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FOR CITY COUNCIL PACKET

JUNE 23, 2009

 

The June 24, 2009 Formal Meeting has been Cancelled

 

The June 30, 2009 Policy Session is a Hold for the

District 3 Council Candidate Interviews

 

CONSENT AGENDA

1.	Affordable Housing Development Community Priorities

 

Packet Date:  June 19, 2009

 

AFFORDABLE HOUSING DEVELOPMENT COMMUNITY PRIORITIES
CONSENT AGENDA
TO:	Rick Naimark Deputy City Manager	AGENDA DATE:		June 23, 2009
FROM:	Kim Dorney Housing Director	ITEM:	1
SUBJECT:	AFFORDABLE HOUSING DEVELOPMENT COMMUNITY PRIORITIES

 

This report requests City Council adoption of updated affordable housing development Community Priorities.  The purpose of the revised priorities is to address the consequences of unprecedented economic conditions which are negatively affecting multi-family rental properties.

 

THE ISSUE

 

On October 18, 2005, the Housing Department proposed that a minimum of 25 percent of housing development resources be allocated for defined Community Priorities.  At that time, the department worked with the Downtown Development Office, Neighborhood Services, Hope VI, Finance, and others to develop proposed priorities.  The resulting priorities were adopted by the City Council and stated in the Department’s Underwriting Guidelines.

 

Today, multi-family rental properties are facing upwards of 20 percent vacancy rate.  This is resulting in an increasing number of rental properties going into foreclosure distress.  Foreclosed multi-family properties can negatively affect the surrounding neighborhood if property management and lease-up activities fail.  For this reason, the Housing Department is proposing updated Community Priorities that focus on development that aligns with economic conditions.

 

Given the significant economic conditions affecting the development and sustainability of multi-family rental properties, the commitment of Housing Department resources to projects delayed by decreased market capitalization, and the pending round of awards by the Arizona Department of Housing for Low Income Housing Tax Credits (LIHTC), the Housing Department proposes the amendment of the Community Priorities.

 

Proposed community priorities are:

• Remove the 25 percent set aside of housing development resources and, instead, make Community Priorities the priority/highest rating for all proposals.
• Acquisition and rehabilitation of multi-family properties that will significantly improve community conditions of the neighborhood in which the multi-family rental property is located.  Examples of such improvements are the removal of blight, reduction in police utilization, and increased populations to support surrounding commerce.
• Acquisition and rehabilitation or new construction of multi-family properties located in the Transit Overlay District (TOD).  The Housing Department supports this type of development as it will result in future affordable housing for low income residents who must rely on public transportation.
• Acquisition and rehabilitation or new construction of properties which focus on special needs populations and which provide appropriate services to assist and sustain this population.
• Innovative financial structuring for the purpose of saving affordable units that are at risk due to over-leveraging or foreclosure or to develop more affordable units through the department’s acquisition of foreclosed properties.
• Acquisition and rehabilitation or limited new construction in high priority urban villages that demonstrate a market gap and strong market support.  Priority urban villages are:  Ahwatukee Foothills, Deer Valley, Paradise Valley, North Mountain, Desert View, and North Gateway.
• Redevelopment Area improvement through acquisition and rehabilitation of rentals, especially consolidation of small rental properties (not including single-family or duplex properties) into single ownership for quality management. Projects must involve at least 30 units.  New construction may also be part of a larger project.
• Redevelopment Area improvement through acquisition and comprehensive rehabilitation of single-family detached homes for homeownership. (This does not include downtown.)
• Multi-family rental projects where 10 to 30 percent of units are designated for households with less than 40 percent of area median income and the project overall serves a mix of incomes.
• Improvement of problem rental properties citywide through acquisition and rehabilitation.  (Problem rentals to be determined by amount of code/preservation violations and police activity.)  Almost always, applications will involve a change of ownership.
• Attached ownership housing units downtown.

 

These priorities favor projects which will not add to the vacancy rate of multi-family rentals.  Additionally, these priorities look to the future in securing affordable units in under-served areas of the City.

 

The Community Priorities will be reviewed annually.  Proposed projects will also need to meet the Affordable Housing Loan Program and Underwriting Guidelines.

 

REQUESTED ACTION

 

Staff requests City Council approval of the amended and revised Community Priorities.

 

The Housing and Neighborhoods Subcommittee recommended this item for Council approval at its June 10, 2009 meeting.