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HomeMy WebLinkAboutMINUTES - 05122015 - HA C.02RECOMMENDATIONS APPROVE staff’s recommendations for the award of 80 project-based vouchers to El Cerrito Senior Apartments in El Cerrito, Riviera Apartments at 1515 Riviera St. in Walnut Creek, and Riviera Apartments at 1716-38 Riviera St. in Walnut Creek. BACKGROUND A housing authority can utilize up to 20% of its Housing Choice Voucher (HCV) funding to “attach” rent subsidies to specific housing units. The attached subsidy is known as a project-based voucher (PBV). PBVs are a component of the HCV program and share most of the same rules and regulations. PBVs are attached to units via a contract with the owner that requires the units be rented to families eligible for the HCV program. While tenants living in a PBV unit may move with regular voucher assistance, the PBV remains attached to the unit and the owner must select another HCV-eligible tenant for that unit. The advantage of PBVs for owners is that the PBV commitment from a housing authority can be used to leverage financing for the construction, rehabilitation or preservation of housing for low-income families by providing a greater cash-flow than the property would otherwise generate. This is because most funding available to owners of affordable projects restricts the rent that can be collected from tenants to an affordable amount that is usually far less than a comparable unit would merit on the open market. However, because the HCV program pays market rate rents by subsidizing the difference between an affordable rent for the tenant and the market rate rent for a particular unit, and the PBV program uses this same basic formula, the amount of rent that an owner can collect from a PBV unit is usually significantly higher than otherwise Action of Board On: 05/12/2015 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Mary N. Piepho, Commissioner Karen Mitchoff, Commissioner Fay Nathaniel, Commissioner Jannel George-Oden, Commissioner ABSENT:Federal D. Glover, Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: May 12, 2015 Joseph Villarreal, Executive Director By: Chris Heck, Deputy cc: C.2 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:May 12, 2015 Contra Costa County Subject:Award of 80 Project-Based Vouchers BACKGROUND (CONT'D) available to the project. This allows the owner to leverage far more financing than if PBVs were not available and thus can be crucial to the success of a given project. The primary advantage of PBVs to a housing authority is that they help increase or preserve the supply of permanent, affordable housing available to both the community and HCV recipients. In general, HUD regulations do not permit PBV assistance to be awarded to more than 25% of the units in a development. However, exceptions are allowed for single-family buildings (defined by HUD as one to four units) and units in multi-family buildings that are designated for elderly or disabled persons or for families receiving HUD-approved supportive services. HUD will permit up to 100% of units in a development meeting these exceptions to have PBV assistance. PBV assistance is usually awarded to newly constructed or rehabilitated units. However, assistance can also be awarded to existing units to preserve affordable housing that might be lost due to financial circumstances. Federal statute permits the initial term to be anywhere from one to fifteen years. HACCC utilizes a fifteen year term to mirror the tax credit compliance term and to provide projects with the maximum financing available. In addition, the Federal statute also permits housing authorities to grant an extension of up to fifteen years to the PBV contract at signing. HACCC utilizes the fifteen year extension in order to further increase the financing available to the project and to ensure long-term affordability of the units. Any contract extensions are subject to the availability of federal funding for the HCV program. All tenants of PBV units must be screened for eligibility for the HCV program by HACCC and must come from HACCC’s PBV site-based wait list for the property. The PBV site-based wait list is open to all families on HACCC’s HCV wait list. The property owner will then select tenants for occupancy of a particular unit after conducting additional suitability screening consistent with their tenant screening and eligibility policies for that property. Tenants in PBV units will sign an initial lease with a one year term. After one year, a PBV tenant has the ability to move from the PBV unit by using regular tenant-based HCV assistance, subject to availability. If a PBV property does not continuously lease up all of its PBV units, or if the property fails to meet HUD’s Housing Quality Standards for health and safety, then the PBV units awarded to that property can be rescinded. HUD requires housing authorities to utilize a competitive process to select developments that will receive PBV assistance. A housing authority can utilize its own competition or may choose projects that were competitively awarded affordable housing funds under a federal, state, or local government program (e.g., CDBG, HOME, competitively awarded Low-Income Housing Tax Credits). If the competitive process of another governmental entity is used, the award of those funds can not have occurred more than three years from the PBV selection date and the earlier selection proposal must not have involved any consideration that the project would receive PBV assistance. As provided in HACCC’s Section 8 Administrative Plan approved by the Board of Commissioners, HACCC will accept proposals for PBV assistance from owners that were selected in another government’s affordable housing competition. In particular, HACCC targets projects awarded funding by the Contra Costa County Department of Conservation and Development in one or more of its competitions for HOME, CDBG, HOPWA or other affordable housing programs. HACCC has taken this approach in order to maximize the success rate of projects funded by both the County and HACCC. The three projects recommended for PBV assistance in this Board Order have all been awarded affordable housing funding by the County during the past three years. This funding was approved by the Board of Supervisors and the competitive process used meets HUD’s requirements. Overall, each project has actually received more than one round of funding from the County and, in some cases, received funding from the City in which the project is located. Additionally, the three projects proposed for funding in this Board Order are the remaining competitors for state cap and trade funding in HACCC's jurisdiction. The State of California's Affordable Housing and Sustainable Communities Program (referred to as cap and trade) funds land-use, housing, transportation, and land preservation projects to support infill and compact development that reduces greenhouse gas (“GHG”) emissions. These projects facilitate the reduction of the emissions of GHGs by improving mobility options and increasing infill development, which decreases vehicle miles traveled and associated GHGs and other emissions, and by reducing land conversion, which would result in emissions of GHGs. Projects are also to support related and coordinated public policy objectives, including: 1. Reducing air pollution 2. Improving conditions in disadvantaged communities 3. Supporting or improving public health 4. Improving connectivity and accessibility to jobs, housing and services 5. Increasing options for mobility, including active transportation 6. Increasing transit ridership 7. Preserving and developing affordable housing for lower income households 8. Protecting agricultural lands to support infill development. At least 50% of the state's cap and trade funds must be spent on housing affordable to low- and extremely low-income households. PBV funding is needed to ensure that these projects are financially viable and that they are maximally competitive for both their cap and trade and subsequent tax credit funding applications. HACCC has awarded 416 PBVs in previous funding competitions. Staff recommends that HACCC award an additional 80 PBVs to three different projects. A list of the projects proposed to receive PBV assistance is attached. FISCAL IMPACT The El Cerrito Senior Apartments project (see attached) is expected to receive approximately $34.3 million in rent and subsidies if the proposed contract and term are approved. The combined Riviera Family Apartments projects (see attached) are expected to receive approximately $13.9 million in rent and subsidies if the proposed contract and term are approved. Funding for project-based vouchers is provided by utilizing a portion of the Housing Authority of the County of Contra Costa’s (HACCC) tenant-based voucher funding. CONSEQUENCE OF NEGATIVE ACTION Should the Board not approve the award of PBV units to one or more of these projects, completion of the project(s) will be delayed or jeopardized. Under current scoring methods, it is unlikely that either would receive tax credit funding. The projects would have to seek additional funding from the County and other sources in order to continue. CLERK'S ADDENDUM ATTACHMENTS PBV Awards 2015 Chart