Technical Review Group Meeting – Affordable Housing Projects – January 11, 2021
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Okay, well, we might as well and go ahead and get started. So first off, thank you everyone for responding so quickly to the poll and being willing to just meet on kind of short notice. Hopefully, you’ve had a chance to look over cinnamon Park’s application. They had I had talked with him in the spring about potentially applying for additional funding. But then when the fourth quarter seipel opened in October, they decided that they were, they didn’t need to apply for more funding. But then between then when the application cycle closed, and just early December, things changed for them, where they had come and asked whether they would be able to apply for additional funding, due to unexpected increases in construction costs and a decrease in what they were expecting to get on their cash credits. So they now have a request in for 250,000, which equals, which is the same amount that they were approved for in 2019. So it would be a total city contribution of 500,000. For their, for their sinnamon. Park project. So I didn’t know if anyone had questions or comments, or if you guys wanted to jump into your discussion. Sandy,
my question is, do we think that we’re gonna encounter or be hearing from other applicants requesting additional funds, because they’re finding a delay? And there is increased costs and what they initially anticipated? I mean, I, I’m surprised you’ve given them all these chances. And then, you know, you’re hearing now from them. And I just wonder,
yeah, I haven’t I haven’t heard from any other applicants? I don’t, I would have to think I think it’s
habitat would be the other project that has or other applicant that has projects that have been awarded funding that haven’t started construction. But I haven’t heard anything from them that they have any concerns about their costs. They’re not obviously getting tax credits. So they don’t worry about any change in that.
It’s the tax credits. That is the significant change. Is that my understanding?
That is part of it. And they also had increase in construction especially lumber due to she said, due to the fires, fires,
yeah. Okay. Thank you.
Yeah, the whole project look like looks like it’s up 600,000 and got a lot of lumber.
Yeah. And they did go ahead. And, you know, they they have asked all of their other funders to some additional funding so they’re not just relying on on on the city to fill to fill that gap.
Yeah, I just looked at the side by side and looks like they, they I mean, they’ve been, I don’t know how creative it is at the end of the day, because I don’t know what it takes to get these but you know, they’ve increased their sources different ended like three different sources. And and obviously, tax credit is down anyway. So it looks like they’ve done some work on that. To try and not put all of it on us, or the city of Longmont
that you that just joined. Someone joined and they didn’t show their name. I didn’t know who that was.
Yeah, by phone. So Molly,
can you hear me? This is Laurie Walker. Hi, Laura. Yes. I don’t know why my picture is not showing but I don’t care. I was wondering the it looks like the tax credit equity amount that they they originally were anticipating of 95 cents has gone down to 89 cents. Are you guys seeing that with other projects? I mean, that’s that’s a significant decrease.
The only other recent tax credit project that I have worked on was long line family apartments and they think they were at 4%. And they i don’t think i don’t know what they what they ended up getting. I don’t think he never mentioned anything about it being a decrease that would make it issue with their with their project.
It’s interesting that that it would decrease that much.
I think their consultant also expressed surprise at that point. Oh, she said it was due and uncertainty in the market is how she how she explained that difference.
So I have a question. Um, you know, on the original request, we didn’t give them the full request, because of the development fee reductions weren’t factored in. Is that still an issue this time around as well?
No. So they’re, they now have the fee waivers or fee reductions factored in to their budget. Okay, so
everything is correct. Okay, perfect thing. Yeah.
So I have a question. I guess I didn’t catch it. But in their application, it talks about that they have reconfigured their units to include one more one bedroom and taken out the commercial kitchen, which they originally planned to support. And then it said, a market study will be redone once the pod has been approved for extension, and the larger property was originally designed to plan to have three two story structures. When they first opened, how many structures are they planning on having now?
So I think it I think, part of the application that we got, she just copied over from the old application. So that didn’t get updated. No, there’s it’s its when they applied back in 2019. They talked about getting rid of the commercial kitchen. That I believe it’s just one structure.
Well, that that’s what I remembered that we just had one building, and then I’m thinking three.
Yeah, I think something that when I was reviewing the application, I think some things just were copied over.
Thank you. application.
Thank you. Okay.
So Can somebody remind me on the original 250? We gave us that alone? Are we expecting them to pay that back?
Yeah, so the loan terms are 0% and paid back over 40 years? Okay. And they’ve said that the same terms if they were to be approved for this additional funding would work for them. Okay. Okay.
And it’s to continue to be permanently supporting at least over for the next 40 years.
Haha. Yes, I’m sorry. affordable. Yes.
Okay, so then my, my, my question that I have almost every time we need is what’s the bank that we have? Like, what’s the bigger picture of
I get confused on what buckets What? And kind of how much of a hit that 250 makes on what is available for 2021.
So Kathy said, and this is not this is sort of rough estimates, but definitely going into 2021, we have about 300,000 CDBG funds that would be available and then 540,000 in affordable housing.
that amount, I believe that 540 does not take into consideration this request so that we so this 250 would come out of Okay, that amount.
Okay, so that looks like eight for 850 k for the year. Man. And, and what they’re what we’re considering right now is almost a little bit less than a third of that. Mm hmm.
But does it 350,005 years Costco affordable housing have to come out of that 850 do also,
there were supposed to be paying for the next five years. That I am not sure. So if he does right there is $600,000 Mm hmm. And do you have any idea if there are going to be other projects coming through 21 I mean, that’s $200,000 that’s not very much money.
Um, I I have not talked to anyone. I don’t know if elements if Kathy is talk more with element, which is moving forward with the suites. What their timeline is and whether they would be coming in? I know that they were going to try and go in for I believe 9% tax credits this year? I think. So I don’t I don’t know. Besides
that stuff them the tax credit do like in February, March, it seems like it’s the same cycle every year.
Yes. So I think it’s due I think the 9% is due in February. Okay.
I believe it’s Laurie Walker, again, I believe I saw that they have submitted an application to chafa. Sorry.
Good, thank you. Well, in the past, have we not kind of borrowed money to pay robbing Peter to pay Paul. I mean, it seemed like in 2020, we were looking at some of these pockets of money out of this year, or my a year off,
we had talked about with 518 Kaufman, which is the Boulder County housing authorities new project, and they applied for our home funding. And that had a lot to do with it was sort of back and forth with boulder about what had been awarded and where projects were in the pipeline, as to what year of funding they got. Also the same with Habitat when they applied for the home choto funds for their mountain Brook project. That was also sort of having to look at where projects were in terms of who could take the funding first.
Yes, sometimes that does happen.
I have a quick question. Can you hear me? I was just curious if anybody on the deferred developer fee, I see about 237 being deferred. That’s up a little bit from their prayer. Does that seem like for the total amount of developer fee on the project? I think I usually see, you know, closer to 5040 or 50% of that fee.
Laurie. Lori, Lori, if
you have any thoughts? Yeah.
And it just depends on what can be paid back within the 10 years out of operating.
Okay, so I guess the assumption would be that they’ve probably tried to max that out as much as they could to help fund it.
I don’t know that answer it. The defer developer fee has to be free. It’s an IRS rule in it. Whatever you defer has to be paid back within the first 10 years. So I
I agree. I think it should be maxed out. But it not is not always done that way.
So here’s looking at the outside looking at the I mean, they they added in the carry back note of 195. So essentially, that that may, you know, end up being the same thing anyway.
I guess my thought just based on that, and I’m not sure, um, it’s just to go back and confirm that they’ve maximized their kind of participation in this through the developers fee. And, or to see if they have and i don’t i guess i’m not sure I’m understanding the sellers note. But um, and I guess that Jeff, are you saying that that gets like if you look at their, their what skin they have in the game, it would be the developer fee plus the note.
Yeah, that’s what I’m wondering if that’s kind of what they did. Maybe They’ve maxed out the developer fee. And so they decided to do this carry back to help make up the difference. I’m not sure I’m just kind of speculating there. It’d be nice to know that I guess. And we could ask that question of them.
So the state did require was the one who asked that they reflect the appraised value of the land that had been donated. So that’s why they have now added that 195 back into the back into the pool.
Is that the is that the appraised value of the land, then?
That’s their estimated appraised value? They haven’t had an official appraisal appraisal done yet. Okay.
So then they’ve asked, so that’s part of the increase in the 600 K, in the in the project costs that 195 is added in there. Would that be true? I’m sure I imagine it is. kind of have to have that on both sides. Yeah.
Yeah, that makes sense. And then they add the carry back note to make up for that portion of it. So Right, right, it would just be nice to know about the developer fee. Yeah.
Yeah. So that’s, that’s what I would do is kind of my inclination right now is to make sure that they’ve maximized as much as they can on developer fee. And if there’s more than that, they can, you know, pump into this, which would decrease our participation. That’s what I would like to see. Okay.
So just in theory, I don’t I’m not opposed to this, if if we can make sure that they maximize it. I think the you know, the catch 22 of this is it doesn’t leave much funding for anybody else for the balance of the year. And maybe it’ll be a slow year, and everybody’s been impacted by COVID and construction costs. And, you know, maybe that won’t be an issue, but it just, you know, it’s going to basically empty our, you know, our bank quite a bit. Well, in Mali, maybe
we can get just clarification from Kathy, that that 350,000 that we’re supposed to pay out per year does come out of what we have available. So it will, we’ll get lucky. And we have more than we think but we you know, be nice to know.
I am in support of everything financial spoken thus far that it’s not in my in my area of expertise to thank you all. The one question that I have just to be reminded is the concerted effort that senior housing options will be doing for our community to have people of our community living in those apartments. I would hope on faith that that is
the intent. Yeah,
I mean, I assume that is their intention. I guess the program never quits. Uh, it’s not necessarily a requirement that’s in for any of the funding. But I would think most of most of the projects have that.
Serve? Yeah. Yeah. And I mean, if they need
to collaborate and put the word out, see, pwd would be more than happy to help with getting the word out. Okay. Great.
So my question to them will be, you know, what the get clarification on the development developer fee, and if there is anything else that of that they could be contributing to the project or if they are maxed out? Does anyone have any other questions for senior housing options?
Think that’s all that I had. I just, you know, that was really once we asked that question, I guess on the deferred developer for you just be really good to know that. Because if we’re mean that the 540 is all we have left, and we’re taking the 250 out of it, that really leaves us with not much for the rest of the year, which this is a good project and I support it, and I think It’s good to have these new units in the community. But we just need to keep them on that would take us down to under 200,000 for the rest of the year. Right.
Yeah, I will. I will talk with Kathy. To get that finalized and clarified.
This is something totally different. I listened to the program. They made a presentation for the veteran’s village of let’s see. Well, yes, yes, my mountain. And, and I’m just wondering, you know, they were talking, they really, they said they have to generate a million dollars a year. And they do fundraising all the time. I’m just wondering if they would possibly step in and ask money from you all.
So they look, they have applied for the fee reductions. So they will get fee reductions, but they indicated that they will not be applying for Okay,
okay, then I we don’t have to worry about that outcome yet. Okay. Okay. Thank you.
Are there any question? It’s Laurie Walker? Again, my question would be if we don’t give this funding, what will happen to this project? Yeah,
that is a good question. I can put that to them as well. In talking with Danny, who is their consultants, she she really did stress how much she has been how much they have been working with all their other partners and everyone else’s, or the state. And they got has maxed out what they are able to put into the project, as well as getting CDBG Dr. funding. So
she did say that if
she didn’t say if they can’t get if they do not get our funding, they have the opportunity or the ability to go back to chafa to get an increase in their tax credit amount. But she said and Laurie, maybe you have more insight into this, that it that that is frowned upon by chafa. And so she didn’t want to put senior housing options in that position. But as a worst case scenario, they could go back to chafa. I don’t know what would happen if Jeff was not able to provide any additional tax credits
for the project.
I just would hate I
did have one other question. Real quick on their application. They talk about the they have asked to extend the peu de de Marte. Beyond that or am I reading that incorrectly? Do you know if they’ve asked for another extension or just through March of 2021? is where they’re at right now.
So that was another part of the application. That seems like a carryover from the past with the previous application, so they have not asked for a PD extension. She said that could be again, something they would ask the city planning and zoning commission, whether about extending it, but as of now, they have not done that.
Okay. I don’t know that would necessarily change their decision on funding. And I’m just curious if they’d ask for that or not. Thank you
think I think they are hoping to get all the funding together and they can actually start on the project in March.
I’d hate for us not to fund this with how far they’ve come with us speculating on possibly some other projects coming along. I mean, I’d hate for us to lose a project that’s ready to go and I feel they’ve been a good partner for a long month.
I don’t really have any history with them, but I feel like they they’ve provided a good product for for the residents that have used it and I don’t know at this point. I would hate to see this project go away over this amount of funding.
So do you all want to reconvene once we have an answer from them? Regarding the developer and the deferred developer fee, or are you just wanting to know what their their thinking is behind that deferred developer fee? I’m, uh, I don’t want to speak for them. I would assume they’ve put in as much as they are able to, but I don’t know. I don’t know the details. So I can’t say why it’s not a larger amount. So we could so what would what would make you all feel comfortable making a final decision on this application?
Maybe here’s a way to say it is, are we in favor of doing filling the gap between a maximized developer’s fee and what they’re asking? So if it’s 237? Now, if it if it’s 250, then we, you know, I bring our piece down again, but just making, you know, assuring that they’ve maximized on their developer fee. And otherwise, as So would it would be 250 or less if if they can put more in? And I’m basically I mean, I’m comfortable saying we’ll fill the gap if they’ve if they’ve maximized the developer fee.
Yeah, I’m okay with that as well.
I am as well. I’m good with it.
That’s good. All right. Sorry, who was the last person who just said they were good with it? Was that you, Jennifer?
Yeah. That was me.
And Diane, are you okay with that? Yeah.
Hey, Molly. Cathy is joining right now.
I might take her a minute for her stuff to hook up.
There, all of the look, locations are different for where you mute and turn on your stuff. So it takes a while to find it.
we have talked through the application, and the group has would like for more clarification from cinnamon park on or senior housing options on whether they’ve maximized the amount of the deferred developer fee that they’ve put in the project? And would it be okay to fill in the gap between that maximized or the amount of the divert developer fee up to 250. So if they are able to put in more of the developer fee, then the amount of the housing affordable housing loan would be less, but could go up to the maximum 250 that they’ve requested. Alright,
so I thought they said in their application or something that they had done that they had changed the different developer fee and had maximized what they can defer, because I know chafa limits how much you can defer.
Yeah, we noticed it’s up 37,000, but didn’t know if it was able, they were able to defer more. You know, it’s evident that they’ve, you know, beat the bushes and come up with a bunch of other funding sources. Right. That’s good.
I could be confusing it, but I thought there was something that I have to say I didn’t read it intently.
I didn’t I don’t
I don’t get just maybe it just said they changed the developer fee to defer more.
Yeah, I mean, they’re their sources and you show the the increase that they’ve put in it, um, but I did not see in their application.
anything about that? Okay,
so that’s a question that you want to ask them. Okay. Yes.
And then there was a question on the funding available and if I wasn’t Ensure for the 350,000 payment that starts this year, is that coming out of the 540, you said was available from now
it’s already that’s already taken out. And actually, I think I didn’t get an answer back from our accounting staff. But I think trying to find the file again, here it is. I think I might have double taken out stuff. Because she’s showing 1.2, almost 1.3 available with all of the fees out that seven that I estimated and the 350 out. And what we haven’t paid out so far. So I think everything’s already taken out at one point just under 1.3. So I think it’s more like that, that we’ve got what I’m not sure. She added in the million that we get additional in 2021. She didn’t add in I don’t think additional the additional marijuana tax would be which would be another 150. And she didn’t add in estimated program income to come in in 2021, which is probably another 200. So that’s I think it’s closer to one 1.3 to 1.5. Actually, that we’ve got available in the affordable housing fund. When I went back and looked I might I think I double took out money.
Well, that’s good. That means there’s more. Yeah. To give away during the year.
Yes. One other thing we did not talk about were the terms and I’m comfortable with saying the same terms as 0% and 40 years. Everybody else is in agreement. I agree with that. Okay.
Yeah, I’m good with that as well.
Anyone have any concerns with those loan terms? No.
is the recommendation to add the 250 to get them to 500 then we’re
getting clarification. Okay. On the so no more than 250,000 Okay. But if there’s any more of the divergent developer fee they put in then we reduce the loan amount. Okay.
job guys didn’t need me here.
Okay, great. Well, I will let everyone know what they say in response to our questions. And
Thank you. Thank you, everybody.