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HomeMy WebLinkAbout08.0 Community Housing ProgramCommunity Housing Program Spring Valley Ranch PUD November. 2000 Background Spring Valley Development, Inc. (Applicant) was asked to communicate to Garfield County how affordable housing will be provided by the Applicant. Although affordable housing is not required by the County for Spring Valley Ranch PUD, the Applicant has chosen to offer a plan which, in many ways, exceeds the newly adopted Garfield County Affordable Housing Guidelines. Quoting from Resolution No. 2000-95, A Resolution Concerned with the Approval of a Planned Unit Development Amendment for Spring Valley Ranch (aka Chenoa), condition #21 of the approval stated: "How affordable housing will be provided must be clarified by the Applicant. In addition, the enforcement of any and all affordable housing will be the responsibility of the Applicant and not the County. This must be done in any Preliminary Plan submittal." The plan outlined in this memorandum will be managed and administered by the proposed Spring Valley Metropolitan District or the Chenoa Homeowners Association. The plan addresses the intent of Garfield County's affordable housing guidelines. Obi ectives • Meet a broad income range in order to avoid a "monoculture" or institutional feel • Respond to direct market demand identified during a presale/reservation period and insure that the housing created remains affordable for the community and the residents well into the future (considerations include sales price, mortgage market and retail market) • Encourage occupancy by residents who work as close to Spring Valley Ranch PUD as possible in order to minimize road impacts and transportation costs for residents • Integrate the architectural feel of the buildings into the Village Center architecture • Despite the potentially large differences in income, attempt to socially integrate the development where possible Recommended Plan for Community Housing A. Affordable Housing Targets: Create 75 for sale units of housing which respond to the following income ranges: Unit Type Preliminary Price (2000) Median Income Range Targeted Initial Unit Allocation Small 800 sf 2 Bedroom Flat $125,000 80 — 100% 30 Larger 1200 sf 2 Bedroom With Attic (2 Floors); [Upgrade option to 3BR/2BA may be offered.] $160,000 100 — 120% 20 Townhomes 1500 sf 3 Bedroom Units plus Attic $198,000 Currently Being Evaluated Over 120% 25 Single Family with Basement Lots for Custom Homes for Employees of Chenoa Total Chenoa Community Housing Units 75 Subsidy The targeted preliminary prices are based upon costs of units that are being considered for the property MINUS the full cost of the land, impact fees for roads and wildlife, and amenities (golf courses, Clubhouse, trails, parks, trailhead and equestrian facilities will not be charged to the units). The Applicant will contribute these costs (subsidy) in order to make the units more affordable. The subsidy for the units will be substantial enough to create not only a more affordable home price, but also an adequate incentive for the home buyer to agree to the deed restriction on appreciation which is proposed within the new ordinance. Our current market analysis suggests that these units are approximately $20-25,000 below the market of the Glenwood -Basalt area, which amounts to a developer total subsidy to the affordable housing program of $1.5 to $1.875 million. Market Responsiveness The Developer would like to retain the ability to shift the housing allocation highlighted above during pre -sales in order to respond to the actual demand from Garfield County households and employers. It is possible that the smaller two bedroom may be more popular than the townhome due to its price, however, it may also be that the private yard available with the townhome will be more popular. We have enough land dedicated to the Community Housing Program that we can make alterations to the mix of units based upon demand. We are also still evaluating a small single family unit as part of the mix of housing, however, the price point for these units, based upon the subsidy assumption outlined, is less certain. B. Deed Restriction All units will be governed by a deed restriction which caps appreciation at the lesser of CPI or 3% per annum on a cumulative basis. C. Qualification Criteria 1. Income Guidelines: Resident households must qualify for their mortgages (30-40% of gross income), but must spend at least 22% of their household income on the housing costs. The Applicant would like to insure that Chenoa's Community Housing is sold (or rented — see Employer ownership below) only to families who need housing which is deed restricted. The Applicant is concerned, however, that fluctuating mortgage interest rates, a factor which is out of the control of the Applicant and Residents, could result in severe restrictions on the marketability of the units (i.e. If interest rates rise sharply, anyone who could qualify for a mortgage could not qualify under the HUD income guidelines). In order to insure the re -marketability of the Chenoa Community Housing now and in the future, the Applicant proposes that the units be offered to incomes which qualify for mortgage rates (i.e., 30% of income), but must spend at least 22% of income on housing costs. This approach not only will help the Chenoa Community Housing track market conditions over the long term, but also will be easier to explain to potential purchasers and mortgage lenders. Given the fact that the Roaring Fork Valley (outside of Aspen/Pitkin County) has very little deed restricted housing product, this is of particular concern. 2. Net Asset Test: Purchasers of Community Housing at Chenoa must have a current household net worth, minus qualified retirement assets, not in excess of $100,000. 3. Priority: Priority will be given to a person that works or resides in Garfield County. 4. "Fannie Mae Clause": The deed restriction will have language which allows mortgages to be qualified under Fannie Mae (and Freddie Mac and VA). The inclusion of this clause is important in order to qualify mortgages at the lowest possible rates in the market. The inclusion of this clause (all affordable housing deed restrictions in the valley have this clause) permits the deed restriction to be eliminated in the event that the unit mortgage is in default and cannot be resold within a pre- determined period of time. Employer owned units as discussed below should also include this clause. D. Employer Sponsorship of Housing: The units also will be offered as 'for sale' housing to community employers. These Garfield County employers (including Spring Valley Homeowners Association) can rent units to households which qualify under Net Asset Guidelines stated above. The units will be deed restricted and have an appreciation cap in place. The employer will have the flexibility to rent the housing at the mortgage cost and expense, however, an employer may discount the rent further to make the unit more affordable. The employer can also sell the unit to a qualifying employee or community member. Note on Employer Sponsorship and the Telluride Case: There is ongoing concern relative to the ability to maintain rent controls on units due to the Telluride case. The Applicant believes that since the employers are not being required to purchase the deed restricted housing and that it is offered and purchased "free will," that the employer/purchasers may voluntarily commit to the affordability guidelines of Chenoa. The employer will not have a rent cap imposed, but will be expected to rent the unit for lease rates that are affordable (e.g., no more than 40% of household income), a guideline which is consistent with an employers objective of keeping and retaining good employees. The fact that the appreciation is capped on employer sponsorship units will also insure that the rent will not be severely below the market value of the asset. Employer sponsorship of some of the units is probably the best way to insure that units are allocated to employees in the area. Various area employers have expressed interest in the employer ownership opportunities. Chenoa will provide an additional opportunity to help employers keep their key employees in greater proximity to work—an important benefit to the overall affordability of a home. E. Presale/Reservation and Resale Priorities: Priority will be granted in the first instance to employees of Garfield employers, then to Garfield County residents, and then to the qualified buyers who do not fit the first two criteria. Should more reservations be made than are available in the first offering time period, a lottery will be held which selects buyers from within the priority categories until all units are sold. If fewer reservations are made, units will be sold on a first come, first served basis. Resales will be made by the owners themselves, who may avail themselves of a prioritized waiting list which is maintained by the Manager of the Chenoa community Housing. A fee may be collected at resale in order to cover administration expenses. F. Community Access to Amenities: Amenities at Chenoa such as golf, trails, cross-country skiing, and the equestrian center, will be available to Chenoa Community Housing residents. The club memberships presumably will be beyond the economic reach of the Chenoa Community Housing residents, however, the public tee times, the trails system and the "pay as you go" Equestrian Center will be significant amenities to the residents. These will be available on a fee-for-service basis. G. Design Objectives: The site plan will encompass the following: • Three tiers of parking on a schedule which is separate from the unit purchase: Surface/Street Parking Carport Parking Garage Parking • Housing built around a "village green" atmosphere The housing architecture will follow these guidelines: ♦ Building structures will provide the look and feel of a larger single family building. • Porches, balconies and decks will be used to transition from private indoor space to outdoor spaces. • The buildings will be two stories with possible third -story "dormer" and attic space. • The program will be fully compliant with Fair Housing Laws and the buildings will provide ground floor ADA access. ♦ Multiple textures and colors will be used on natural finishes in order to provide a varied texture. Upgrade Options: • Chenoa Community Housing will be designed to allow residents to upgrade and grow into their units. Attic and basement spaces may be unfinished. Extra bathrooms may also be available for installation. The buyer may elect to add these items at purchase or over time and have these reasonable upgrades included in the deed restricted house value. The upgrade options are not included in the housing price estimates. H. Quality Management Management of the Chenoa Community Housing will be administered by the proposed Spring Valley Metropolitan District and/or the Chenoa Homeowners Association. Certain management functions (landscape, roads, etc.) will be administered by contract with the management company used by the entire development. Reserves and maintenance will be established which ensure the long term viability and quality of the housing. I. Consider seeking a further subsidy from•the Colorado Division of Housing in order to have 5-10 housing units which will reach levels of affordability below 80%. Proposal for Housing Fund Investor August 2006 This proposal is between the Garfield County Housing Authority (including agreements with Mt. Regional Housing Corp and the Housing Fund) and the Developers of Spring Valley Ranch. The developers of Spring Valley Ranch have proposed to invest in the Housing Fund through the Housing Authority a sum of $2,000,000. This sum is equivalent to the fee- in -lieu formula that was established for the County's consideration in the February 2006 Housing Assessment. The methodology is explained below: Taking an average size home of 1200 to 1300 sq ft in the Carbondale/Glenwood Springs area and applying the figures on the chart on page ES -4 of the Garfield County Housing Assessment Averaging the amounts of fee -in -lieu for 80-100% AMI ($53,907) and 100- 120% AMI ($34,719) Equals $44,313 then multiplied by 10% of the estimated 450 units to be built(45) Equals $2,000,000 total fee -in -lieu The development is not under the Garfield County Inclusionary Zoning guidelines and this proposal is being made as a separate negotiation. The investment will be used to support the Keator Grove development and used as allowed by the Housing Fund to promote affordable housing in the valley. The purpose and function of the Housing Fund as stated in the IGA is "to plan, finance, and cooperate with Members in the planning and financing of, the acquisition, construction, reconstruction or repair, maintenance, management, and operation by one or more Members of (i) housing projects and programs within the means of families of low or moderate income and (ii) affordable housing projects or programs for employees of employers located within the jurisdiction of the Housing Fund." (IGA page 1) The Housing Fund will be managed by the Funding Partners organization and is under the oversight and guidance of the Housing Fund Board of Directors. This proposed investment will comply with an Equity Equivalent Investment Agreement between the Spring Valley Ranch developers and the Housing Fund (yet to be agreed on). However, this is a non-recourse and 0% interest investment for 10 years. Because this is an equity equivalent, no repayment of principal shall be required until maturity of the agreement. This agreement is being negotiated and will not be executed until the Spring Valley Developers, the Garfield County Housing Authority, the Housing Fund and the legal council for each above mentioned entity has agreed on the conditions. Page 1 of 1 Geneva Powell From: "Tom Gray" <TomG©santaluciapreserve.com> To: <geneva-gchaaawest.net> Cc: <d erg@seligmangro t • . m>; <humber@coastwoodcapital.com> Sent: S a .. February 18, 2007 10: PM Attach: SVR Housing rF `o'p- : iOC Subject: Affordable Housing Proposal Geneva I hope all is going well with the Housing Authority. I look forward to working with you to create much needed affordable work -force housing in Garfield County. Attached please find my letter which proposes a funding relationship between the Housing Authority and Spring Valley Ranch. I attempted to incorporate the terms of the earlier outline that you set me. I am heli -skiing this week in Canada. I hope that we can discuss this proposal upon my return next week. I will give you a call. Thanks so much for your time and interest. Best regards, Tom Gray 7/5/2007 SPRING VALLEY HOLDINGS, LEGS -±afy5 6e7 - Ms. Geneva Powell Garfield County Housing Authority 2121 Railroad Avenue, Suite 102 Rifle, CO 81645-3257 Dear Geneva: We have finished the replanning of the Spring Valley Ranch Project and are once again prepared to submit our application to amend the existing Preliminary Plan and PUD. We continue to advocate that any affordable housing provided by the Project would best be located near jobs, schools and services, rather than in a remote location some 8 miles up CR 114. As you and I have discussed, Spring Valley Holdings' preference is to assist the Housing Authority in fulfilling its mission to provide affordable housing in Garfield County. We believe that the Authority knows much better than we the location and type of housing that is needed. Even though the Project does not fall under the County Inclusionary Zoning guidelines, Spring Valley values the role that work -force must play in the future of Garfield County and the communities of Carbondale and Glenwood Springs. We want to honor the intent of the commitment for affordable units included by the prior owners in the existing Preliminary Plan. The currently approved "Chenoa" plan sited 72 affordable units at the intersection of CR 114 and CR 115. Our proposal is to provide funding to the Housing Authority to construct a comparable number of units over time in more appropriate locations. You and I discussed the possibility of Spring Valley providing interest-free, non-recourse equity to a Housing Fund. As contemplated by the IGA, the Fund would "plan, finance, and cooperate with Members in the planning and financing of, the acquisition, construction, reconstruction or repair, maintenance, management, and operation by one or more Members of (i) housing projects and programs within the means of families of low or moderate income and (ii) affordable housing projects or programs for employees of employers located within the jurisdiction of the Housing Fund." The Housing Fund would be independent of Spring Valley and managed under the oversight and guidance of a Housing Fund Board of Directors, in which Spring Valley need not participate. The Board would direct the investment of the Fund on a revolving basis in joint ventures that develop affordable housing projects in the Roaring Fork Valley. Spring Valley would be due no interest on its investment and would not participate in the profits from any of the joint ventures. At the end of ten years Spring Valley's contribution to the fund would be repaid. The Housing Fund would retain all joint venture profits, and thereby establish a permanent internal source for future investment. 600 Montgomery Street — 40`t' Floor — San Francisco, CA 94111 Spring Valley Holdings, LLC — Affordable Housing Page 2 In concept Spring Valley offers to contribute $250,000 into the fund upon the approval of the amendments to the Project's current entitlements. Thereafter, Spring Valley would add to the fund at the rate of $25,000 for each market -rate residential lot upon the recordation of the final plat in which that lot is included. These contributions would continue until Spring Valley's investment in the Fund equals $2 million. While this proposal is the barest of outlines, we hope that you will be interest in pursuing an Equity Equivalent Investment Agreement between the Housing Authority and Spring Valley Holdings. Of course our discussions and correspondence are not binding on either of us until an formal Agreement has been approved and executed by all parties. We would appreciate the opportunity to work with you to provide affordable housing in the County. If you were able to provide us with your reaction to our suggestions by the end of the month, we would be very grateful. We are anxious to move an Agreement forward if you are interested. I am planning to be in the Valley in early March. Please call or email me with any comments or questions (831- 620-6708 or tomgray@santaluciapreserve.com). Very truly yours, Tom Gray Cc: Mr. Danny Goldberg Mr. Charlie Humber 7/5/2007 11:50:53 AM SVR HousingProposa10702I3.DOC Proposal for Housing Fund Investor May 17, 2007 The Garfield County Housing Authority Board of Commissioners have reviewed and discussed both the original proposal dated August 2006 and the response dated February 20, 2007 between the Housing Authority and the developers of Spring Valley Ranch. We respectfully submit the following: The developers of Spring Valley Ranch have proposed to invest in the Housing Fund through the Housing Authority a sum of $2,000,000. This sum is equivalent to the fee- in -lieu formula that was established for the County's consideration in the February 2006 Housing Assessment. The methodology is explained below: Taking an average size home of 1200 to 1300 sq ft in the Carbondale/Glenwood Springs area and applying the figures on the chart on page ES -4 of the Garfield County Housing Assessment Averaging the amounts of fee -in -lieu for 80-100% AMI ($53,907) and 100-120% AMI ($34,719) Equals $44,313 then multiplied by 10% of the estimated 450 units to be built (45) (or up to 72units) Equals $2,000,000 total fee -in -lieu The Garfield County Housing Authority appreciates your commitment to honor the affordable housing component that is included in the existing Spring Valley PUD. We believe that a 10 year loan would not be of optimum benefit for the development of affordable housing. We are requesting that you consider the proposed investment be given as a grant to the Housing Fund instead of a 10 year loan that was previously discussed. We believe that we can reach an agreement with your concept that `Spring Valley contribute $250,000 into the fund upon the approval of the amendments to the Project's current entitlements. Thereafter, Spring Valley would add to the fund at the rate of $25,000 for each market -rate residential lot upon recordation of the final plat in which that lot is included.' We request a proposed good faith estimated time line to show payment schedule and date of last payment. The investment will be used as allowed by the Housing Fund to promote affordable housing in the valley. The purpose and function of the Housing Fund as stated in the IGA is "to plan, finance, and cooperate with Members in the planning and financing of, the acquisition, construction, reconstruction or repair, maintenance, management, and operation by one or more Members of (i) housing projects and programs within the means of families of low or moderate r income and (ii) affordable housing projects or programs for employees of employers located within the jurisdiction of the Housing Fund." (IGA page 1) The Housing Fund will be managed by Funding Partners for Housing Solutions, a Colorado non- profit organization and certified Community Development Financial Institution (CDFI) and is under the oversight and guidance of the Housing Fund Board of Directors. This proposal is between the Garfield County Housing Authority (including agreements with Mt. Regional Housing Corp and the Housing Fund) and the Developers of Spring Valley Ranch and will not be executed until the Spring Valley Developers, the Garfield County Housing Authority, the Housing Fund and the legal council for each above mentioned entity has agreed on the conditions The proposal is being negotiated separate from any commitment or requirement placed on the developer by County guidelines and regulations. Again, we are most thankful for your focus on affordable housing and your generous offer. We are anxious to work out these details and assist you in moving forward with your proposal as soon as possible. We will wait to hear from you. Sincerely, Mary Jane Hangs, Chair Garfield County Housing Authority SPRING VALLEY HOLDINGS, LLC June 18, 2007 Mary Jane Hangs Chair Garfield County Housing Authority 2121 Railroad Avenue, Suite 102 Rifle, CO 81645-3257 Subject: Spring Valley Ranch; Memorandum of Understanding for Funding Grant Dear Ms. Hangs: Thank you very much for sending to us the Proposal for Housing Fund Investor dated May 24, 2007 ("Proposal"). The Proposal outlines the primary terms of a potential grant from Spring Valley Holdings, LLC ("SVH") to invest in the Housing Fund through the Garfield County Housing Authority ("Authority"). Please accept this letter, when acknowledged below by both parties, as a non-binding Memorandum of Understanding ("MOU") between the Authority and SVH concerning such terms as restated below. SVH is the owner of the Spring Valley Ranch PUD, an approximately 6,000 acre property located in the Spring Valley/Missouri Heights area of Garfield County, Colorado (the "PUD"). SVH has filed applications with Garfield County for a Preliminary Plan approval and a PUD amendment (the "Applications") to develop 577 market -rate residential lots and appurtenant facilities and structures (the "Project"). The Project is not subject to Garfield County affordable housing regulations, and in particular is not subject to Section 4.07.15.02 of the Garfield County Zoning Resolution of 1978. Nonetheless, SVH wishes to support the efforts of the Authority to provide affordable and workforce housing in Garfield County by making a voluntary contribution to the Housing Fund. Therefore, the Authority and SVH wish to enter into an agreement under which SVH would provide a grant of Two Million Dollars ($2,000,000) to the Authority to be used by the Housing Fund to promote affordable housing in Garfield County. Upon your acceptance of this MOU, SVH and the Authority will negotiate in good faith to enter into a grant agreement containing the following essential terms (the "Grant Agreement"). The Grant Agreement shall be effective upon the final approval of the Applications by the Board of County Commissioners of Garfield County upon terms and conditions acceptable in the sole discretion of SVH as evidenced by a resolution executed by the Board, and the expiration of any period of appeal thereof (the "Effective Date"). 4000 County Road 115, Glenwood Springs, Colorado 81602 Spring Valley Holdings a. The Grant Agreement shall represent the binding commitment of SVH to fund a grant of Two Million Dollars ($2,000,000) to the Housing Fund through the Authority in furtherance of its mission "to plan, finance, and cooperate with Members in the planning and financing of, the acquisition, construction, reconstruction or repair, maintenance, management, and operation by one or more Members of (i) housing projects and programs within the means of families of low or moderate income and (ii) affordable housing projects or programs for employees of employers located within the jurisdiction of the Housing Fund," located in Garfield County (the "Commitment"). b. The Housing Fund shall be managed by Funding Partners for Housing Solutions, a Colorado non-profit organization and certified Community Development Financial Institution that operates under the oversight and guidance of the Housing Fund Board of Directors. c. Within sixty days after the Effective Date, SVH shall contribute Two Hundred Fifty Thousand Dollars ($250,000) of the Commitment. d. The Grant Agreement will provide that SVH shall continue to fund the Commitment at the rate of Twenty Five Thousand Dollars ($25,000) for each market -rate residential lot platted within the PUD, upon recordation of the final plat in which such lot is included, until the Commitment has been funded in full, without interest. e. The Commitment shall be inclusive of any condition the Board of County Commissioners might place on the Project with respect to inclusionary housing. If the Board imposes any condition(s) on its approval of the Application which directly or indirectly requires a financial commitment from SVH regarding inclusionary, affordable or workforce housing, the Commitment shall be reduced dollar for dollar by the cost to fulfill such condition(s). f. The Grant Agreement shall terminate and cease to exist upon the dissolution of the Housing Fund or the Authority, upon the termination of affordable housing programs in Garfield County, upon a finding by an appropriate authority that funds provided by SVH under the Grant Agreement are not or have not been used for their intended purposes, or upon a breach of the Grant Agreement by the Authority or the Housing Fund. Upon such event, all payments previously made by SVH to the Authority under the Grant Agreement shall be deemed to be non-refundable, and all parties to the Grant Agreement shall be relieved from any further liability thereunder, including without limitation any liability for damages, reliance or any other cause. This non-binding MOU covers the primary terms for a grant agreement between the Authority and SVH. It is not binding on either party unless and until a Grant Agreement that contains these terms and other appropriate provisions is executed by both parties. This MOU shall have no binding effect on the parties, except to cooperate in good faith to reach agreement on a Grant Agreement. Spring Valley Holdings As time is of the essence, this proposal shall be automatically withdrawn if not accepted by the Authority and returned to the undersigned by 5:00 pm PDT on Friday, June 29, 2007. We look forward to working with you to assist in addressing the critical need for affordable housing in Garfield County. Sincerely, Spring Valley Holdings, LLC Tom Gray Acknowledged and accepted this day of June, 2007 The Garfield County Housing Authority By Authorized Signature Spring Valley Ranch PUD Community Housing Program Summary Zoning Resolution §4.07.11 through .15 Standards and Requirements: AFFORDABLE HOUSING RESPONSE: The purpose of this section of the Zoning Ordinance is to provide for affordable housing mitigation by development in Garfield County. The ordinance is based on the premise that mitigation is required solely in the case of a request for increased density on a given site. In the case of Spring Valley Ranch PUD, the amendment is requesting approval for a reduction in density on the site as compared with the underlying zoning and therefore, is not required to provide affordable housing mitigation. However, the Applicant fully understands the needs expressed in the Ordinance and recognizes and is committed to the County's goal of implementing affordable housing programs. The currently approved PUD plan provides for a Village Center near the intersection of County Roads 114 and 115. This area was to have been devoted to commercial uses and an affordable housing component. This application proposes to relocate the Village Center. All amenities and activities will occur in the middle bench area at the center of the project, at a much more logical location. This eliminates the commercial uses, and unnecessary traffic and visual impacts on our neighbors and the County Road 114-115 area. We have retained the project's voluntary commitment to affordable housing in the County. However, rather than locating that housing in the Village Center, where it was away from transportation and services, we are proposing to work with the Garfield County Housing Authority to provide significant financial contributions to the Authority's projects in the County. The Applicant has been in discussions with the Authority, and expects to finalize an arrangement before final plat. We believe this is a much more effective contribution. Moreover, this approach is much more consistent with the policy expressed in Section 4.07.12, that "the County recognizes that affordable housing is most desirable in or adjacent to towns"