily Sun on February 3 & 10, 2024 and posted the solicitation to the City of Flagstaff’s PlanetBids Website on February 2, 2024. On February 19, 2024, the City received three (3) proposals with two deemed responsive and responsible. In developing the NOFA, staff prioritized a simple application with fact-based evaluation criteria in an effort to streamline the application and evaluation process. Housing staff conducted a minimum threshold review of all three applications and determined one to be ineligible for evaluation due to the advanced construction stage of the project. The two eligible applications were provided to members of the Ranking Committee and scored individually in accordance with the evaluation criteria. The Ranking Committee was comprised of two Housing Commissioners and a selection of internal City staff involved in the review of affordable development projects (two members from the Housing Section, one member from Development Engineering, and one member from Current Planning). The group met to discuss their scores and reached a final consensus score for each application. Based upon the numerical scoring of the applications below, the Committee identified both applications to be recommended for funding.
Foundation for Senior Living, a non-profit Low-Income Housing Tax Credit (LIHTC) developer, submitted two applications for a two-phased redevelopment of an entire downtown block located at 320 N. Humphreys Street (the old St. Mary’s school site). Each phase is considered a separate project with separate financing efforts currently underway. The San Francisco Square project has already secured funding in part through conditionally approved Tax-Exempt Bonds with 4% LIHTCs, $5 Million of Arizona Department of Housing’s State Housing Trust Fund, $7 Million in federal appropriations through Senator Sinema's office, and private funding. The Aspen Lofts project is applying for an award of 9% tax credits from the Arizona Department of Housing. Awards are typically announced in June each year.
A summary of application details is provided in the table below.
If Council approves the award amounts, staff will issue notices of award to the developer. Funding will be provided as two 50-year forgivable loans, which will be drafted and brought forward as consent items at a future Council meeting. Per the adopted RIBP, all remaining $1,670,000 in Program funds will be made available for a subsequent NOFA process. Dates for the next round have not been determined.
Community Benefit
These forgivable loans will assist in the creation of 139 new 100% affordable LIHTC units in downtown Flagstaff. The San Francisco Square Apartments will serve seniors earning up to 80% AMI and consists of 60 one-bedroom and 10 two-bedroom units. The Aspen Lofts Apartments will serve individuals and families up to 60% of the Area Median Income (AMI) and consists of 37 one-bedroom, 19 two-bedroom and 13 three-bedroom units.
Proposition 442 – authorizing the use $20 million dollars of general obligation bonds for “Creating Rental and Ownership Opportunities for Residents of Flagstaff” was approved by the voters in the November 2022 General Election. Proposition 442 identified four affordable housing spending categories, including “incentivizing the private sector to incorporate affordable rental housing into new developments.”
Rental Incentive Bond Program Overview
Approved by City Council in November 2023, the RIBP is intended to provide loans to eligible developers of rental housing choosing to include a minimum of 10% affordable units in new rental projects serving households at or below 80% area median income ($65,450 for a household of 3) in Flagstaff.
NOFA and Evaluation Process
Purchasing staff published a Request for Proposals solicitation for the Notice of Funding Availability Rental Incentive Bond Program in the Arizona Daily Sun on February 3 & 10, 2024 and posted the solicitation to the City of Flagstaff’s PlanetBids Website on February 2, 2024. On February 19, 2024, the City received three (3) proposals with two deemed responsive and responsible. In developing the NOFA, staff prioritized a simple application with fact-based evaluation criteria in an effort to streamline the application and evaluation process. Housing staff conducted a minimum threshold review of all three applications and determined one to be ineligible for evaluation due to the advanced construction stage of the project. The two eligible applications were provided to members of the Ranking Committee and scored individually in accordance with the evaluation criteria. The Ranking Committee was comprised of two Housing Commissioners and a selection of internal City staff involved in the review of affordable development projects (two members from the Housing Section, one member from Development Engineering, and one member from Current Planning). The group met to discuss their scores and reached a final consensus score for each application. Based upon the numerical scoring of the applications below, the Committee identified both applications to be recommended for funding.
- FSL Humphreys Flagstaff 2019 LLC (San Francisco Square) - 601 points
- FSL Aspen Lofts, LLC - 557 points
Foundation for Senior Living, a non-profit Low-Income Housing Tax Credit (LIHTC) developer, submitted two applications for a two-phased redevelopment of an entire downtown block located at 320 N. Humphreys Street (the old St. Mary’s school site). Each phase is considered a separate project with separate financing efforts currently underway. The San Francisco Square project has already secured funding in part through conditionally approved Tax-Exempt Bonds with 4% LIHTCs, $5 Million of Arizona Department of Housing’s State Housing Trust Fund, $7 Million in federal appropriations through Senator Sinema's office, and private funding. The Aspen Lofts project is applying for an award of 9% tax credits from the Arizona Department of Housing. Awards are typically announced in June each year.
A summary of application details is provided in the table below.
| Application #1 | Application #2 | |
| Project Name | San Francisco Square Apartments (Phase 1) | Aspen Lofts Apartments (Phase 2) |
| Applicant Name | Foundation for Senior Living | Foundation for Senior Living |
| Requested Award Amount | $1,680,000 | $1,650,000 |
| Total Project Cost | $35,236,005 | $29,274,852 |
| Number of Affordable Units | 70 | 69 |
| Subsidy Per Unit Requested | $24,000 | $23,913 |
| Percent of Affordable Units | 100% | 100% |
| Max AMI & Population Served | 80%, Seniors 62+ | 60%, Families & Individuals |
| Consensus Score | 601 points | 557 points |
| Recommended Funding Amount | $1,680,000 | $1,650,000 |
If Council approves the award amounts, staff will issue notices of award to the developer. Funding will be provided as two 50-year forgivable loans, which will be drafted and brought forward as consent items at a future Council meeting. Per the adopted RIBP, all remaining $1,670,000 in Program funds will be made available for a subsequent NOFA process. Dates for the next round have not been determined.
Community Benefit
These forgivable loans will assist in the creation of 139 new 100% affordable LIHTC units in downtown Flagstaff. The San Francisco Square Apartments will serve seniors earning up to 80% AMI and consists of 60 one-bedroom and 10 two-bedroom units. The Aspen Lofts Apartments will serve individuals and families up to 60% of the Area Median Income (AMI) and consists of 37 one-bedroom, 19 two-bedroom and 13 three-bedroom units.
Connection to PBB Priorities and Objectives:
Livable Community: Actively support attainable & affordable housing through City projects & opportunities with developers.
Connection to Regional Plan:
- Goal LU.9. Focus reinvestment, partnerships, regulations, and incentives on developing or redeveloping urban areas.
- Goal NH.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors.
- Policy NH.3.1. Provide a variety of housing types throughout the City and region, including purchase and rental options, to expand the choices available to meet the financial and lifestyle needs of our diverse population.
- Policy NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.
- Policy NH.3.5. Encourage and incentivize affordable housing.
Connection to Carbon Neutrality Plan:
- HA-1: Create housing options for households at all income levels and family sizes occupied by local residents.
- HA-2: Connect people to equitable housing solutions.
- HA-4: Protect people from housing discrimination and remove housing barriers.
Connection to 10-Year Housing Plan:
Create housing options for households at all income levels and family sizes occupied by local residents.
- Create 1: Incentivize the creation of affordable units through various programs and mechanisms. Protect people from housing discrimination and remove housing barriers.
- Protect 2: Ensure affordable housing is a part of every Flagstaff neighborhood and work to address disparate impact as part of any development or redevelopment.