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HomeMy WebLinkAboutResolution No. 431CITY OF MEDINA, WASHINGTON RESOLUTION NO.431 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MEDINA, WASHINGTON, AUTHORIZING THE DULY APPOINTED ADMINISTERING AGENCY FOR ARCH TO EXECUTE ALL DOCUMENTS NECESSARY TO ENTER INTO AGREEMENTS FOR THE FUNDING OF AFFORDABLE HOUSING PROJECTS, AS RECOMMENDED BY THE ARCH EXECUTIVE BOARD, UTILIZING FUNDS FROM THE CITY'S HOUSING TRUST FUND. WHEREAS, A Regional Coalition for Housing (ARCH) was created by interlocal agreement to help coordinate the efforts of Eastside cities to provide affordable housing; and WHEREAS, the ARCH Executive Board has recommended that the City of Medina participate in the funding of certain affordable housing projects and programs hereinafter described; and WHEREAS, the ARCH Executive Board has developed a number of recommended conditions to ensure that the City's affordable housing funds are used for their intended purpose and that projects maintain their affordability over time; and WHEREAS, the City Council has approved the Amended and Restated Interlocal Agreement for ARCH; and WHEREAS, the City Council desires to use $27,476 from City funds as designated below to finance the projects recommended by the ARCH Executive Board; now, therefore, THE CITY COUNCIL OF THE CITY OF MEDINA, WASHINGTON, DOES RESOLVE AS FOLLOWS: Section 1. The City Council authorizes the duly -appointed administering agency of ARCH pursuant to the Amended and Restated Interlocal Agreement for ARCH to execute all documents and take all necessary actions to enter into Agreements on behalf of the City to fund Ardea at Totem Lake, Habitat Bellevue Homes, Kenmore Supportive Housing, Kirkland Heights, The Landing Shelter, Inclusion Scattered Homes, Spring District Transit -Oriented Development and Totem Six-Plex, in a combined total amount not to exceed $27,476. Section 2. The Agreements entered into pursuant to Section 1 of this resolution shall include terms and conditions to ensure that the City's funds are used for their intended purpose and that the projects maintain affordability over time. In determining what conditions should be included in the Agreements, the duly -appointed administering agency of ARCH shall be guided by the recommendations set forth in the ARCH Executive Board's memorandum of January 12, 2023, a copy of which is attached hereto as Exhibit A. Resolution No. 431 Page 1 of 2 PASSED BY THE CITYIL OF THE 1TY OF MEDINA ON THE t' T DAY OF IL 2023 AND SIGNEDIN AUTHENTICATIONITS PASSAGE THE TH DAY OF APRIL ;—Is�iaa t sman, c r Approved as to tee A t t: Scoff missal[, City Attorney Aimee Kellerman, CM, City Clerk Ogden Murphy Wallace, PLL Resolution No. 431 Fags 2 of ARC F A Regional Coalition for Housing �,el ` ti "s dr p years :'D � s3a #P t ' � f' o '9 Rt} if e3 King iJ' Together Center Campus 16387 NE 83rd St, Suite 201 RC� Redmond, WA 9862 (426) 861-3677 MEMORANDUM TO, City of Bellevue Council Members City of Bothell Council Members City of Clyde Hill Council Members Town of Hunts Point Council Members City of Issaquah Council Members City of Kenmore Council Members' City of Kirkland Council Members City of Medina Council Members City of Mercer Island Council Members City of Newcastle Council Members City of Redmond Council Members City of Sammarnish Council Members City of Woodinville Council Members Town of Yarrow Point Council Members FROM: Kurt Triplett, Chair, ARCH Executive Board DATE: January 12, 2023 RE Fall 2022 Housing'Trust Fund IHTFj Recommendation As we mark ARCH's 30th anniversary, I am pleased to transmit this year's recommendations for the ARCH Housing Trust Fund. The 2022 funding round was the largest in ARCH`s history, with requests from eight projects proposing an impressive 819 units of affordable housing and 26 emergency shelter buds*. After careful deliberation, the ARCH Executive Boardconcurred with the recommendations of the ARCH Community Advisory Board (CAB) and is recommending funding totaling 7,645,900, which provides full funding for four projects and partial funding for three projects. These recommendations advance an incredible set of projects that will meet diverse needs throughout the region, including: • Supportive housing for formerly homeless seniors, veterans and people with disabilities; e Homeownership housing that will help families build equity„ • Preservation of existing affordable housing for large families; • Affordable senior independent living; • Transit -oriented development for families and individuals adjacent to future light rail; • Emergency shelter for youth and young adults in East King County*; and • Affordable housing for individuals with intellectual and developmental disabilities In the last three decades, the ARCH Trust Fund has supported over 5,30 units of affordable housing and shelter beds, creating housing for thousands of families and individuals with limited opportunities to live in our community. The Trust Fund has also leveraged local resources over 10:1, bringing in 1 billion in other investments to East Ding County, and this year is no exception, with proposed projects expected to leverage over 460 million in other funding. ARCH MEMBERS —1 BEAUX ARTS VILLAGE BELL V'UE= # BOTHEoLL # CLWYDE HILL # HUNTS POINT ISSAQUAH' KENMORE KIRKLAND MEDINA + MERCER ISLAND NEWCASTLE # REDMOND SAMMAMISH # WOODINVILLE YARROW POINT o KING COUNTY ARCH Trust Fund Exec Board Memo December 2022 Page 12 A summary of recommended projects is shown in the table below: Project Units/ ARCH Executive Board Applicant City Beds Request Recommendation Ardea TWGjlmagine Housing Kirkland 170 $1,400,000 $1,400,000 Bellevue Homes Habitat for Humanity Bellevue 25 $600,000 $600,000 Kenmore Supportive Housing Plymouth Housing Kenmore 100 $3,279,700 $3,279,700 Kirkland Heights King County Housing Authority Kirkland 276 $2,000,000 $1,566,200 The Landing Shelter* Friends of Youth Kirkland 26 $650,000* See Below* Scattered Homes (Supported TBD-Bothell Living Home / OHS Home) Kenmore Alpha Supportive Living Woodinville 7 $400,000 $400,000 Spring District 1201h St. TOD BRIDGE Bellevue 235 $4,000,000 $350,000 Totem Six-Plex Attain Housing Kirkland 6 $750,000 $50,000 Total 819 $13,079,700 $7,645,900 *Note. Friends of Youth was able to obtain other grant funds and withdraw its application to ARCH. The ARCH Executive Board remains in strong support of the project These investments couldn't come at a more urgent time, as inflation and rising rents continue to threaten the housing stability of households with low and moderate incomes. While ARCH did not have sufficient funding to fully fund all proposed projects, these awards will make a major difference in the community and help create momentum towards meaningful production of affordable homes. The increased demand for the Trust Fund program also demonstrates ARCH's success in strengthening and expanding relationships with a range of development partners. We know these partnerships are critical to creating the affordable homes that will provide economic relief and stability for current and future generations in our community. Below is a more detailed description of the applications received, the Executive Board recommendation and rationale, and proposed contract conditions for the proposals recommended for funding at this time. Also enclosed is the proposed funding sources and an economic summary of the projects recommended for funding. Attachments: 1. Proposed Funding Sources 2. Project Economic Summaries Note that bolded text in proposed conditions shows unique conditions in otherwise standard text. hAHIBI I A ARCH Trust Fund Exec Board Memo December 2022 Page (3 1. TWG and Imaitine Housing — Ardea at Totem Lake Funding Request: $1,400,000 (Contingent Loan) 170 affordable rental units (including 1 manager unit) Executive Board Recommendation: Up to $1,400,000 (Contingent Loan) See attached Proposed Funding Sources for distribution of City Funds Proiect Summary: The Ardea project consists of 170 units of affordable housing for seniors age 62 and older at 40%, 50% and 60% AMI, including an estimated 45 units for senior veterans. The project will include 91 studios and 791-bedrooms units. All of the units will be within one building with seven residential levels over a one - level parking garage partially below grade with 36 parking stalls. TWG, a national for -profit affordable housing developer, will be the lead developer with Imagine Housing acting as non-profit sponsor/ownership partner and service provider. The project will provide major right-of-way pedestrian improvements intended to connect the unimproved section of 1161h Ave NE along the property with the Totem Lake Business District major pedestrian loop. The project will replace and improve the existing sidewalk with street trees and pedestrian lighting to complete the improved pedestrian corridor along 116th Ave NE. Funding Rationale: The Executive Board recommends funding with conditions listed below for the following reasons: • The project will meet several local housing strategies within the City of Kirkland and provide a large amount of senior affordable housing units in a much -needed area of East King County. • The project will complete an important missing section of pedestrian and right of way improvements connecting the Totem Lake Business District. • This project leverages significant funding from other public and private sources. • The project aims to bring together the efficiencies of a vertically integrated developer with the perspectives and connections of a local community -based nonprofit with deep roots in East King County. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment shall continue for twelve (12) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the applicant will provide a status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider up to a 12-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, CXH1131 I A ARCH Trust Fund Exec Board Memo December 2022 Page 14 the applicant must demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by the Agency towards construction costs. Funds may not be used for any other purpose unless ARCH staff has given written authorization for the alternate use. Spending of construction contingency must be approved in advance by ARCH. If after the completion of the project there are budget line items with unexpended balances, ARCH and other public funders shall approve adjustments to the project capital sources, including potentially reductions in public fund loan balances. 3. Funds will be in the form of a deferred, contingent loan. Loan terms will account for various factors, including loan terms from other fund sources and available cash flow. Final loan terms shall be determined prior to release of funds and must be approved by ARCH Staff. it is anticipated that loan payments will be based on a set repayment schedule and begin after repayment of deferred developer fee with 1% interest. The terms will also include a provision for the Agency to defer payment if certain conditions are met (e.g., low cash flow due to unexpected costs). Any requested deferment of loan payment is subject to approval by ARCH Staff, and any deferred payment would be repaid from future cash flow or at the end of the amortization period. 5. The net developer fee shall be established at the time of finalizing the Contract Budget and will follow the ARCH Net Developer Fee Schedule. Net developer fee is defined as that portion of the developer fee paid out of capital funding sources and does not include the deferred portion which is paid out of cash flow from operations after being placed in service. 6. A covenant is recorded ensuring affordability for at least 55 years, with size and affordability distribution per the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH staff. Affordability Studio 1 BR Total 40% 17 17 34 50% 47 38 85 60% 27 24 51 Total 91 79 170 7. The final loan amount shall be up to $1.4 million, subject to approval by ARCH staff based on a documented funding gap. ARCH reserves the right to reduce its total loan amount based on changes to the project sources and uses, and unit mix. 8. Agency must submit for ARCH staff approval a management and services plan which includes coordination of services with outside providers and parking management. 9. Agency shall identify and assist residents with alternative transportation options such as car sharing programs and/or shuttle services, bicycle facilities, and robust pedestrian access. 10. Agency shall include in its quarterly monitoring reports the following information: a. Updates on tenant relations and engagement in existing ARCH -funded projects 4 CXHIt31I A ARCH Trust Fund Exec Board Memo December 2022 Page 15 b. Updates on Agency property and asset management capacity and oversight c. Updates on work necessary to preserve current wetland buffer approvals 11. Agency must demonstrate its commitment to retaining/providing Energy Star Appliances in every unit. 2. Habitat for Humanity of Seattle -King County — Bellevue Homes Funding Request: $600,000 (Secured Grant) 25 affordable homeownership units Executive Board Recommendation: Up to $600,000 (Secured Grant) See attached Proposed Funding Sources for distribution of City Funds Proiect Summary: Habitat for Humanity Seattle -King County proposes creating 25 permanently affordable 3-bedroom, 1.5 bath townhomes and a new 3,500 SF community center in the Factoria neighborhood of Bellevue, WA. This 3.13-acre site is to be purchased from the Holy Cross Lutheran Church of Bellevue. The proposed population for the development is 4-5 person families with incomes up to 60% AMI and 80% AMI. The homeownership structure uses a land trust model to ensure permanent affordability of each unit. Under the model, HFHSKC retains ownership of the land, which is leased to individual homeowners, and a right of first option to purchase the home upon resale. Habitat requires homebuyers to put in 250 hours of self-help labor to help construct their own units as well as their neighbors' units. This "sweat equity" model, combined with the modest appreciation within the land trust structure, provides low-income households the opportunity to build wealth through homeownership while securing safe, affordable housing. The project addresses a local priority to the City of Bellevue' s Affordable Housing Strategy by creating more affordable housing stock for low-income households, including through developing on land owned by faith -based groups. Funding Rationale: The Executive Board supports the intent of this application for the following reasons: • The project would create additional units of homes for purchase in a very high -cost area with median home prices that exceed $1 million. Such opportunities are quite rare and allow households with modest incomes to achieve stability and wealth building through homeownership. • The project takes advantage of new City policies that encourage additional density and affordable housing on property owned by faith communities, helping to advance the City's overall Affordable Housing Strategy. • The project preserves existing community assets that will create benefits for residents and the broader community. 5 ARCH Trust Fund Exec Board Memo December 2022 Page 16 • Habitat's sweat equity model allows volunteers and potential buyers to gain valuable skills and experience in homebuilding, while allowing for cost savings when compared to traditional construction. Also, keeping the units and land in a land trust ensures perpetual affordability, which is especially important in a high cost, high growth city like Bellevue. • Habitat's approach to marketing helps to address historic barriers to home ownership and preserve cultural diversity in the community. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment continues for twelve (12) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the Agency will provide a status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider a twelve-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Agency will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by Agency toward acquisition costs. Funds may not be used for another purpose without prior written authorization from ARCH. If, after project completion project, there are budget line items with unexpended balances, ARCH and other public funders shall approve adjustments to the project capital sources, including potential reductions in public fund loan balances. Funds will be in the form of a secured grant, so long as affordability and target population are maintained. 4. The Net Developer Fee shall be established when the Contract Budget is finalized and will follow the ARCH Net Developer Fee Schedule. Net Developer Fee is defined as that portion of the developer fee paid out of capital funding sources and does not include the deferred portion which is paid out of cash flow from operations after the project is placed in service. 5. A covenant shall be recorded ensuring affordability for at least 55 years, with size and affordability distribution per the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH. Affordability 3 BR Total 60% 10 10 80% 15 15 Total 25 25 6 ARCH Trust Fund Exec Board Memo December 2022 Page (7 6. Agency shall include the following in its quarterly reports: a. Update on mortgage interest rate projections and contingency plans to address rates in the present inflationary environment. b. Update on neighborhood engagement and efforts to inform the surrounding community about the project. 7. Agency shall provide for ARCH review and approval any draft agreements memorializing roles and responsibilities for management and use of shared spaces, including the community center, open space elements, and shared parking. Agency shall ensure that homeowners are not responsible for maintenance of non-residential spaces intended primarily to benefit other parties or the broader community. 8. Agency shall affirmatively market the project to further fair housing (as described in the funding application), and commit to measures that ensure all households may enjoy residency regardless of religious affiliation, and protect against religious discrimination in the sale of homes and operation of the development. 3. Plymouth Housing — Kenmore PSH Funding Request: $3,279,729 (Deferred Loan) 100 affordable rental units (including 1 manager unit) Executive Board Recommendation: Up to $3,279,700 (Deferred Loan) See attached Proposed Funding Sources for distribution of City Funds Project Summary: The proposed project is the new construction of 100 affordable housing units for seniors, veterans, formerly homeless, and disabled individuals. All of the units will serve formerly homeless residents earning up to 30% of area median income. The project will be located on a city -owned site on Bothell Way in Downtown Kenmore with good proximity to amenities and transportation. The project location is ideal for a building that serves seniors and single individuals. The project includes a mix of studios and one -bedroom units (25 one -bedroom and 75 studio) as well as resident amenity space, including a community room, community kitchen, on -site medical and behavioral health space, offices for case managers and property staff, and a front desk. The project will also include commercial space on the ground floor that will provide a benefit to the community through a partnership with Kenmore -based Bastyr University. This project was made possible through the efforts of the City of Kenmore, which committed approximately $3.21VI in ARPA funding and offered a $1.89 million City -owned property through an RFP dedicated to affordable housing. The ARCH Executive Board also approved a preliminary reservation of unused 2021 Housing Trust Fund resources to the development of this project. The winning project and funding recommendation was then reviewed and affirmed by ARCH's Community Advisory Board. t:AHIbII A ARCH Trust Fund Exec Board Memo December 2022 Page 18 Due to construction market conditions, and incorporation of commercial prevailing wages into the construction budget (to accommodate federal resources committed to the project), the budget experienced an increase in construction costs that increased the remaining funding gap. To help fill this gap, Plymouth requested additional funds from ARCH in the fall round, and submitted applications to other funding sources to complete the project financing. Funding Rationale: The Executive Board recommends funding with conditions listed below for the following reasons: • Aligns with the City's RFP goals and would further the City of Kenmore #1 priority to build affordable housing: o Exceeded the City's goal of providing 20% of the units at 30% AMI. a Utilizes project site efficiently allowing for 100 units of affordable housing. a Meets the City's requirement of a cost-efficient design. a Commits significant agency resources toward development of a ground floor that will benefit the community o Envisions a welcoming design that enhances and creates a gateway to Downtown Kenmore • Will provide critically needed, deeply affordable units at 30%AMI. • Meets ARCH's long-term objective of investing in affordable housing across member jurisdictions. • Serves a range of special needs populations (homeless individuals, seniors, veterans and persons with disabilities) • Will allow a dependable, long standing non-profit housing and service provider to expand services into Kenmore. • Will be highly competitive for Low Income Housing Tax Credits and State Housing Trust Fund resources, providing significant financial leverage of local resources. • Site has convenient access to transit, shopping, and services. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: The funding commitment shall continue for eighteen (18) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the Agency will provide a status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider a twelve-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Agency will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by Agency toward reserves, soft costs, design, permits and construction. Funds may not be used for any other purpose unless ARCH staff has given written authorization for the alternate use. If after the completion of the project there are budget line items with unexpended 8 CAHILi11 A ARCH Trust Fund Exec Board Memo December 2022 Page (9 balances, ARCH and other public funders shall approve adjustments to the project capital sources, including potentially reductions in public fund loan balances. 3. Funds will be in the form of a secured grant, so long as affordability and target population is maintained, and the service funds necessary to provide services to this population are available. 4. The net developer fee shall be established at the time of finalizing the Contract Budget and will follow ARCH Net Developer Fee Schedule. Net developer fee is defined as that portion of the developer fee paid out of capital funding sources and does not include the deferred portion which is paid out of cash flow from operations after being placed in service. S. A covenant is recorded ensuring affordability for at least 55 years, with unit size and affordability distribution per the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH staff. Affordability studio 1-bedroom Total 30961 75 25 100 Total 75 25 100 6. Based on the availability of adequate support services, the project will contain 100 units for formerly homeless residents, unless otherwise approved by ARCH. Plymouth will work with service providers and other agencies working in East King County to establish referral mechanisms, or other referral method as approved by ARCH, and shall aim to include seniors, veterans, and persons with disabilities. 7. ARCH shall review and approve the services budget and services plan for consistency with application. 8. The Agency will establish a services reserve account in the amount of no less than $500,000 to be used in the event of shortfalls in project income to pay for necessary services expenses. A services reserve budget must be approved by ARCH at the close of permanent financing and will be monitored for consistency with the services plan, ARCH will review 9. if service funding decreases at any point during the term of the contract, Agency shall submit for review and approval a service plan which provides continuity of services within the project. 4. King County Housing Authority — Kirkland Heights Funding Request: $2,000,000 (Contingent Loan) 276 Affordable Units (including 3 manager units) Executive Board Recommendation: Up to $1,566,200 (Contingent loan) Includes $1,056,300 local funds, $509,900 CDBG funds 9 ARCH Trust Fund Exec Board Memo hAli 1131 I A December 2022 Page 110 See attached Proposed Funding Sources for distribution of City Funds Project Summary: The Kirkland Heights Apartments is a 180-unit apartment complex located in Northeast Kirkland near the Totem Lake neighborhood. This proposal's scope includes the rehabilitation of all existing residential buildings, addition of a third story to eleven of the existing buildings, and the new construction of two three-story residential buildings and one community building. Upon project completion, the complex will consist of 276 units, thus utilizing more of the site's allowed density. The project will include 103 units affordable for households at 30% AMI, 52 units at 60% AMI and 114 units at 80% AMI. This structure takes advantage of the available Project -based Section 8 rental assistance, which is targeted to the 106 units at 30% AMI, while allowing existing residents with incomes between 60% and 80% AMI to remain at Kirkland Heights. KCHA is proposing $24.2 million in public funds while contributing a significant ($36.1 million) subordinate loan. King County has awarded $11.2 million in funds for the project, and $10 million is proposed from the State (of which $5 million would fund the rehab project, and $5 million would fund the new construction portion). in addition, as a Public Housing Authority (PHA), KCHA can issue tax exempt debt. At the time of application, 50% ($110 million) of the total sources have been committed/secured. Funding Rationale: The Executive Board supports the intent of this application for the following reasons: • The project preserves and enhances housing for a large number of existing low- and moderate - income residents in the community, including many families with children. • The project also adds a significant number of units affordable to very low-, low- and moderate - income households within a high -opportunity area near good jobs, various transportation options, and other public and private amenities. • KCHA has taken advantage of income averaging, thus allowing the feasible incorporation of 106 units targeted to very low-income households. Those units are supported with Project -based Section 8 Rental Assistance under a HAP Contract signed in 2020. • This project leverages significant funding from public and private sources, 50% of which are already committed/secured. • The project is undertaken by an experienced agency that has prioritized the project to start construction as soon as possible. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment shall continue for eighteen (18) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the applicant will provide W tXMll31 I A ARCH Trust Fund Exec Board Memo December 2022 Page 111 a status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider up to a 12-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the applicant must demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. Funds shall be used by the Agency for soft costs, acquisition costs, and construction costs. in the event any portion of the funding award is reserved for construction contingency, that portion must be approved in advance by ARCH staff. Funds may not be used for another purpose without prior written authorization from ARCH. if, after project completion project, there are budget line items with unexpended balances, ARCH and other public funders shall approve adjustments to the project capital sources, including potential reductions in public fund loan balances. Funds will be in the form of a deferred, contingent loan. Loan terms will account for various factors, including loan terms from other fund sources, including the sponsor subordinate loan and available cash flow. Final loan terms shall be determined prior to release of funds and must be approved by ARCH staff. Based on the preliminary development budget, it is anticipated that loan payments will be based on a set repayment schedule and begin after repayment of the deferred developer fee (approximately year 12), with 1% interest. The terms will also include a provision for the Agency to defer payment if certain conditions are met (e.g., low cash flow due to unexpected costs). Any requested deferment of a loan payment is subject to approval by ARCH staff, and any deferred payment would be repaid from future cash flow or at the end of the amortization period. 4. KCHA will provide a sponsor subordinate loan in the approximate amount of $36.1 million. The final amount and terms of repayment will be finalized at the time of review and approval of the contingency portion of the funding commitment. Terms are anticipated to account for available cash flow and repayment of the ARCH loan. 5. Until such time as the deferred developer fee is fully repaid, all cash flow after payment of operating expenses and debt service shall be used to repay the deferred developer fee or project reserves as approved by ARCH staff. 6. A covenant is recorded ensuring affordability for at least 55 years, with affordability as shown in the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH staff. Affordability 1 BR 2 BR 3 BR 4 BR Total 30910 56 43 7 106 60% 4 23 22 4 53 80% $ 1 48 48 10 114 Total 12 127 113 21 273 7. Agency shall provide remaining findings after the completion of Building 8 test case. if those findings impact the project's development budget or project timeline, those updates will be shared with ARCH. [tea _ V- ARCH Trust Fund Exec Board Memo December 2022 Page 112 8. Agency shall provide a relocation plan for ARCH review and approval, including 1) the total relocation budget, 2) description of impact to residents, and 3) sample relocation notices provided to residents (all applicable per approved relocation plan: 30-day notice, 60-day notice, etc.). 9. Agency shall provide ARCH a management plan that includes proposed recreational activities that will be offered to build community and promote resident engagement. 10. Agency shall identify and implement opportunities to incentivize sustainable transportation choices such as car sharing, public transportation, electric vehicle ownership and bicycle storage. S. ALPHA/Inclusion — Scattered Homes Funding Request: $400,000 (Secured Grant) 2 homes (including 3 tenants per home) Executive Board Recommendation: Up to $400,000 (Secured Grant) See attached Proposed Funding Sources for distribution of City Funds Proiect Summary: The proposed ARCH -funded project will consist of the acquisition of two homes in East King County for individuals with Intellectual and Developmental Disabilities (IDD) earning below 30% AMI, referred through the Development Disabilities Administration (DDA). Each home is expected to have three clients. The $400,000 request to ARCH would help to acquire two homes in the Woodinville/Bothell/Kenmore area, where the sponsor has an established presence and supports within the community. Inclusion Homes will own and operate the homes, while Alpha Supported Living provides tailored supportive services at each home. The two proposed acquisitions include: 1. Purchase of a children's home in the Bothell/Woodinville area of King County (OHS Home #3). This will be a 4-bedroom home for the Out of Home Services (OHS) program for children and youth ages 9-20 years old. Alpha is seeking sites near their two existing OHS homes for streamlining of management and staffing purposes. The timeline to purchase the home is late 2023. 2. Purchase of a 3-bedroom Supported Living home located in East King County (Bothell, Woodinville), with services provided by Alpha also referred as Home #4. The timeline is to purchase the home in mid-2023. Each home site will be assessed by Inclusion Homes for repairs and retrofitting at time of purchase as needed. Inclusion homes has already identified a list of up potential homes that would fit within the agency's needs and standard requirements. 12 tAHIl311 A ARCH Trust Fund Exec Board Memo December 2022 Page 113 There has been an ongoing demand for Supported Living services from individuals with IDD living with their parents or from an institutional setting. Alpha continually receives referrals but lacks access to affordable housing to place individuals. Currently, there are 87 open and funded "slots" for clients with IDD to move into Supported Living in Washington State, plus 68 additional funded "slots" that will be added over the next 12 months from legislative appropriations. Funding Rationale: The Executive Board supports the intent of this application for the following reasons: • The project will provide much needed IDD housing in King County people with very low incomes below 30% AM I. • This project leverages significant investments from public sources including State capital funds as well as ongoing rental subsidies and service funding that will ensure stable operations over time. • The project is undertaken by an agency with recent success creating new IDD housing and a strong reputation for meeting the needs of individuals who would otherwise not be successful in many other types of housing. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment continue for eighteen (18) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the Agency will provide status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider a twelve-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Agency will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by Agency toward acquisition. Funds may not be used for any other purpose unless ARCH staff has given written authorization for the alternate use. 3. Funds will be in the form of a secured grant, so long as affordability and target population is maintained, and the service funds necessary to provide services to this population are available. 4. The net developer fee shall be established at the time of finalizing the Contract Budget and will follow ARCH Net Developer Fee Schedule. Net developer fee is defined as that portion of the developer fee paid out of capital funding sources and does not include the deferred portion which is paid out of cash flow from operations after being placed in service. 5. A covenant is recorded ensuring affordability for at least 55 years, with size and affordability distribution per the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH staff. 13 _:V21W_JI/_1 ARCH Trust Fund Exec Board Memo December 2022 Page 114 Affordability 1-bedroom/suite Total 30% 7 7 Total 7 7 6. ARCH shall review and approve the services budget and services plan for consistency with application. A services reserve budget must be approved by ARCH at the close of permanent finance and will be monitored on an annual basis for consistency with the services plan. Any deviation from the services budget must be pre -approved by ARCH. 7. Agency shall provide to ARCH for review a Capital Needs Assessment for all homes for ARCH's approval. 6. BRIDGE Housing —Spring District TIED Funding Request: $4,000,000 (Contingent Loan) 235 Affordable Units (including 2 manager units) Executive Board Recommendation: Up to $350,000 (Contingent Loan) See attached Proposed Funding Sources for distribution of City Funds Proiect Summary: In October 2020, Sound Transit selected BRIDGE and its partners, Essex and Touchstone, to master plan and develop a 6.9-acre site adjacent to the agency's Operations and Maintenance Facility in the Spring District of Bellevue. Together, the project partners plan to deliver a mixed -use, mixed -income transit - oriented development that offers direct connections to a new transit station and a regional multi -modal trail corridor. The proposed affordable housing project is comprised of Building 6 and Building 3, which consist of 235 permanently affordable units at 50%-60% AM[ including two manager's apartments. Unit mixes will consist of 71 studios, 101 one -bedroom units, 37 two -bedroom units, and 24 three -bedroom units. The current proposal was prepared in response to a 2019 RFP that originally contained up to $10 million in committed funding from King County and $4 million from ARCH. At the time, BRIDGE believed the project would be feasible without those funds, but in subsequent years high -cost inflation has created a large financing gap in the project. The project is currently projecting a large gap in public financing, but is not expected to get underway with construction until late 2024. Therefore, the project may be able to re -apply for funding in ARCH's 2023 funding round. 14 CAHILS1I A ARCH Trust Fund Exec Board Memo December 2022 Page 115 Funding Rationale: The Executive Board supports the intent of this application for the following reasons: • The project will provide a large amount of low- and moderate -income affordable housing units in a strategic location close to jobs, transportation and amenities. • This project leverages significant investments from public and private funding sources, including King County TOD funds which are specifically set aside for the Bel -Red corridor, Amazon's Housing Equity Fund and the Evergreen Impact Housing Fund. • The project takes advantage of surplus public property provided at no cost by Sound Transit and City of Bellevue. • The project design incorporates cost and sustainability considerations such as reduced parking. • The project advances key objectives in the City of Bellevue's Affordable Housing Strategy. Proposed Conditions: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment shall continue for twenty-four (24) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the applicant will provide a status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider up to a 12-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the applicant must demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by the Agency towards soft costs and construction. Funds may not be used for any other purpose unless ARCH staff has given written authorization for the alternate use. Spending of construction contingency must be approved in advance by ARCH. if after the completion of the project there are budget line items with unexpended balances, ARCH and other public funders shall approve adjustments to the project capital sources, including potentially reductions in public fund loan balances. 3. Funds will be in the form of a deferred, contingent loan. Loan terms will account for various factors, including loan terms from other fund sources and available cash flow. Final loan terms shall be determined prior to release of funds and must be approved by ARCH Staff. It is anticipated that loan payments will be based on a set repayment schedule and begin after repayment of deferred developer fee with 1% interest. The terms will also include a provision for the Agency to a defer payment if certain conditions are met (e.g., low cash flow due to unexpected costs). Any requested deferment of loan payment is subject to approval by ARCH Staff, and any deferred payment would be repaid from future cash flow or at the end of the amortization period. S. The net developer fee shall be established at the time of finalizing the Contract Budget and will follow the ARCH Net Developer Fee Schedule. Net developer fee is defined as that portion of the tAH1131 I A ARCH Trust Fund Exec Board Memo December 2022 Page 116 developer fee paid out of capital funding sources and does not include the deferred portion which is paid out of cash flow from operations after being placed in service. 6. A covenant is recorded ensuring affordability for at least 55 years, with size and affordability distribution per the following table. Limited changes to the matrix may be considered based on reasonable justification as approved by ARCH staff. Affordability Studio 1 BR 21311 3BR Total 50% 21 30 11 8 70 60% 50 71 26 16 163 Total 71 101 37 24 233 7. Agency must submit for ARCH staff approval a management and services plan which includes coordination of services with outside providers for special populations. 8. Agency shalt ensure that all measures have been taken to provide durable, high quality and sustainable constructions materials, and Energy Star appliances within the project. 9. Agency shall identify and take steps to connect residents with affordable, healthy food options, and commit to pursuing the removal of any restrictions within the broader master development that prevent the operation of grocery stores. 10. Agency shall submit a parking management and shared parking plan and shall pursue opportunities to make additional parking options available to residents who require vehicle parking. 11. In the interest of encouraging integration of residents across the development site, the Agency shall look for ways to incorporate shared amenities, unifying aesthetics, and other programmatic features to build community. 7. Attain Housing —Totem Six Piex Funding Request: $650,000 (Secured Grant) 6 new housing units Executive Board Recommendation: Up to $50,000 (Technical Assistance Grant) See attached Proposed Funding Sources for distribution of City Funds Proiect Summary: The proposed project is the new construction of a three-story structure with six two -bedroom units of transitional housing for homeless families earning up to 30% of area median income (AMI). The property currently contains an existing four plex building owned and managed by Attain Housing. Attain also manages the four plex on the lot next to the proposed construction site. The proposed new building will sit in what is currently a lawn between the two four Alex buildings. The project represents an expansion Im ARCH Trust Fund Exec Board Memo December 2022 Page 117 of existing programs operated by Attain, with overall capacity growing from 8 to 14 units across the three buildings. Funding Rationale: The Executive Board supports the concept of the Attain Housing proposal but does not recommend fully funding the project at this time. The Executive Board supports technical assistance funding for this project in an effort to address outstanding project issues, and encourages the project to apply for funding during the 2023 ARCH Housing Trust Fund round. This would provide an opportunity for Attain Housing to address the issues identified below: • Further development of building design, permitting, siting and parking and conformance with zoning requirements. • Allow the project to obtain funding commitments of other public funding sources and make progress on the needed capital campaign. • Secure project management capacity, including recommended engagement of a development consultant who will assist with the financing and project management of the project through construction completion. • Development of an updated development budget and operating budget which addresses increases in construction costs based on an updated cost estimate and funding to address the additional cost increases. • Development of a project schedule consistent with the proposed funding and local permitting requirements. • Further discussion of long-term strategy for funding supportive services for transitional housing. Proposed Conditions for Technical Assistance Award: Standard Conditions: Refer to list of standard conditions found at end of this memo. Special Conditions: 1. The funding commitment shall continue for twelve (12) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to ARCH staff no later than sixty (60) days prior to the expiration date. At that time, the Agency will provide status report on progress to date and expected schedule for start of construction and project completion. ARCH staff will consider a twelve-month extension only based on documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Agency will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable timeframe. 2. Funds shall be used by Agency toward development consultant and design development. Funds may not be used for any other purpose unless ARCH staff has given written authorization for the alternate use. 3. Funds will be in the form of a grant for eligible predevelopment expenses. 17 hAHI I I A ARCH Trust fund Exec Board Memo December 2022 Page 118 Standard Conditions (Apply to all proiects): 1. Agency shall provide revised development and operating budgets based upon actual funding commitments, which must be approved by ARCH staff. If the Agency is unable to adhere to the budgets, ARCH must be immediately notified and (a) new budget(s) shall be submitted by the Agency for ARCH's approval. ARCH shall not unreasonably withhold its approval to (a) revised budget(s), so long as such new budget(s) does not materially adversely change the Project. This shall be a continuing obligation of the Agency. Failure to adhere to the budgets, either original or as amended may result in withdrawal of ARCH's commitment of funds. 2. Agency shall submit evidence of funding commitments from all proposed sources. In the event commitment of funds identified in the application cannot be secured in the timeframe identified in the application, the Agency shall immediately notify ARCH, and describe the actions it will undertake to secure alternative funding and the timing of those actions subject to ARCH review and approval. 3. In the event federal funds are used, and to the extent applicable, federal guidelines must be met, including but not limited to the following: contractor solicitation, bidding, and selection; wage rates; and Endangered Species Act (ESA) requirements. CDBG funds may not be used to refinance acquisition costs. 4. Agency shall maintain documentation of any necessary land use approvals and permits required by the city in which the project is located. 5. Agency shall submit quarterly monitoring reports through completion of the project, and annually thereafter, and shall submit a final budget upon project completion. If applicable, Agency shall submit initial tenant information as required by ARCH. 6. Agency shall maintain the project in good and habitable condition for the duration of the period of affordability. 7. The final award amount shall be up to the recommended total, subject to approval by ARCH staff based on a documented funding gap. ARCH reserves the right to reduce its total award amount based on changes to the project sources and uses, and unit mix. 18 hAI-111:311 A. Attachment 1: Proposed Funding Sources PROJECTS RECOMMENDED FOR 2022 FUNDING 2022 Armes at Bellevue Kenmore Kirkland Scattered Spring Totem Six Recommended Totem Lake Names PSH Heights Homes District Plex Funds Bellevue 475,000 203,600 1,112,800 358,400 135,700 118,700 25,000 2,429,200 Bothell 28,200 12,100 66,100 21,300 8,100 7,100 142,900 Clyde Hill 7,600 3,300 17,800 5,700 2,200 1,900 38,500 Hunts Point 1,600 700 3,700 1,200 500 400 8,100 Issaquah 65,300 28,000 153,000 49,300 18,700 16,300 330,600 Kenmore 23,400 10,000 54,900 17,700 6,700 5,900 118,600 Kirkland 386,100 165,500 904,600 291,300 110,300 96,500 25,000 1,979,300 Medina 7,400 3,200 17,.300 5,600 2,100 1,800 37,400 Mercer Island 25,200 10,800 59,100 19,000 7,200 6,300 127,600 Newcastle 36,000 15,400 84,300 27,100 10,300 9,000 182,100 Redmond 261,200 111,900 611,800 197,100 74,600 65,300 1,321,900 Sair mamish 49,500 21,200 115,900 37,300 14,100 12,400 250,400 Woodinville 30,600 13,100 71,700 23,100 8,700 7,700 154,900 Yarrow Paint 2,900 1,200 6,700 2,200 800' 700 14,500 Local Funds 1,400,000 600,000 3,279,700 1,056,300 4000,000 350,000 50,000 7,136,000 CDBG .. 509,900 509,900 mmrdail00 000 0 0':. '� �7 O0 55 Oi:`0 0 ` . 50 0.0 g1011 715 900 ,.. tXH1t5l I A Attachment 2: Project Economic Summaries Applicant: TWG and Imagine Housing Proiect, Name: Ardea Senior Affordable Housing Location: 12700116 1h Avenue NE, Kirkland WA Project Description: 170 units of affordable housing for seniors 62 and older at 40%, 50% and 60% AM Project c Soures -0— M Amazon $8,075,000 • OWWRIM11MIJ � KiLng County $2,274,00 - Sam 4 LIHTC $28.357,114 Perm Loan $,15,300,000 Proposed Deferred Developer Fee $3,696,674 Committed Toources Uses: $4,805,427 $28,267 Constructiow $265,016 Soft Costs: Pre -Development / Bridge Financing_+-",Lo,w#.To� — Construction Financing $2,642,119 Permanent Financing $1,279,375 Capitalized Reserves $4,022 Other Dev lopment Costs $12,477 on. Filorg-31 I'll- M-M t:AHIt5I I A Applicant: Habitat for Humanity of Seattle -King County Project Name: Bellevue Homes Location: 4315 129th Place SE, Bellevue, WA 98006 Proiect Description: New development of 25 permanently affordable 3-bedroom, 1.5 bath townhomes and a new 3,500 SF community center for residents at 80% AMI. Project Sources Amount Status State HTF $900,000 Proposed State CHIP $800,000 Proposed ARCH HTF $600,000 Proposed HFHSKC $11,540,313 Committed Total Sources $13,840,313 Project Uses Amount Per Home Per SF Acquisition Costs $1,020,000 $40,800 $37.09 Construction $11,360,313 $454,413 $413.10 Soft Costs $1,180,000 $47,200 $42.91 Other Development Co �"n,840,313 $280,000 $11,200 1 $10.1d8 Total uses $555,623 8 $503.28 CXIi11SII A Applicant: Plymouth Housing Proiect Name: Kenmore PSH Location: 4315129' Place SE, Bellevue, WA 98006 Proiect Description: New construction of 100 affordable housing units for formerly homeless seniors, veterans, and disabled individuals at 30% area median income with moderate service needs. Source Name Amount Originally Committed Proposed Status Tax Credit Equity $25,705,200 Proposed Housing Trust Fund $5,000,000 Proposed City of Kenmore $400,000 $5,090,000 Proposed ARCH $279,729 $3,000,000 Proposed Plymouth Sponsor Loan $1,458,600 Committed FHLB $750,000 Proposed King County $1,000,000 Proposed Plymouth Sponsor Loan $1,541,400 Committed Total Sources $44,224,929 Project Uses Amount Per Unit Per SF Acquisition Costs $1,920,000 $19,200 $45 Construction $34,123,997 $341,240 $804 Soft Costs $3,015,000 $30,150 $71 Construction Financing $794,532 $7,945 $19 Permanent Financing $315,000 $3,150 $7 Capitalized Reserves $1,135,000 $11,350 $27 Other Development Costs $1,380,000 $13,800 $33 Community Space $1,541,400 N/A $706 Total Uses $44,224,929 $442,249 $1,042 hAH1131 I A Applicant: King County Housing Authority Proiect Name: Kirkland Heights Location: 13310 NE 133`d Street, Kirkland WA 98034 Proiect Description: Rehab and new construction of 276 Affordable Units at 30%, 60% and 8096 AMI Project Sources Amount Status 4% LIHTC Equity $96,393,299 Proposed Tax Exempt Bonds (Permanent) $52,262,366 Proposed King County TOD $11,200,000 Committed State HTF $10,000,000 Proposed State CHIP $1,000,000 Proposed ARCH HTF $2,000,000 Proposed Sponsor Subordinate Loan $36,145,521 Committed Deferred Developer Fee $10,911,606 Committed Deferred Interest 1 $400,000 Committed Total Sources 1 $220,312,792 Project Uses Amount Per Unit Per SF Acquisition Costs $51,524,800 $186,684 $210.09 Construction $128,170,181 $464,385 $522.61 Soft Costs $31,905,619 $115,600 $130.09 Pre -Development / Bridge Financing $1,200,000 $4,348 $4.89 Construction Financing $1,825,000 $6,612 $7.44 Permanent Financing $1,594,462 $5,777 $6.50 Other Development Costs $3,627,730 $13,144 $14.79 Bond Related Costs of Issuance $465,000 $1,685 $1.90 Total Uses $220,312,792 $798,235 $898.31 lZMVI_=jiitl Applicant: Proiect Name: Location: Proiect Description: ALPHA/Inclusion Scattered Homes TBD Purchase and rehabilitation of two homes in East King County for IDD children and individuals. Project Sources OHS Home 3 Supported Living Home 4 Total Housing Trust Fund $700,000 $650,000 $1,350,000 ARCH $200,000 $200,000 $400,000 Kuni Foundation $100,000 $0 $100,000 Inclusion Housing $100,000 $100,000 $200,000 Total Sources $11100,000 $950,000 $2,050,000 Project Uses: Supported Living Home #4 Amount Per SF Per Bed Acquisition Costs $812,000 $226 $116,000 Construction $96,000 $27 $13,714 Soft Costs $21,000 $6 $3,000 Capitalized Reserves $21,000 $6 $3,000 Total Uses $950,000 $264 $135,714 Project Uses: OHS Home #3 Amount Per/SF Per Bed Acquisition Costs $963,000 $268 $137,571 Construction $96,000 $27 $13,714 Soft Costs $21,000 $6 $3,000 Capitalized Reserves $20,000 $6 $2,857 Total Uses $1,100,000 $306 $157,143 CAHIt31I A Applicant: Proiect Name: Location: Proiect Description: BRIDGE Housing Spring District Affordable Housing Development 16011201h Avenue NE, Bellevue WA New construction of Building 6 and Building 3, which consist of 235 permanently affordable units at 501YS-60% AMI in the Spring District TOD site. Project Sources Amount Status 4% Low Income Housing Tax Credits $58,501,006 Proposed Amazon Housing Equity Fund - Loan $22,100,000 Proposed Amazon Housing Equity Fund - Grant $3,750,000 Proposed Evergreen Impact Housing Fund $15,500,000 Committed King County TOD $10,000,000 Proposed City of Bellevue $8,000,000 Proposed ARCH $4,000,000 Proposed BRIDGE General Partner Equity $4,985,350 Committed Deferred Developer Fee $2,000,000 Committed Perm Loan $2,987,826 Proposed Total Sources $131,824,182 $560,954 Project Uses Amount Per Unit Per SF Acquisition Costs $25,000 $106 $0.11 Construction $101,081,682 $430,135 $424.80 Soft Costs $15,434,392 $65,678 $64.86 Pre -Development / Bridge Financing $810,975 $3,451 $3.41 Construction Financing $9,589,624 $40,807 $40.30 Permanent Financing $580,627 $2,471 $2.44 Capitalized Reserves $611,227 $2,601 $2.57 Other Development Costs $3,690,655 $15,705 $15.51 Total Uses $131,824,182 $560,954 $553.99 EXHIBI I A Applicant: Proiect Name: Location: Proiect Description: Attain Housing Totem Six Plex 12601 NE 132 nd St, Kirkland New construction of a three-story structure with six two -bedroom units of affordable housing for homeless families earning up to 30% of area median income (AMI). Project Sources Amount Status ARCH $750,000 Proposed State Housing Trust Fund $750,000 Proposed King County $750,000 Proposed Capital Campaign $1,500,000 Propose Attain Housing $250,000 Committed Total Sources $4,000,000 $666,667 Project Uses Amount Per Unit Per SF Acquisition: $1,500 $250 $.25 Construction: $3,393,632 $565,605 $566 Soft Costs: $526,143 $87,691 $88 Other Development Costs $78,725 $13,1221 13 Total Uses $4,000,000 $666,667 $667