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RES 99-13 BAINBRIDGE ISLAND HOUSING TRUST FUND PROPOSAL RESOLUTION NO. 99-13 A RESOLUTION OF THE CITY COUNCn.. OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, ACCEPTING THE BAINBRIDGE ISLAND HOUSING TRUST FUND PROPOSAL WHEREAS, the Housing Element of the City's Comprehensive Plan recommends that a Housing Trust Fund be established for use in purchasing land, assisting with financing and for providing infrastructure to support affordable housing on Bainbridge Island; WHEREAS, Mayor Sutton appointed a 90-Day Committee to consider the key elements involved in establishing a Housing Trust Fund to complement existing city ordinances addressing affordable housing, to encourage development of moderate and lower income housing and to provide funding for income groups not serviced by other funding sources currently available; WHEREAS, the 90-Day Committee produced a report on November 13, 1998, entitled "Proposal for The Bainbridge Island Housing Trust Fund" outlining its recommendations and the means for establishing such a trust fund; BE IT RESOLVED BY THE CITY COUNCn.. OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, AS FOLLOWS: Section 1. The City Council of the City of Bainbridge Island, Washington, accepts the proposal drafted by the go-Day Housing Trust Fund Committee dated November 13, 1998, attached to this resolution. PASSED by the City Council this 12th day of May, 1999. APPROVED by the Mayor this 13t!1 day of May, 1999. ~~ ~~-, ~ DWIGHT SUTTON, Mayor ATTEST/AUTHENTICATE: ~~G'_ tP ~~1J ~ P. KASPER, CIty Clerk FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: RESOLUTION NO. May 6, 1999 May 12, 1999 99-13 -s ~\\ ~ fIcMnnIJ..13, 1988 fr r iA OO-Day Mayor'S Committee Report ,.' REPORT SUMMARY 3 THE COMPREHENSIVE PLAN'S HOUSING ELEMENT-ENABLING LANGUAGE 3 POTENTIAL REvENuE SOURCES: 3 ADMINISTRATION OF THE TRUST FuND 4 POTBN'I1AL PROGRAMS SUPPoRTED 4 PARTNERSHIPS 4 THE REPORT 4 MIsSION OF THE HOUSING TRUST FUND 5 COMMlI'TEE MEMBERs 5 REVENUE SOURCE 6 REVENUE SOURCE GoALS 6 VOLUNTARY REvENuE CONTRIBUTIONS 6 , REVENUE SOURCE SUBCOMMIT'I'EE REcOMMENDATIONS 7 1 SURCHARGES ON PLANNING, LAND USE AND BUILDING PERMITS 7 1'RAicsACTION-BASED VOLUNTARY CONTRIBUTION nOM INDIVIDUALS AND BUSINESSES DIRBC'11.Y RELATED TO REAL ESTATE ACTIVITIES 8 MATCHING IlJNDS fROM-COBI GENERAL FuND 9 CONSIDERATIONS FOR Ftl'nJRE PuBLIC REvENuE SOURCE 9 ADMINISTRATION _ 9 ADMINISTRATION DETAJL: HOUSING TRUST FUND LENDING CRrrEIu:A 10 SCHIDULI:AND ~PROCESS 10 COMPLE'I'ENESS OF APPLICATIONS 11 BASIC ELIGmn.rI'Y 11 FEAsmn.rI'Y 12 , PRIOItrI'Y FOR FUNDING 15 , UNDIRWRITING 16 PROGIlAMInASIBll...ITY 18 PROGRAMIFEASmn.rI'Y SUBCOMMI'ITEE OF THE HOUSING TRUST FUND 18 THE NEED 18 SUBCOMMITI'EE OBSERVATIONS 19 RECOMMENDATIONS 20 Housilll-Trust Fund 9O-Day CommillOe Report 10 the- Mayor Page I iAPPENDICES 21 AFFORDABLE HOUSING FUNDING OPTIONS 22 .011lER SOURCES OF REVENUE: A SPECIAL PROPERTY TAX LEVY PER RCW 84.52.105. 23 i80USING TRUST FuND CRITERIA WORKSHEET 24 '.~ HOUSIJI/G TRUST FUND CRITERIA 25 "ow MUCH FUNDING IS NEEDED PER YEAR TO BE EFFECTIVE? 28 .OUSING OPTIONS FOR SEATTLE REsmENTS wrm LOw AND MODERATE INCOME 29 tIousing Trust Fund 9O-Day Commil1leeReport 10 the Mayor Page 2 REPORT SUMMARY A Bainbridge Island Housing Trust Fund (RTF) would be a pennanent source of locally controlled money dedicated to increasing affordable housing opportunities exclusively for projects on Bainbridge Island. This can be accomplished through providing grants and 'loans for construction and rehabilitation projects, operation of non-profit organizations, .and assistance for financial hardship. The Housing Trust Fund Mayor's 90-Day Committee proposes that a Housing TrustFund could be an effective way for Bainbridge Island to leverage other funding and resources to help reach its affordable housing goals. . The Comprehensive Plan's Howlng Element-Enabllng Language Developing a Housing Trust Fund specifically addresses the implementation of Goal 1, Policy 4 of the Housing Element within the Comprehensive Plan, which states: "The City .recognizes the need to provide financing assistance for affordable housing. Accordingly, the City will actively pursue funds that may include, but are not limited to, councilmanic bonds, general obligation bonds, real estate excise tax, grants, and other available resources. These funds may be used to establish a Housing Trust Fund which will be used for purchasing land, for assisting with financing, and for providing infrastructure to support affordable housing on Bainbridge Island. " Housing trust funds are often used to develop capacity within an organization and help non- profit developers gain control of building sites. Funds also help leverage other sources of funding that could otherwise not be considered. Grants most often require matching funds and proof of other financial support. A housing trust fund can be used to provide the most critical and difficult to come by 'financing for non-profit developers of affordable housing. Unlike for-profit developers, non-profits rarely have reserve funding to provide the initial fmancing in order to get a project underway. However, funds are generilly available to for-profit developers if the 'funding contribution is necessary to make the project feasible. The Mayor's 9O-Day Committee (the "Committee") for a Housing Trust Fund considered 'the following key elements: 1) Source of revenue 2) How the-fund is to be administered 3) What types of programs will be supported 4) How citizens can participate ,Potential Revenue Sources: 'The Revenue Source Subcommittee, used the expertise of the City of Bainbridge Island iFinance Director, Ralph Eells and the documented experience of other housing trust ifunds across the country to define potential revenue sources available for the Housing Trust Fund. Their study suggests a combination of revenue sources to include: (1) fees Housing Trust Fund 9O,Day CommillOe Report 10 the Mayor Page 3 from planning and building permits, (2) specific housing-related business contributions, and (3) matching funding from the City's general fund. These revenue sources would yield an estimated annual RTF contribution of $293,000 to $337,000. Administration of the Trust Fund The Health, Housing and Human Services Council (HHHSC) has provided a su~cessful model for the annual distribution of funds to local organizations from a City source. Another model is the ARCH Housing Trust Fund that serves Bellevue and other Eastside jurisdictions. The Administration Subcommittee proposes a hybrid of the two models. The RTF administration of the fund would be the official City body responsible for setting funding criteria, reviewing applications and monitoring use of funds. This recommendation is presented in considerable detail within the report. Potentia' Programs Supported The H1F can be a flexible instrument in helping the City meet its affordable housing goals. Most importantly, the RTF may be targeted to meet the varying needs of today's and tomorrow's low and moderate income renter and owner households. Each new funding round or each year, the Citizen's Advisory Board may review the uses of the funds and the targeted income groups and suggest changes that reflect the needs in the community. An . initial focus of the RTF program could be down payment assistance for low and moderate income home buyers. Serving these populations in this manner would facilitate affordable housing development as currently required by the Municipal Code. The implementatian of the RTF would demonstrate a coordinated program by addressing the demand-side of housing (Bainbridge families) as well as the supply-side (the developerlbuilder). Partnerships A Housing Trust Fund opens doors to a great number of partnerships. The RTF would provide a diverse number of resources, programs and organizations the incentive to working together toward a common goal. The Mayor's Committee members are the foundation of those partnerships representing many of the players in housing. The local partners provide the human infrastructure for a sustainable and substantial Housing Trust Fund. Also, the activities of the RTF Committee have caught the interest of the Washington State Finance Commission, a potential partner and revenue source to complement the sources raised through the RTF. News of this opportunity will be forthcoming shortly. THE REPORT The cost of housing on Bainbridge Island, whether rental or for-purchase, is out of reach of most of the existing Island' workers. In order to afford to work on the Island, either a household depends upon another income for household expenses, the household has been fortunate enough to have purchased a home many years ago when housing prices were affordable to moderate and lower income households. they receive some sort of subsidy and live in the small number of subsidized units on the Island, or they have been lucky Housin. Trust Fund 9O-Day Commi~ Report to the Mayor Pase 4 enough to find one of the infrequently vacant affordable housing units. Presently, new households, whether singles or families, do not have these opportunities. · The targets of the Housing Trust Fund are those households which depend on an Island-based income to support their home. The targets of the Housing Trust Fund are those households on which the Island depends upon as clerks, teachers, public employees, wait staff, artists, crafts people, skilled workers... In short, those people who make the Island run day to day in an interesting and economically viable way. · Housing affordability is a essential to Island businesses. · Housing affordability is essential to maintaining cultural, social and economic' diversity on the Island. The Committee set out on its investigation of what kind of housing trust fund would be appropriate on Bainbridge Island with a clear idea of the guiding principles stated in the Bainbridge Island Comprehensive Plan. Both the Committee and subsequently the mayor, city council, and the public will need to have a very clear understanding of the purpose of the Housing Trust Fund. Mis.lon of the Housing Trust Fund The Housing Trust Fund 9O-Day Committee was given the task of developing the framework for a local source and use of funding for affordable housing. The mission of the Housing Trust Fund is too complement existing city ordinances concerning affordable housing, encourage development of moderate and lower income housing and to provide funding for income groups not serviced by other funding sources currently available. Commlttefllllembers We benefit from a great deal of expert advice both from those on the Committee and those individuals we invited to inform us on various issues. The Committee was made up of a broad cross section of those in our community so that many of the talents of our community might have an opportunity to contribute to this effort and that a variety of ideas and issues could be examined and debated more fully. Representatives on the Committee were: Ralph Eells, Director of Finance, City of Bainbridge 1$1and; Joan Holcomb, Helpline House; Karen Kline, Health, Housing and Human Services Council; Ed Kushner, Windermere Real Estate, Bainbridge Island;'Jack MacArthur, President of the Chamber of Commerce; Rod McKenzie, Land Developer, Bainbridge Island; Susan Millan, Housing Planner, City of Bainbridge Island; Lynn Nordby, Administrator, City of Bainbridge Island; Gretchen Novasio, Housing Resources Board; Preston Prince, Kitsap County Consolidated Housing Authority; Gamie Quitslund, Housing Resources Board (HfF Committee Chairperson); Chelle Roberts, Housing Resources Board Coordinator; Stephen Rowley, Bainbridge Island School District; Dee Taylor, Washington State Finance Commission; John Teising and Ross Thomas, Washington Mutual Bank Bainbridge Island; Roger Waid. Kitsap County Consolidated Housing Authority; Charles Wenzlau, Wenzlau Architects. Housinl Trust Fund 9O-0ay Committee Report 10 the Mayor Page S Special guests/advisors to the Housing Trust Fund: Mary Brooks, Housing Trust Fund Project; Lee Desta, Community Builder, U. S. :Department of Housing and Urban Development; Art Sullivan, Executive Director, A Regional Coalition for Housing . (ARCH), BeUevue, W A . At the first meeting of the Committee, the group divided into three subcommittees to deal with three components of the housing trust fund: (1) Revenue Source, (2) Administration . and (3) Program (targets) and Feasibility. . REVENUE SOURCE RfwfllJue Source GoIII. Key to any HTF is a revenue source. City HTFs are a challenge compared to that of a state-based HTF simply due to the more limited array and amount of revenue sources available to cities. While fmding an appropriate dedicated funding sources is the most difficult part of the Housing Trust Fund development process, once found, housing trust funds typically leverage other funding dollars for projects at the rate of $5 for every $1 dollar provided by the trust The Revenue Source Subcommittee invented a unique program suited singularly to Bainbridge Island which combines voluntary contributions with public funds. The ' voluntary contributions are from those involved in the market-rate housing production and sales that have made such an impact of the Island: lending institutions, real estate companies and possibly others is then matched by a contribution from the City. The City's match would flow from the general fund in addition to an increase in the planning and building fees charged to developers. Currently, the City charges only a fraction of the cost of administering the planning program. Other cities, using similar fees for affordable . hOUSing, have proven the nexus between the rising cost of market rate housing-from which developers profit-and the increasing difficulty in providing affordable housing to those in the moderate and lower income ranges. Yet, the Committee recognized that many others in the community contribute to the high cost of housing and benefit from its presence on the Island. Other sources of revenue which spread the cost across more of the community other than those developing new housing are being investigated (e.g., business and occupation tax, business license tax, condominium conversion fee, demolition fee, special property tax levy). Voluntary Revenue ContrIbution. Part of the search for revenue sources lead the Committee to ask about the kinds of contributions that could come from sources other than those from the public coffers. The reasoning behind this search was that many other individuals and businesses benefit directly from the development, refinancing, and resale of housing. In other communities, where there are neighborhoods left out of the general economic health of the broader Housin. Trust Fund 9O-Day Committee Report 10 the Mayor Page 6 'community, lenders are required, by federal law, to demonstrate their reinvestment into their local community by servicing loans in those neighborhoods. There is no particular neighborhood that has been neglected or discriminated against in terms of lending on Bainbridge Island. However, there exists a lack of lower and moderate-income housing units for which to provide financing. One of the first steps toward gathering a variety of revenue sources is educating the public of the community responsibility for affordable housing and the benefits of affordable housing. It is essential that the source of funding reflect the ideal of fairness in sharing the cost of all housing. The businesses on the Island are major benefactors from low cost housing: they employ individuals earning their rent and mortgage payments in the service sector on the Island. Rev..". Soures SubcommitIH Recommendations The following consideration of several substantive and permanent funding sources for the City of Bainbridge Island Housing Trust Fund, the Subcommittee recommends the proposed revenue sources outlined below. Taken as a whole, these sources represent a combination of private and public sources and their selection is based on the rationale that, in any given community, the rising cost of housing is directly related to population growth and development pressures in that community. Thus, just as the case is often made in the context of "impact fees", a case can be made here that significant sources of the funding for a housing trust fund should be monies generated directly in relation to growth and development activity. Surcharges on Planning, Land Use and Building Permits This proposal contemplates the establishment by ordinance of a unifonn set of surcharges on all planning, land use and building permits required by the City of Bainbridge Island. The individual permitting activities are listed in the attachment together with a statement of fees collected by COBI through September of this year and an annualized estimate of these fees for 1998. At present the City's fees for such serviceS, by statute, .cannot exceed the cost of providing them. Under the City's current fee structure, approximately 50% of the cost of planning and land use services and about 75% of the cost of building permit services are covered by fees. Thus, the amount of a surcharge which the City can impose is limited to approximately 50% on planning and land use services and approximately 25% on building permit services. In recognition that a schedule of surcharges at these levels would push the outer limit of what is possible, we are recommending a schedule which is less aggressive: 25% on planning and land use services fees and 12.5% on building permit fees. Applying these hypothetical surcharge levels of 25% and 12.5% to the fees generated at current activity levels, the additional revenue which the City could generate and make available to the " Houaing Trust Fund 9O-Day Committee Report 10 the Mayor Page 7 HTF through the budgeting process would be approximately $161,000 (For details, see appendix: Affordable Housing Funding Options). Tran.-:tion-based Voluntary Contribution from Individuals and BusiItesMI. Directly R.11Ited to R_I EsfBta Activities This proposal contemplates that, at each "point" in a real estate transaction (a "point" being defined as a sale of a property, closing of a loan, completion of an appraisal or inspection, issuance of a policy of title insurance or home owner's insurance, etc.). the individual or business involved would make a voluntary contribution to the HTF. Such amounts would be determined by the contributors and paid into the HTF periodically or in conjunction with some annual event such as the renewal of business licenses. As an example, here is a list of the hypothetical contributions which might be generated from the close of the sale of just one single family residence: Listing Agency Selling Agency Escrow Office Lender* Appraiser Property Inspector Titl~ Insurance Company Homeowner's Insurance TOTAL $50 $50 $25 $25 * $10 $10 $25 $25 $220 * Washington MutuallBainbridge Island has already committed to this contribution and conversations with other individuals and businesses are underway. Given that, in recent years there have been between 300 and 400 residential sales per year in Bainbridge Island, the total monies generated annually for the HTF by this proposal could be in the range of $66,000 to $88,000 annually. 'I Housing Trusl Fund 9O-Day CommillOe Report 10 the Mayor Page 8 Mstching Funds from COSI GfIIHInIl Fund This proposal contemplates that the monies generated by. the volunteer contribution outlined above be matched on a I: 1 basis by the City of Bainbridge Island from General Fund revenue sources. Assuming that the estimate of voluntary monies is valid, this proposal could also generate between $66,000 and $88,000 per year. The combination of these sources, at present activity levels, could generate annual revenue in the range of: @ 300 sales @ 400 sales '. Planning and Land Use Surcharges) Building Pennit Surcharges) Voluntary Contributions COBI Matching Funds $107,000 $54,000 $66,000 $66,000 ~: \ \ . $107,000 $54,000 . $66,000 . $66,000 ~-O' 1<-' C'.:C -; ,j~~, ," TOTALS $293,000 '< "--- - $337,000 Con.u:ler8tJons for Future Public Revenue Source The Subcommittee further recommends that, within five years, these revenue sources be supplemented with revenue generated from special affordable housing levy financing passed by the electorate of Bainbridge Island (See appendix concerning a special property tax levy per RCW 84.52.105). ADMINISTRATION The Administration Subcommittee used the model provided by ARCH: A Regional Coalition for Housing. ARCH has an affordable housing delivery system that has worked . in this re&ion and in the existing housing climate. More importantly, the components of the administratioR demonstrated by ARCH closely resemble a successful model of fund administration in use on the Island by the Health, Housing and Human Services Council. The Administration Subcommittee understood the importance of accountability of funding uses, low-cost administration (as well as self-sufficiency) and continued diverse community participation. Central to the model is use of existing City staff and other existing support agencies such as the Kitsap County Consolidated Housing Authority. . Below is an organization chart depicting the line of control and advisory relationships of the required functions. It is assumed that the HTF will be starting with a limited operating budget and therefore the City should provide certain functions from departments already in existence such as accounting and planning. I See the appendices for the proposed individual sources for the planning and building fees: "Affordable Housing Funding Options." Housing Trust Fund 9O-Day Committee Report 10 the Mayor Page 9 . The Administration Subcommittee recommends that technical assistance consulting is utilized on an as-needed basis and the City-employed planning staff person (a housing planner) coordinate between such a technical consultant and the rest of the HTF organization. IBainbridae Island City Council .-:~ '\, , . t_......_ 1'1', ~ r " \ rr:f....\ Executive Committee . Mayor, City Administrator, Member of the . City Council, Citizen-At-Large 1(=-- , Administrative Prop-am Coordination CODlDlunity Services City Housing Planner Advisory Board Accounting and an Performed by I. Legal Independent HHHSC Etc. Development Consultant Provided by COBI '.'-~ " \ \ 1..";-/ '- ....-<> 1';.1'\-~...\,( -' .,'/ ,'~ ("'\) v,, .'0.{. h', KC(\-~\ \ Administration 0tJt811: Houlllntl Trust Fund Lending Crlterls The purpose of the Bainbridge Island Housing Trust Fund (HTF) is to create and preserve affordable housing for low and moderate income households. In special circumstances middle income households may also be assisted.2 The HrF application includes a number of criteria that are used by the Community Advisory Board to complete its evaluation and recommendations. The purpose of the lending criteria is to allow applications to be evaluated for feasibility and timeliness, prioritized for funding, and establish conditions for funding. This report summarizes the criteria used to evaluate applications for HrF. St;hedu,. ..d Revlfiw PrOCflllB . The HrF conducts one funding round each year. The typical schedule for the funding , round has applications due in March, Executive Committee recommendations completed in May and Council action in June. An initial screening of applications is conducted by staff to determine the completeness of each application, with applicants informed of additional information needed. Applications Zpor the purpose oCtile Bainbrid,e Island'Trust FlInd the Seattle MSA median income. as defined by HUD, wiIl be used.* . Housing TllIIl Fund 9O-Day Committee Report 10 the Mayor Page 10 that are very incomplete may not be given further consideration that round. HTF staff ,prepares a summary of the submitted applications which is forwarded to Community Advisory Board. The final staff reports are forwarded to the Community Advisory Board (CAB) for their review and funding recommendation. The CAB will appoint a subcommittee which w~ll be comprised of professional expertise in housing, lending or related areas. The CAB will always contain members who have professional expertise in mortgage underwriting, and development of housing (e:g., for-profit residential developer, not-for-profit affordable housing developer). As vacancies occur, the CAB will maintain expertise in these areas. In this way, financial ~xpertise will be available in reviewing applications prior to referral to the Executive Committee. The CAB will always include at least three members with private lending or residential development professional background. CAB reviews eac;:h application and identifies any issues which require clarification of further review/research. During the $econd meeting, the CAB will prioritize the applications and issue a funding recommendation, and recommend conditions to be met before funds can be expended. These recommendations will be voted for approval by CAB. The Executive Committee receives the funding recommendation from Health, Housing ~d Human Services Committee. The Executive Committee is comprised of the M~or, City Administrator, member of City Council, a Citizen at Large. The Committee reviews the CAB recommendation and approves it -- with or without modification. The Executive Committee recommendations are then forwarded to BI City Council. Council approval is required for a funding allocation to be made. If the City Council approves funding for a project, the Program Coordin~tor provides administrative assistance with preparing contracts and monitoring projects. 'f;omp/fllen... of AppNcstlons .1An initial screening will be performed to detennine the completeness of each application. trhe HTF application form requests infonnation to help measure how projects meet Fogram criteria. Information requested in applications is described in more detail below. Projects that 'are deemed incomplete may be'rejected without further consideration. "'..;c Eligibility trbe Housing Trust Fund has established some basic guidelines that all proposals must pleet. These include: Eligible Applicant i. Non-profit organizations . Private for-profit organizations . Public housing authorities Housing Trust Flind 9O-Day Commillee Report 10 the Ma~ Pace 11 '. Public development authorities Partnerships involving combinations of the above groups are encouraged, especially in the case where a private for-profit organization applies for funding. Income Served Use of the RTF must be directed towards eligible beneficiaries -- households with incomes up to 95% of the Area Median Income (AMI) adjusted by household size as defined by HUD for the Seattle MSA. In some cases, the beneficiaries may have incomes at or below 120% of AMI. Use of Funds There is a wide range of eligible uses of RTF. These include acquisition, construction, rehabilitation, and others. If CDBG funds are used project must comply with any CDBG 'restrictions (e.g., not available to for profit developers, constraints on using for construction costs). . Feasibility :Once a complete application is received, it will be reviewed in further detail. The overall intent is to detennine whether the project will be capable of accomplishing established !,oals in a reasonable time frame, or whether assumptions/omissions made by the ;proponent cast doubt on project feasibility. ; Development budget Applicants provide detailed breakdowns of development costs, including: acquisition, ;constructionlrehabilitation, professional services, finance, site development and others. Issues which may be evaluated from this infonnation include: . Completeness-any line items missing from the budget breakdown, including inappropriate contingency for the type of project. . Do any of the line itemsappeal' to stand out (too high or too low) . Are the overall per unit costs reasonable '. Are the RTF per unit costs reasonable . How do the Costs compare with other projects with, similar type work '. Are the RTF costs eligible for CDBG fun~ use lOperations Budget jThe purpose of this budget is to show all the costs associated with the daily operation and lmanagement of the project after it is completed, such as staff, supplies, insurance, ,professional services, utilitieS, repairs, reserves and the like. Key issues include: '. Completeness - are all of the costs included, or are important items missing . Is the vacancy rate built into the rent income project appropriate . Are there "rainy day" fuIids (operating reserves and replacement reserves) . Housing Truat Fund 9O-Day CommillOe Report 10 the Mayor Page 12 . Do the costs provided appear reasonable · Continuity - will the budget support their needs years down the road . Is the debt service less than the net operating income . Is there a positive cash flow (e.g., For projects with private debt is there an appropriate debt coverage ratio). Support Services Budget For some projects, support services are an integral part of the housing program. In these cases information is requested on the support services budget. The purpose of this budget is to identify all the casework, assessment, counseling, training/seminar, and other support services, which are provided by the sponsor or by another agency (for or in cooperation with the sponsor). These may be provided on or off-site. Key issues to evaluate include: . . Does the support services budget account for all services provided. . Are the fullding sources for the support services realistic. . Is funding for support services potentially available on an ongoing basis? IT not, what plans are there in the event a specific funding sources is lost. Funding Sources/Commitment In this section, the applicant identifies the amounts and sources of all the funds required for development of the project. The applicant also provides the cUITent status of the funds -- whether they have been approved (or not) for the project. Key issues include: . Does the total of all sources equal the total of the development budget. . Does the ratio of HTF dollars to other dollars seem high/have other potential sources of.funding been reasonably assumed. . Are private funding sources included at a reasonable level . Is it realistic to expect other public funding sources to commit at the level indicated . Does the schedule for the commitment of other funds seem timely . Is there too much dependence upon a single funding source Organization/T eam A successful project starts with a sponsor who is experienced and well organized. When appropriate, the sponsor may pull in other player for the team to help with the project, as well as to operate it after construction. By knowing who is involved in project development, and who will be involved in operating the project after construction, it will be easier to evaluate the potential success of the proposal. Key issues include: . Are the key team members identified -- do they have the right experience . Does the sponsor have experience developing projects like the proposal. IT not, have they brought in members to the team that have appropriate experience . Is the construction manager identified - does she/he have experience Housing Trust Fund 9Q-Day Commiaee Report to the Mayor Page 13 · For providing housing-related social services, are the agencies/individuals identified and do they have the appropriate skills . Will the proposal have the potential to increase the capacity of a local organization, thus increasing the area's overall organization capacity to provide affordable housing Management Plan This section addresses tenant selection, tenant interaction with management decision- making (such as tenant councils, apartment manager, etc.), tenns of occupancy, routine facility maintenance, and (if emergency or transitional housing) what are the support service provision for the proposal. key issues to look for include: . Are the daily and overall management provision clearly set forth and sound . Do the provision (including if appropriate the availability of services) seem appropriate for the type of facility . If support services are included, how are they integrated into the project . Do the tenants have reasonable provisions for management interaction Site ControVSite Issues Does the applicant have the "right" to use the property as proposed? This evaluation also includes the appropriateness of the site for the proposed use. Key issues include: . Is there fonnal site control (e.g., ownership, binding option or purchase agreement) . Does the agreement allow sufficient time for the project to secure all fmancing, permits, etc. . Is the proposed use allowed under local land use regulations: . Is the site appropriate for the proposed use (e.g., is there access to necessary services for residents) . DisplacementlRelocation This section only applies to "existing" residential units, and not new construction. It also does not apply to vacant units. If existing tenants are displaced or have to be relocated, they may be eligible for financial compensation. The key issues include: . Will temporary or permanent displacement/relocation occur . Is there a reasonable plan to address any potential displacement/relocation , . Have all reasonable efforts been made to avoidlreduce displacement/relocation Timeliness Addresses whether the components of the application can" individually and collectively, be delivered in an appropriate time frame. Also if the application is premature to be requesting funding. (Note: Other communities have created local funding programs with several public funders to provide predevelopment loans. One purpose of such a program is to provide some funding so that projects can address some basic issues before requesting funds from public funders) Key issues include: Housinl Trust Fund 9O-Day Commitlice Report 10 the Mayor Page 14 . What are the time frames for commitment of funding sources . Does site control cover all the time frames for funding commitment . How soon will the project be ready to go . If a project is relatively early in the process, does making a commitment now help the project in any way (e.g., help to secure other funding) . Are there any warning flags which suggest possible delay. If so, have they been accounted for, or could they adversely affect the proposal. Priority For Funding Once applications are determined to be feasible, they are then evaluated against several , other overall objectives of the HTF. This procedure is especially important when the total IITF funds requested by an applicant exceeds the total HTF available. This evaluation can help make the qecision about whether proposals should be funded at 'the current time. Level of Affordability The applicant must identify the income targets (expressed as a percentage of Seattle MSA median income) of the intended tenants. Key issues to evaluate include: . Are the intended tenants low or moderate income (no more than 95% of area median income) . If middle income (up to 120% AMI), what special circumstances justify the proposal . Are the proposed rents (including utilities) affordable to the proposed tenants . If applicable, comparison of proposed rents to existing rents in the project . Comparison of proposed rents to average rents in the project's local area Duration of Affordability The applicant must propose a specific time period for which rents will remain affordable to targeted tenants. The key issue here is: . Will the applicant provide a duration of at least 30 years? Shorter time periods maybe allowed, but the preference is fora minimum of 30 years. Consistency with Bainbridge Island Housing Needs/Goals The City of Bainbridge Island has housing g981s, policies and objectives set forth in its Comprehensive Plan. Proposals are evaluated for consistency with these policies. In addition the IITF has established a long term objective that funds be distributed proportionally between several types of housing. If certain types of housing have disproportionately been funded in previous rounds, the application packet will state a preference for under funded types of housing. Key issues include: . Is the project consistent with local housing goals and policies . Has the community already taken some steps to help initiate the proposal, or expressed support for the proposal Housing Trust Fund 9O-Day Committee Report 10 the Mayor Page IS Underwriting Underwriting criteria provide the documentation and other information necessary to ensure that funds are not made available until certain conditions are met, therefore minimizing the likelihood a project will not be completed as finally proposed. It can also provide protections to maximize the city's ability to protect its long term interests in the property. This can include items such as maintaining Affordability, property maintenance, and repayment or recapture of city funds. Finally, underwriting criteria will determine in what form funds will be made available (e.g., grant, loan, or deferred loan). Some underwriting criteria will determine in what form funds will be made available (e.g., grant, loan, or deferred loan). Some underwriting criteria will be standard to all projects while others may be developed to address specific unique issues for a certain project. These underwriting criteria are incorporated into the funding contract, promissory notes and/or regulatory agreements. Key criteria include Cost/Funding Confirmations Most projects begin with a series of cost estimates, that suffice for conceptualizing and preliminary review . Yet before funds are actually committed to a project, costs are verifIed. AppraisaVpurchase - sales agreements, appraisals, inspection reportslbids, and the like, give certainty to costs - and confidence that there won't be any financial surprises down the road. To the extent confmning information (e.g., appraisal) are not provided with the application, there will be conditions included in the contract that this information needs to be provided prior to receiving local funds. Key issues include: . Are the cost conftrmations current . Who petfonned the confinnations . Do the confIrmations verify the proposed project Land Development Issues Applicants are required to provide information conftrming that the proposed use is allowed (letter from permits, etc.), and any potential significant site constraints identified and, if applicable, addressed. Types of reports that can be required include: . Inspection report . HazardsIW etIands survey . Soil test . Zoning verification Form of Assistance (loan/grant) Funds can be given to the applicant in the form of a grant, or repaid over time in the form of a straight or 'deferred' loan. In recommending the form of assistance issues include: . Does the project have enough cash flow initially to make loan repayments immediately, Housilll Trust FuRd 9O-Day CommillOe Report 10 the Mayor Page 16 . Does the project have the potential to increase cash flow in the fuwre, thus allowing repayment at some fuwre point in time, or when certain cash flow standards are achieved (e.g., net cash flow is greater than a predetermine % of gross income) . Would loan repayment affect Affordability in the project . Is a project serving certain types of a households that funds should be made available as a grant (e.g., transitional housing, very low income families, handicapped individuals) Formal Agreements Legal agreements (contracts, promissory notes, regulatory agreements) are used to . formalize the financial relationship between the lender: (local jurisdiction) and the recipient, governing the award of lITF dollars. Key elements of these agreements include: Contract: . List conditions (as described above) that must be met prior to releasing funds (e.g. other funding commitments, pennits, final budgets) . All funding conditions must be m~t before funds are released . Any significant revision to the scope of work or budget must be submitted for review and approval of staff . Establishes time frames in which key steps must be completed, or funding reservation can be withdrawn unless an extension is approved by staff . Establishes timing/procedures for drawing funds. (In what proportion local fundS will be drawn relative to other finding sources. For example, for private developers, developer funds may be expected to be spent proportionally to local funds) . City can recapture funds if not used for intended purposes Promissory Note: . Establishes any terms for repayment of funds . Secured by recorded deed of trust. . City can cure defaults on any 'senior' loans . Subordinates city loan to 'senior' loans (typically private loans) . Funds made available as a non-recourse loan to applicant Regulatory Agreerpent: . Recorded agreement that establishes the levels and terms of Affordability . SpecifICS projects monitoring/reporting obligations . IT ownership project, establishes process for resale, and how to calculate future affordable price Housing Trust Fund 9O-Day CommillOe Report 10 the Mayor Pace 11 . PROGRAMJFEASIBIUTY Progrsm/F..lblNty Subcommittee of the Housing Trust Fund The ProgramlFeasibility Subcommittee was charged with making recommendatiQns ! about the target population, eligibility and what kinds of projects/programs the funds should support. The City of Bainbridge Island Comprehensive Plan Housing Element (1994) established affordable housing needs on the Island. The data and conclusions of the Housing Element fonn the foundation for our recommendations. The Need '. A need assessment was done by Kitsap County in 1993. Based on that assessment, the County recommended 2,900 affordable housing units (rental and purchase) on Bainbridge Island. Please refer to pages 1,2,3 of the Housing Element . Ross Thomas provided our ProgramlFeasibility Subcommittee with demographics for the Island from 1997. This data showed that 45.7% of Island citizens make less than $49,000 a year. This number represents 3,104 households. Given the current incomes of existing households of the Island, 29% of the total households could qualify to buy only 6.5% of the existing housing stock on the Island. In other words. 93.5% of the housing stock is out of reach to most moderate and middle income households. . If rental units were available, the market price for 2-bedroom rental units in the City Center of Winslow would range from $625-$850 per month. The market prices for three bedroom rental units in Winslow would range from $950-$1200. Based on 30% of income spent on housing, the 10.33% of households who make up to $15,000 income per year could afford $375 per month rent. 8.5% of our population could afford $375 to $625 per month on rent. 10.6% could afford $624 to $850 per month on rent. It is in this range that households could find market rate units. The housing needs assessment denotes that there is an almost zero vacancy rate in rent assisted units (around 2%'overall according to Trends). . The ProgramlFeasibility Subcommittee saw the nccd and it is great. The Comprehensive Plan recommends an adcJitional 550 multi-family rental units by the year 2012. The majority of the 550 should be affordable to moderate and lower inCome households. Currently, there are 73 guaranteed affordable rental units (less senior housing). This includes projects by HRB and KCCHA. There are a number of market rate rental units on the Island that are affordable to moderate. and lower income households. We have anecdotal evidence from Helpline House, HRB and KCCHA that corroborate the continuing need for affordable housing. The Subcommittee was unable to detennine the number of accessory dwelling units available' J{ousing Trust Fund 9O-Day Commi_ Report 10 the Mayor Page 18 . Types of projects and programs the HTF is proposed to support based on identified need in the community: (a) preservation of existing affordable housing stock, (b) rental units - singles and large households, (c) first time home buyers-funding to support education and identify loan sources, (d) education to promote development of affordable housing by attracting developers, encourage lenders to participate in affordable housing financing, to inform those in need and to gain community support. . Other criteria: (a) allows for affordability in the future, (b) design consistent with Island values, (c) create conservation of energy efficient homes to improve affordability, (d) environmentally friendly home design and function. Subcommittee Observations There are two gaps between recorxunended housing-cost related guidelines for Kitsap County and Bainbridge Island. One gap is the difference in median household income on the Island as compared to Kitsap County. Bainbridge Island's median income ($54,337) is 13% higher than the median income of Kitsap County ($48,100). The County guidelines are used to generate funds from affordable housing grants. For the purpose of the Housing Trust Fund, and perhaps other affordable housing programs initiated by the City, Bainbridge Island incomes and housing costs correlate more closely to SeattlelKing County rather than Kitsap County. Using SeattlelKing County figures makes home ownership opportunities more feasible to develop given high land costs. The second gap is the difference median home values between jurisdictions. In 1997, the median home value in Kitsap County was $136,000, whereas the median home value in the same year on Bainbridge Island was $229,077. Moreover, developers tell us that development costs are 15% higher on the Island compared to the County: These factors, in addition to the high cost of land on Bainbridge Island make it difficult for developers and non-profits to build affordable housing. In today's economy, a full-time employee must make more than double minimum wage to affordable an average two-bedroom rental in our state's urban areas. The PrograrnsIFeasibility Subcommittee interviewed Island stores, Day Road businesses, Sateway, Thriftway, Bainbridge Island Police, the City and the School District employees and discovered that half of these people live off-Island. Of course, we cannot detennine if the location of their housing is by choice or affordability. People with median incomes for Bainbridge Island cannot afford to buy here and people with moderately low incomes cannot afford to rent here. Amazingly, there are some households who manage to find housing despite rising housing costs. The Subcommittee's study found that 25% of Island household malce $25,000 or less per year. More study is needed to learn more about the condition of the housing, its age, tenancy and cost burden to such households (See appendix: "Housing Options for Seattle Residents with Low and Moderate Income"). Housing Trust Fund 9().Day Committee Report 10 the Mayor Page 19 Recommendations In general, linkages to other Island affordable housing-related programs should be encouraged and supported. Affordable housing is linked to the local economic, environmental and community health, and should be linked to a broader range of policy decisions to support affordable housing goals. The Program/Feasibility Subcommittee and the Committee as a whole debated the issue of target populations and the types of programs the Housing Trust Fund could support at each of its meetings. One exercise, presented in detail in the appendices, helped the Committee identify and prioritize who would be assisted through the HTF and how (see appendices: Housing Trust Fund Criteria Worksheet and Ranked Housing Trust Fund Criteria). . Findings . Target population of the HTF is the median income level and below. . The majority of the HTF would pay to assist development of new, affordable units. . The HTF would pay to provide opportunities to potential home buyers to purchase permanent affordable homes. . Eligibility for HTF dollars: (a) non-profit organizations, (b) developers, (c) recommend that HTF fund be used to leverage other funding sources to assist developers in creating affordable units. The Program/Feasibility Subcommittee suggests that the Housing Trust Fund initially assist affordable housing by:' . Providing down payment assistance to for-purchase units created through the Affordable Housing Ordinance (whether rental or for-purchase and at the income- level required per unit). For example, the HTF could provide down payment assistance up to $10,000 per unit for low, moderate or middle income home owners. . Rehabilitation loans for low-income households (up to $5,(00) . A final key issue for the Housing Trust Fund to evaluate is the amount of funding needed to effectively serve the development and preservation of affordable housing. The Committee asked the question: How much money each year is necessary to support and sustain a lITF7 Given the goals set forth in the Comprehensive Plan, production thus far, due to the Affordable Housing Ordinance (BIMC 18.90), and other infonnation available it is possible to estimate the potential need. the revenue sources may not provide all that is need to create all the affordable housing needed on the Island, the amount provided by the HTF could help leverage this amount. The amount needed will depend on the range of loans and grants and the specific income levels of households to be served in any given year. However, as an estimate, the funding needed to serve 50 households per year with a down payment and rehabilitation loan/grant program, as mentioned above, could be in the range of $285,000 to $375,000. These estimates are a reasonable goal given the revenue sources identified by the Committee (For detail, see appendix: How much funding is needed per year to be effective?). HOusing Trust Fund 9O-Day Commillee Report 10 the Mayor Page 20 APPENDICES ; Housing Trust Fund 9O-Day Committee Report 10 the Mayor Page 21 tl ~ ':f I.L;~ '2 I,!~ r<; c: o ~t ~,~ :i~ t:~ ~! ~' fo ; ..c:: ~ ~ In ~ fo ; ..c:: ~ ~ In ::s C'l~ .... '" 08 i'~ <If .... = ::s 8-Q jet ....-s~ ) 'il co8 ~~ .... ~ ~ tb ~e ~-s ~Olnl'r-8colnln-8mco-oo mCOC'lC'lr- commo o~m ""d"'V......- ~ \ONoO~-~N ~ r-~m~oo8~oor-80-~,C\ ....... \o\O('t') ............. ""V")r---..... C'l - m-~ - ~ :!:l88~~888:;~88gg8 ~~~~~s;!~~$8gS~~ ooa::C'lC'l-~-C'l~\OC'lC'lC'l~ ..,. -: -: m-~-C\mC'lO-Inooo\O~ 00 ......Vl .......~ N"'ll:t...... m -O(f'l(f'l~~r--mOl'l'mmm OOO(f'l(f'lID 1OC'lC"lt"-\OC'lmm "l. <'l t'l. t-:. C!. .. "lilt ~ ~ "l ~.. ~ <'1. "1. C'l--C'lC'l- IOC\Or--OIOC'l ~ ....... ........................ m ~ ~53~8~~~8~8OO~8~,~ mO\~coo~ml''''' \l>C'lr--C5' 0\ ...: ('-1' 0\ -: N -.:i 00 vi 00 ~ ...: ~ -- ~ ;.; .... = 6 :!l 8 =0 .:= == o:;l u oe tl [.~ .5. :g ,~o '8 o (J , 0 .9 ::s ~ t:: C)~ ~ ",'=00 > 11l "bb"S: "C (J tl ~ :n .9 0 ~ = .- 00( =.~ 0 is Q '" .- 'lib :8 0 0 '" ~ ..... ::> ~;) f '" ::s .S '::1 0 ::> .ll4 2 0 .!! IS:: C) = ~ ...:l a ~ 'il g ::> 1 8 ~ ~ < :3 ~ .3 ~=a,8.~ alofaoo(fab~t:C)-g~i:a 3 3 j '>5 fu ~ ~ .g ,g ~ ~ f.,g ,~ ~~..... ~;>....~~..:J",,~'~',-, ~inc Tl'IISl Fund 9O-Day Committee Report to the Mayor -a .... 0\ m ~. - """ \C """ * . ':j: - s o ..'~ u ~ ~ .s "C - .S = '8 " ~ I:: .- 8 " Ii: PI&" 22 -; lI'I CI\ """ 8 ~ ~ ~ lI'I \C """ ~ ~ ~ ! i ~i U ~] ~~ ::I C"I) C"I) ~ CI\~ ~'" ~~ Il- ~@ ~@ ~ ~ i ~ ~ .S = Other sources of revenue: a special property tax levy per RCW 84.52.105. "In 1993, the Washington Legislature passed a bill that enables a county, city or town to impose additional regular property tax levies of up to 50 cents per thousand dollars of assessed value of property in each year for up to ten consecutive years to finance affordable housing for very low income households [for BI: very low = $22,800 for a 4-person household]. It requires a majority of the voters of the taxing district voting on a ballot proposition that authorizes the levy" (Current Topicsfrom the Housing Trust Fund Project, August 1996, p.17). 84.52.105 AtJordable housing levies authorized-Declaration of emeraency and plan required. (1) A county, city, or town may impose additional regular property tax levies of up to fifty cents per thousand dollars of assessed value of property in each year for up to ten consecutive years to finance affordable housipg for very low-income households when specifically authorized to do so by a majority of the voters of the taxing district voting on a ballot proposition authorizing the levies. If both a county, and a city or town within the county, impose levies authorized under this section, the levies of the last jurisdiction to receive voter approval for the levies shall be reduced or eliminated so that the combined rates of these levies may not exceed fifty cents per thousand dollars of assessed valuation in any area within the county. A ballot proposition authorizing a levy under this section must conform with RCW 84.52.054. (2) The additional property tax levies may not be imposed until: (a) The governing body of the county, city, or town declares the existence of an emergency with respect to the availability of the housing that is affordable to very low- income households in the taxing district; and (b) The governing body of the county, city, or town adopts an affordable housing financing plan to serve as the plan for expenditure of funds raised by a levy. authorized under this section, and the governing body determines that the affordable housing financing, plan is consistent with either the locally adopted or state-adopted comprehensive housing affordability strategy, required under the Cranston-Gonzalez national affordable housing act (42 U.S.C. Sec. 12701, et seq.), as amended. (3) For purposes of this section, the term "very .low-income household" means a single person, family. or unrelated persons living together whose income is at or below fifty percent of the median income, as detem'1ined by the United States department of housing and urban development, with adjuSbnents for household size, for the county where the taxing district is located. (4) The limitations in RCW 84.52.043 shall not apply to the tax levy authorized in this. tfousing TNSI Fund 9O-Day Commiuee Report 10 the Mayor Page 23 Howing Trwt Fund Criteria Worksheet Income Criteria: Extreme Low Income = 30% and below AMI Very Low Income = 30% to 50% AMI Low Income = 50% to SO% AMI Moderate Income ,: SO% to 9S% AMI Middle Income,: 9S'lL to I2O'lL AMI Criteria MuItipIler* Extreme Very Low Moderate MIddle Low Low Income Income Income Income Income S01ro to SO'lL to !IS'lL to 3O'lL 8DcI 3O'lLto SO'll> !IS'lL 120% below SO'lL ~........,.... '.. ,.i '. ....... .. .. i i..' .... . .' c. - .>........... i............i..... .... I' ........ .... 1 ..' .... ':3. . '3 S 4 Mods . Com 'vc Plan li_ S S 24 24 40 32 Ease in IIIOlIitoriu S S IS IS 25 20 Creates pennanently affordable housing for 30 10 10 10 30 SO 40 years Proximity to public tral1Sportation, or, S 10 S 24 40 32 deve1olll11Alnl includes comoonent .' Providel a contiDllum of 9 9 27 27 45 36 Provides education concerning affordable 10 10 10 30 SO 40 hOllSin. Provides affordable housing in an area with few 10 10 '10 30 SO 40 - existiRJI affordable OIllIOrlWlitiea Provides affordable housing to several income 10 10 10 30 SO 40 levels witllin a sintrle de bililV witb neillbborbood 10 10 10 30 SO 40 EnvirolUllelllallv friendlv 6 6 6 IS IS 30 4 40 28 I=~~= 110 1 S so I 4 40 4 40 1 20 1 10 '. i' ....... . "i .... .i ". .' "'~JJIM:eIDe ....... ....i.... I....>.. i'.' .... i.i".1 ..... . i',," 3 S 4 DemollllralCS high degree of leverage of other 10 10 30 30 SO 40 fundinll sources - Grant fundlnll 10 10 30 30 SO 40 Lonll-tenn loan S .S 24 24 40 32 Brid2e (.bort-term) loan fundln2 10 10 30 30 SO 40 Promotes mixed-income housing 10 10 30 30 50 40 Housing Trusl Fund 9O-Day Committee Report 10 the Mayor Page 24 J ., :ii 816 .1:1 e'ti <<>..... 8 _ 0 0 li'S .E! Jt~ ~ ......8 tilt It ~ Ii ..~ t.)1 .. .J5 . "'C :ii ..: 5 ~ .. lE .e ~ O!:l~oo..o ~SM""'!! . ..-. .......-- ;.... N '0 ...:=-.:r 8. '1 ~ .. 'g .. . .. . ~ is ., .. '" ~.e-!&1 alia . .. . 1 '5 .. B.. .s I. .8 aE~t .. e ili..: ~ ildu . .. . Jt.~ f ; ') : I ] a ~ ~ u ~ .Js .I~aB'a i .J It i..... o ~ e. . -.. .... "'CI .. - ~ ll.... <<>.&> !!l 0 0...... .c - .. c: u @ .~ 8..- . .. . ~ ~ .9 <<> 1 -;i. e e ]:s e e . . . ""oa c: -;;; =' "'u .8 e- o !! u c: c: u .- .. . . . . .E! 0\ t; II "'0 :ii is u .. .. 0.E S &:: gg .51 ~.. a: "'-..::: ;; V"I-":: - 4oI't4ol't '" 4oI't ... ~ .~ u ., .. . ~ .. is u e ~ .. -- 0 N 5.E!~;"~ :Eaa\~is ul~....l!i.... . .. . oj 1 . c 15 a a . ..1~IJfli itO\.~g g evla;; ~ ':i 8- 8 . u e o .c "'0 lo'o -", -0. .~ "0 ~ ::t "'41 "5 ....... e:l!!l'8 ::s.c O'~ el!.c:;; ,-;!c:u =.... c'a eoC>. -8..- . M . e. .. &." .. ~. .) - <It is I. If I I_Ii r! I ... o !. a '" i"iJi i 00 1-' g u~ i i J' ~ i ill- ..8I1Oi- g 8"!iiJQ. ~ ii I 'Eo' l>.. . oCi.e . -=.8 ..1Il't. ;; o. ." u- ... ... . ~::l~:i ~1 == ~ ~.si~ c:....n .Bel5u ..:s: ... C! !!..... ...- 8..~.elllt '8fie~ 8ga:ii _'-co .. It.-- C:.,'-"" .200:1 ~ olll't?- o.uoo tleMM uo..:: ?llee ~&~~ -- . . e e .. 1 ..; .. D 1~~.ra. i!t ]i~gti. . . - .. ~ o .~ 9 .!! .&> a ::s .1. C) -~' ~ :1] i e e .. . .. .. .... Clll c: -;; '" ... 0 ...c e;; 8 is .5 ~ u e II "'CI .. .~ .... o.u e :I -11 e s . . . - ... .... .. Housing Options for Sattle Residents with Low and Model'8te Income The next page illustrates what is affordable to the various income levels. There is a gap between what working people can earn on the Island and the cost housing available. While generated for Seattle for 1997, the next page applies to income levels appropriate tor Bainbridge Island in 1998. "ouaing Trust Fund 9O-Day Committee Report 10 the Mayor Page 29 How much funding is needed per year to be effective? The following are examples of possible funding scenarios that could be considered upon implementation of the Housing Trost Fund. For 50 units per year: A combination of $10,000 and $5,000 loans or grants. The variation of the loan/grant from SO% to 100% is meant to reflect the possible variation in need per households served. Scenario 1 Scenario 2 Down payment Program 25 loans/grants reserved for up to $10,000 $250,000 (maximum amount) -OR- 13 loans/grants @ 100% and $130,000 12 loans/grants @ 50% $60,000 . Subtotals $250,000 $190,000 : Rehaltilltation Program '25 loans/grants reserved for up to $5,000 $125,000 (maximum amount) .-OR- 1310anslgrants @ 100% and $65,000 1210anslgrants @ 50% $30,000 lSubtotals $125,000 $95,000 ,Grand Total $375,000 $285,000 'The funding needed to serve 50 households per year with a down payment and irehabilitation loan/grant program could be in the range, of $285,000 to $375,000. 1H00000g Trust Fund 9O-Day CommillOe Report 10 the Mayor Page 28 Provides affordable housing in an area with few existing affordable opponunities for Very Low Income Provides affordable housing in an area with few existing affordable opponunities for Extremely Low Income Provides affordable housing to several income levels within a single development for Very Low Income Provides affordable housing to several income levels within a single development for Extremely Low Income Compatibility with neighborhood for Very Low Income ! Compatibility with neighborhood for Extremely Low Income Provides home ownership opponunities for Very Low Income Provides home ownership opportunities for Extremely Low Income Demonstrates high degree of leverage of other funding sources for Extremely Low Income Grant funding for Extremely Low Income Bridge funding for Extremely Low Income Preserves existing affordable housing for Extremely Low Income j Makes existing housing more affordable for Extremely Low Income .' Recognizes existing housing need for Extremely Low Income , Promotes mixed-income housing for Extremely Low Income 'Provides rental opportunities for Middle Income ; Provides education concerning affordable housing for Extremely Low Income i~re 019 'Provides a continuum of housing for Extremely Low Income ~af8 , eel a CP Goal for Very Low Income jProximity to transponation for Very Low Income 'lLong-tenn loan funding for Extremely Low Income e.' 7 payment assistance to i1lC01l1C qualified Very Low Income ". . payment assistance to income qualified Extremely Low Income tOft 01 , . viro1lll1entaIly friendly for Very Low Income ~vironmentally friendly for Extremely Low Income ~nitoring Extremely Low Income $ousing Trust Fund 9O-Day Commiaee Report to the Mayor Page 27 Provides education concerning affordable housing for Low Income , Provides affordable housing in an area with few existing affordable opportunities for Low Income ; Provides affordable housing to several income levels within a single development for Low Income Compatibility with neighborhood for Low Income Provides home ownership opportunities for Low Income Demonstrates high degree of leverage of other funding sources for Low Income Grant funding for Low Income I Bridge funding for Low Income - Preserves existing affordable housing for Low Income ; Preserves existiDl affordable housing for Very Low Income , Makes existing housing man: affordable for Low Income 'Makes existing housing more affordable for Very Low Income l RecogDizes existing housing need for Low Income : Recognizes existing housing need for Very Low Income : Promotes ItIixed-income housing for Low Income · Promotes mixed-income housing for Very Low Income ; EnvirotunentalI, friendly for Micldle Income ,Ie_ur ~ . ) Down peymentusistance to income qualified Middle Income jJcore ., 1.7 1Provides a continuum of housing for Low Income :Provides a continuum of housing for Very Low Income "Score 16 25 lEase in mOnitoring for Moderate Income l~'" ., ~ ~Meet a CP Goal for Low Income -,Proximity to transportation for Low Income lLong-tenn loan flmding for Low Income ~Long-tenn loan funding for Very Low Income !Meet a CP Goal for Extremely Low Income =.,21 ;, payment usistance to income qualified Low Income ~:'m:itoring for Middle Income jprovide rental opportunities for Moderate Income !:o::tally friendly for Moderate Income ; viromnentally friendly for Moderate Income ~ 1615 .. in monitoring Low Income ~ in monitoring Very Low Income t::s9f10 ;.pennanendy affordable housiDl for 30 years for Very Low Income ~reates pennancady affordable housing for 30 years for Extremely Low Income ,!Proximity to transportation for Extremely Low Income IfProvides education concerning dordable housing for Very Low Income iHousing TIllS! Fund 9O-Day CommillOe Report 10 the Mayor Page 26 Ranked Hou.lng TlU$t Fund Criteria . HIm. PrioritY (~l"e of SO) j CreateS permanently affordable housing for 30 years for Moderate Income Provides education conccming affordable housing for Moderate Income Provides affordable housing in an area with few existing affordable opportunities for Moderate Income Provides affordable housing to several income levels within a single development for Moderate Income Compatibility with neighborhood for Moderate Income Provides home ownership opportunities for Modcratl:l Income Provides rental opportunities for Extreme Low Income Demonstrate high degree of leverage of other funding sources for Moderate Income Grant funding for Moderate Income Bridge funding for Modcratl:l Income , Preser"oleS existing affordable housing for Modcratl:l Income Makes existing housing more affordable for Moderate Income Recogaizes existing houIing Deed for Moderate Income Promotes mixed-income housiDg for Moderate Income ,Score ~ 45 , Provide continuum of housing for Moderate Income i Score _ 40 ~ Meet a CP Goal for Moderate Income i Creates permanently affordable housing for 30 years for Middle Income ,! Proximity to transportation for Moderate Income 1 Provides oduc:ation cOnceming affordable housing Middle Income 1 Provides affordable bousiDl in an area with few existing affordable opportunities Middle Income ! Provides affordable bousing to several income levels within a single development Middle Income tCompatibility with neighborhood Middle Income 1 Provides bome ownership opportunities for Middle Income 1 Provides rental opportunities for Low Income Preserves existing affordable housing for Middle Income ~Makes existing housing more affordable for Middle Income !I.ecogaizes existing housing IlCleCI for Middle Income :Promotes mixed-income housing for Middle Income JProvidea rental opportunities for Very Low Income . ,jDemOIlltrateS hilb degree of leverage of other funding sources for Middle Income !Grant funding for Middle Income jBridge funding for Middle Income 'Long-term loan funding for Moderate Income ~"36 , videa a continuum of housing for Middle Income ' 't're ol35 ' : wn payment assistance to iDcome qualified Moderate Income tore ol32 '. eel a CP Goal for Middle Income jProximity to trauportation for Middle ,Income !Long-term loan funding for Middle Income ~ eanently affordable housing for 30 years for Low Income ~OUIing Trust Fund 9O-Day CommillOe Report 10 the Mayor Page 2.5 -<).1l. ~\\~ November 13, 1998 < y- for The Bain · . Island Housing. Trust Fund AOO-pay Mayor's Committee Report REPORT SUMMARY ....... ~ :, .,: - or':' ... .......... ,. ....-:. . .".{ 3 THE COMPREHENSIVE PLAN'S HOUSING ELEMENT-ENABLING LANGUAGE 3 POTENTIAL REVENUE SOURCES: 3 ADMINISTRA TION OF THE TRUST FUND 4 POTENTIAL PROGRAMS SUPPORTED 4 PARTNERSHIPS 4 THE. REPORT 4 MISSION OF THE HOUSING TRUST FUND 5 COMMITTEE MEMBERS 5 REVENUE SOURCE 6 REVENUE SOURCE GOALS 6 VOLUNTARY REVENUE CONTRIBUTIONS 6 REVENUE SOURCE SUBCOMMnTEE RECOMMENDATIONS 7 SURCHARGES ON PLANNING, LAND USE ~ BUILDING PERMITS 7 TRANsACTION~BASED VOLUNTARY CONTRmUTION FROM INDIVIDUALS AND BUSINESSES DIRECTLY RELATED TO REAL ESTATE ACTIVITIES 8 MATCHING FUNDS FROM-COBI GENERAL FuND 9 CONSIDERATIONS FOR FUTURE PUBLIC REVENUE SOURCE 9 ADMINISTRATION 9 ADMINISTRA TION DETAIL: HOUSING TRUST FUND LENDING CRITERIA 10 . SCHEDULE AND REVIEW PROCESS 10 COMPLETENESS OF APPLICATIONS 11 BASIC ELIGIDILITY 11 FEASmILITY 12 . PRIORITY FOR FUNDING 15 . UNDERWRITING 16 PROGRAMlFEASmILITY -18 PROGRAM./FEASIDILITY SUBCOMMIlTEE OF THE HOUSING TRUST FUND THE NEED . SUBCOMMITrEE OBSERVATIONS RECOMMENDA TIONS . 18 18 19 20 Housing .Trust Fund 90-Day Committee Report to the- Mayor Page 1 APPENDICES 21 AFFORDABLE HOUSING FUNDING OPTIONS 22 OTHER SOURCES OF REVENUE: A SPEC~L PROPERTY TAX LEVY PER RCW 84.,52.105. 23 HOUSING TRUST FUND CRITERIA WORKSHEET 24 RANKED HOUSING TRUST FUND. CRITERIA 2S How MUCH FUNDING IS NEEDED PER YEAR TO BE EFFECTIVE? 28 HOUSING OPTIONS FOR SEATTLE REsIDENTS WITH Low AND MODERATE INCOME 29 Housing Trust ,Fund 90-Day Committee .Report to the Mayor Page 2 REPORT SUMMARY A Bainbridge Island Housing Trust Fund (HTF) would be a permanent source of locally controlled money dedicated to increasing affordable housing opportunities exclusively for projects on Bainbridge Island. This can be accomplished through providing grants and -loans for construction and ~ehabilitation projects, operation of non-profit organizations, and assistance for financial hardship. The Housing Trust Fund Mayor's 90-Day - ~ Committee proposes that a Housing Trust.Fund could be an effective way for Bainbridge Island to leverage other funding and resources to help reach'its affordable housing goals. , , The Comprehensive Plan's Housing Element-Enabling. Language Developing a Housing Trust Fund specifically addresses the implementation of Goal 1-, Policy 4 of the Housing Element wiQIin the Comprehensive Plan, which states: liThe City recognizes the need to provide financing assistance for afford~ble housing. Accordingly, the City will actively pursue funds that fl?ay include, but are not Iiniited to, councilmanic bonds, general obligati.on bonds, real estate excise tax, grants, and other available resources~ These funds may be used to establish a Housing Trost Fund which will be used for purchasing land, for assisting with financing, and for providing infrastructure to support affordable housing on Bainbridge Island. II Housing trust funds are often used to develop capacity within an organization and help non- profit developers gain control of building sites. Funds also help leverage other sources of . funding that could <;>therwise not be considered. Grants most often require matching funds and proof of other financial support. A h9using trust fund can be used to provide the most critical and difficult to come by financing' for non-profit developers of affordable housing. Unlike for-profit developers, non-profits rarely have reserve funding to provide the initial financing in 'order to get a project underway. However, funds are generally available to for-profit developers if the funding contribution i~ necessary to make the project feasible. The Mayor's 90-Day' .Committee (the "Committee") for a Housing Trust Fund considered the following key elements: 1) Source of revenue . 2) How the' fund is to be administere,d 3) What types of programs 'will be supported 4) How citizens can p~icipate Potential Revenue Sources: The Revenue Source Subcommittee, used .the expertise of the City of Bainbridge Island Finance Director, Ralph Eells and the documented ~xperience of other housing trust funds across the co~ntry to define potential revenue sources available for the Housing Trust Fund. Their study suggests a combination of revenue sources to include: (1) fees Housing Trust Fund 90-Day Committee Report to the Mayor Page 3 from planning and building permits, (2) specific housing-related business contributions, and (3) matching funding from the City's general fund~ These revenue sources would . yield an estimated annual HTF contribution of $293,000 to $337,OOO~ Administration of the Trust Fund The Health, Housing and Human Services Council (HHHSC) has provided a suc;:cessful model for the annual distribution of funds to local organizations from a City source~ Another model is the ARCH Housing Trust Fund that serves Bellevue and other Eastside jurisdictio,ns. The Administration Subcommittee proposes a hybrid of the two models~ The. RTF administration of the fund would be the official City body responsible for setting funding criteria, reviewing applications and monitpring use of funds.. This recommendation is presented in considerable detail within the report.. Potential Programs Supported The HTF can be a flexible instrument in helping the City meet its affordable housing goaIs~ Most importantly, the RTF may be targeted to meet the varying needs of today' s and tomorrow's low and moderate income renter and owner households~ Each new funding _ round or each year, ~e Citizen's Advisory Board may review the uses of the funds and the targeted income groups and suggest changes that reflect the needs in the community. An " initial focus of the RTF program could be down payment assistance for low and moderate income home buyers~ Serving these populations in this 'manner would facilitate affordable housing development as currently required by the Municipal Code~ The implementati0n of the HTF would demonstrate a coordinated program by addressing the demand-side of housing (Bainbridge families) as well as the supply-side (the developer/builder)~ Partnerships A Housing Trust Fund opens doors to a: great number of partnerships. The RTF would provide a diverse number of resources, programs and organizations the incentive to working together toward a conunon goa1~ The Mayor's Committee members are the foundation of those partnerships representing many. of the players in housing. The local partners provide the human infrast~cture for a sustainable and substantial Housing Trust Fund. Also, the activities of the RTF Committee have caught the interest of the Washington St~te Finance Commission, a potential partner and revenue source to complement the sources raised through the HTF~ New~. of this opportunity will be forthcoming shortly.. THE REPORT The cost of housing on Bainbridge Island, whether rental or for-purchase, is out of reach of most of the existing Island " workers. In order to afford to work on the Island, either a household depends upon another income for household expenses, the household has been fortunate enough to have purchased a home many years ago when housing prices were affordable to moderate and lower income households, they receive some sort of subsidy and live in the small number of subsidized units on the Island, or they have been lucky Housing Trust Fund 90-Day Committee Report to the Mayor Page 4 enough to find one of the it:lfrequ~ntly vacant affordable housing units. Presently, new households, whether singles or families, do not have these opportunities~ · The targets of the Housing Trust Fund are those households which depend on an Island-based income to support their home~ The targets of the Housing Trust Fund are, those households on which the Island depends upon as clerks, teachers, public employees" wait staff, artists, crafts people, skilled workers. ~ ~ In short, those people who make the Island run day to day in an interesting and economically viable way ~ · Housing affordability is a essential to Island businesses~ · Housing affordability is essential to maintaining cultural, social and economic diversity on the Island~ The Committee set out on its investigation of what kind of housing trust fund would be appropriate on l?ainbrldge Island with a clear idea of the guiding principles stated in the Bainbridge Island Comprehensive Plan. Both the Committee and subsequently the mayor, ~ity council, and the public will need to have a very clear understanding of the purpose of the Housing Trust Fund. Mission of the Housing Trust Fund The Housing Trust Fund 90-Day Committee was given the task of developing the framework for a local source and use of funding for affordable housing.. The mission of the Housing Trust Fund is too complement existing city ordinanc~s concerning affordable housing, encourage developm~nt of moderate and lower income housing and to provide funding for income groups not serviced by other funding sources currently available~ Committee Members We benefit from a great deal of expert advice both from those on the Committee and . those individuals we invited to inform us on various issues. The Committee w~ made up of a broad cross section of those in oUf.community so that many of the talents of our community might have an opportunity to contribute to this effort and that a variety of ideas and issues could be examined and debated more fully. Representatives on the Committee were: Ralph Eells, Director of Finance, City of Bainbriqge Island; Joan Holcomb, Helpline House; Karen Kline, Health, Housing and Human Services Council; Ed Kushner, Windermere Real Estate, Bainbridge Isl~nd;:Jack MacArthur, President of the Chamber of Commerce; Rod McKenzie, Land Developer, Bainbridge Island; Susan Millan, Housing Planner, City of Bainbridge Island; Lynn Nordby, Administrator, City of Bainbridge Island; Gretchen Novasio, Housing Resources Board; Preston Prince, Kitsap County Consolidated Housing Authority; Garnie Quitslund, Housing Resources Board (HTF Committee Ch~rperson); Chelle Roberts, Housi~g Resources Board Coordinator; Stephen Rowley, Bainbridge Island School District; Dee Taylor, Washington State Finance Commission; John Teising and Ross Thomas, Washington Mutual Bank Bainbridge Island; Roger Waid; Kitsap County Consolidated Housing Authority; Charles Wenzlau, Wenzlau Architects. Housing Trust Fund 90.Day ,Committee Report to the Mayor Page 5 Special guests/advisors to the Hous~.ng Trust _Fund: Mary Brooks, Housing Trust Fund Project; Lee Desta, Community Builder, U~ s. Department of Housing and Urban Development; Art Sullivan, Executive Director, A Regional Coalition for Housing (ARCH), Bellevue, W A . At the first meeting of the' Committee; the group d.ivided. into three subcommittees to deal with three components of the housing trust fund.: (1) Revenue Source, (2) Ad-ministration . and (3) Program (targets) and Feasibility. ,REVENUE SOURCE -Revenue Source Goals Key to any RTF is a revenue source. City HTFs are a challenge compared to that of a state-based RTF simply due to the more limited array and amount of revenue sources available to ~ities. While finding an appropriate dedicated funding sources is the most difficult part of the Housing Trust Fund development process, once found, housing trust funds typically leverage other funding dollars for projects at the rate of $5 for every $1 dollar provided by the trust. The Revenue Source Subcommittee invented a unique program suited singularly to Bainbridge Island which combines voluntary contribu.tions with public funds. The . ~. voluntary contributions are from those involved in the market-rate housing production and sales that have made such an impact of the Island: lending institutions, real estate companies and possibly others is then matched by a contribution frqrn the City. The " City's match would flow from the general fund in addition to an increase ~n the planning and building fees charged to developers. Currently, the City charges only a fraction of the cost of acJrninistering the planning program. Other cities, using similar fees for affor~able . housing, have proven the nexus between the rising cost of market nite housing-from which developers profit-and the increasing difficulty in providing affordable housing to those in the moderate and lower income ranges. Yet, the Committee recognized that many others in the community contribute. to the high cost of housing and benefit from its presence on the Island. . Other sources of revenue which spread the cost across more of the community other than those developing new housing are being investigated (e.g., business and occupation tax, business license tax, condominium conversion fee, demolition fee, special property tax Ievy)~ Voluntary Revenue Contributions Part of the search for revenue sources lead the Committee to ask about the kinds of contributions that could come from sources other than those from the public coffers.. The reasoning behind this search was that.many other individuals and businesses benefit directly from the development, refinancing, and resale of housing~ In other communities, where there are" neighborhoods left out of the gen'eraI economic health of the broader Housing Trust Fund 90- Day Committee Report to the Mayor Page 6 community, lenders are required, by federal law; to demonstrate their reinvestment into their local community by servicing loans in those neighborhoods. There is no particular neighborhood that has been neglected or discriminated against in terms of lending on Bainbridge Island. However, there exists a lack of lower and moderate-income housing units for which to provide financing. One of the first steps toward gathering a variety of revenue sources is educating the public of the community responsibility for affordable housing and the benefits of affordable housing. Itis essential that the source of funding reflect the ideal of fairness in sharing the cost of all housing. The businesses on the Island are major benefactors from low cost housing: they employ individuals earning their rent and mortgage payments in the service sector on the Island. Revenue Source Subcommittee Recommendations . The following consideration of several substantive and permanent funding sources for the City of Bainbridge Island Housing Trust Fund, the Subcommittee recommends the proposed revenue sources outlined below. Taken as a whole, these sources represent a combination ~f private and public sources and their selection is based on the rationale that, in any given community, the rising cost of housing is directly related to population growth and development pressures in that community. Thus, just as the case is often. made in the context of "impact fees", a case can be made here that significant sources of the funding for a housing trust fund should be monies generated directly in relation to growth and development activitY6 Surcharges on Planning, Land Use and Building Permits This proposal contemplates the establishment by ordinance of a uniform set of surcharges on all planning, land use and building permits required by the City of Bainbridge Island. The individual permitting activities are listed in the attachment together with a statement of fees collected by COBI through September of this year and an annualized estimate of these fees for 1998. . At present the City's fees for such services, by statute, .cannot exceed the cost of providing them. Under the City's current fee structure, approximately 50% of the cost of . planning and land use services and about 75% of the cost of building permit services are covered by fees. Thus, the amount of a surcharge which the City can impose is limited to . approximately 50% on planning and land use services and approximately 25% on building permit services~ In recognition that a schedule of surcharges at these levels would push the outer limit of what is possible, we are recommending a schedule which is less aggressive: 25% on planning and land use services fees and 12.5% on building permit fees. Applying these hypothetical surcharge levels of 25% and 12.5% to the fees generated at current activity levels, the additional revenue w~ich the City could generate and make available to the Housing Trust Fund 90-Day Committee Report to the Mayor Page 7 HTF through the budgeting process would be approximately -$161,000 (For details, see appendix: Affordable Housing Funding Options). Transaction-based Voluntary Contrib,ution from Individuals and Businesses Directly Related to Real Estate Activities This proposal contemI?lates that, at each "point" in a, real estate transaction (a "point" being.defined as a sale of a property, closing of a loan, completion of an appraisal or inspection, issuance of a policy of title insurance or home owner's insurance, etc~). the individual or 'business involved would make a voluntary contribution to the RTF. Such amounts would be detennined by the contributors and paid into the HTF periodically or in conjunction with some' annual event such as the renewal of business licenses. As an example, here is a list of the hypothetical contributions which might be generated from the close of the sale of just one single family residence: Listing Agency S,elling Agency Escrow Office Lender * , Appraiser ,Property Inspector Titl~ Insurance Company Homeowner's Insurance TOTAL' $50 $50 $25 $25 * $10 $10 $25 $25 $220 , * Washington MutuallBainbridge Island has already committed to this contribution and conversations with other individuals and businesses are ,un~erway~ Given that, in recent years there have been between 300 and 400 residential sales per year in Bainbridge Island, the total monies generated annually for the HTF by this proposal could be in the range of $66,000 to $88,000 annually. ", Housing Trust Fund 90MDay Committee Report to the Mayor Page 8 Matching Funds from COBI General Fund This proposal contemplates that the monies generated by.the volunteer contribution outlined above be matched on a 1: 1 basis by the City of Bainbridge Island from General Fund revenue sources~ Assuming that the estimate of voluntary monies is valid, this proposal could also generate between $66,000 and $88,000 per year. The .coqlbination of these s~urces, at present activity levels, could generate annual revenue in the range of: @ 300 sales @ 400 sales \" Planning and Land Use Surchargesl Building Permit Surcharg~sl Voluntary Contributions. COBI Matching Funds $107,000 / ' $107,000 $54,000 $54,000 ~ $66.000~'-\ $66,000. $66,000 \, $66,000' S- (,,, rt-.i "-:: "2: Jj(~ TOTALS $293,000 \. ~-_.~. $337,000 Considerations for Future Public Revenue Source The Subcommittee fu,rther recommends that, within five years, these revenue sources be supplemented with revenue generated from special affordable housing levy financing passed by the electorate ,of Bainbridge Island (See appendix concerning a special property tax levy ,per RCW 84~52.1 05). ADMINISTRATION The Administration Subcommittee used the model provided by ARCH: A Regional Coalition for Housing~ ARCH has an affordable housing delivery system that has worked - in this region and in the existing housing climate. More importantly, the components of the administration demonstrated by ARCH closely resemble a successful model of fund administr,ation in use on the Island by the Health, Housing and Human Services Council. The Administration Subcommittee understood the imp~ortance of accountability of funding uses, low-cost administration (as well as self-sufficiency) and continued diverse community participation. Central to the model is use of existing City staff and other existing support agencies such. as the Kitsap County ~onso]idated Housing Authority ~. , Below is an organization chart depicting the line of control and advisory relationships of the required functions. It is assumed that the RTF will be starting with a limited operating budget and therefore the City should provide certain functions from departments already in existence such as accounting 8:nd planning. I See the appendices for the proposed individual sources for the planning and building fees: "Affordable Housing Funding Options~n Housing Trust Fund 90.Day Committee Report to the Mayor Page 9 The Administration Subcommittee recommends that technical assistance consulting is utilized on an as-needed basis and the City-employed planning staff person (a housing planner) coordinate between such a technical consultant and the rest of the- RTF or gani zati 0 n . Bainbridge Island City Council ...(.~\""'"iI.""""'''''''''''' . '\ '''j ~, \~. '_ .-J, ~'I -..-, \ \J~' :.~ -'i~ ~""'r'o;.:. ,\ \ \ "Qr /'. \ Cz~ /' <:.. 'r... -<J~- f". .c' .Q_~~\r ~..'~ Executive Committee r Mayor, City Administrator, Member of the City Council, Citizen-At-Large .l ~ '\ ,/ ~...{':', ~..... ,r ,- Y- :'~ ) C.." 'fV' -( K (" (\-,~ ~ '- . \ r~ '{' Administrative Services Program Coordination Community Advisory Board Accounting Legal Etc. Provided by COBI City Housing Planner and an Independent , Development C'onsultant Performed by HHHSC '.Administration Detail: Housing Trust Fund Lending Criteria 'The purpose of the Bainbridge Island Housing Trust Fund (HTF) is to create and preserve affordable housing for low and moderate income households~ In special circumstances middle income households may also be assisted.2 The HTF application includes a number of criteria that are used by the Community Advisory Board to complete its evaluation and recommendations. The purpose of the lending criteria is to allow applications to be evaluated for feasibility and timeliness, prioritized for funding, and establish conditions for funding. This report summarizes the criteria used to evaluate applications for HTF. Schedule and Review Process . The RTF conducts one funding round each year. The typical schedule for the funding round has applications due in March, Executive C~mmittee recommendations completed, in May and Council action in June. An initial screening of applications is conducted, by staff to determine the completeness of each application, with applicants informed of additional.information needed. Applications 2For the purpose of the Bainbridge Island'Trust Fund the Seattle MSA median income, as defined by HUD, will be used~""" - . Housing Trust Fund 90~Day Committee Report to the Mayor Page 10 that are very incomplete may not be given.further consideration that round. HTF staff prepares a summary of the submitted applications which is forwarded to Community Advisory Board~ The final staff reports are forwarded to the Community Advisory Board (CAB) for their review and funding recommendation~ The CAB will appoint a subcommittee which wi,ll be comprised of professional expertise in housing, lending or related areas~ The CAB will always contain members who have professional expertise in mortgage underwriting, and development of housing (e~g., for-profit residential developer, not-for~profit affordable housin.g developer). As vacancies occur, the CAB will maintain expertise in these areas. In this way, financial expertise will be available in reviewing applications prior to referral to the Executive Committee. The CAB will always include at least three members with private lending or reside~tial development profes.sional background. CAB reviews ea9h ap'plication and identifies any issues which require clarification of further review/research6 During the second meeting, the CAB will prioritize the applications and issue a funding recommendation, and recommend conditions to be met before funds can be expended. These recommendations will be. voted for approval by CAB~ The Executive Committee receives the funding recommendation from Health, Housing and Human Services Committee. The Executive Committee is comprised of the Mayor, City Administrator, member of City Council, a Citizen at ~arge. The Committee reviews the CAB recommendation and approves it -- with or without modification~ The Executive Committee recommendations are then forwarded to BI City Council. Council approval is required for a funding allocation to be made. If the City Council approves funding for a project, the Program Coordin~tor provides , administrative assistance with preparing contracts and monitoring projects. Completeness of Applications An initial screening will be peIformed to determine the completeness of each application~ The HTF application form requests information t<? help measure how projects meet program criteria. Information requested in ap.plications is described in more detail below ~ Projects that.are deemed incomplete may be~Tejected YJithout further consideration. Basic Eligibility The Housing Trust Fund has establi.shed some basic guidelines that all proposals must meet These include: Eligible Applicant . Non-profit organizations · Private .for-profit organizatio.ns . P~blic housing authorities Housing Trust Pund 90-Day Committee Report to the Mayor Page t 1 . L · Public development authorities Partnerships involving combinations of the above _groups are encouraged, especially in the .case where a private for-profit organization applies for funding. Income Served Use of the RTF must be, directed towards eligible_ beneficiaries -- households with incomes up to 95%:of the Area Median Income (AMI) adjusted by household size as defined by HUD for the Seattle MSA. In some cases, the'beneficiaries may have incomes at or below 120% of AMI. Use of Funds There is a wide range of elig~ble uses of RTF. These, include acquisition, construction, rehabilitation, and-.others. IfCDBG funds are used project, must comply with any CDBG restrictions (e.g., not available to for profit developers, constraints on ,using for construction costs). Feasibility , Once a complete application is received, it will be reviewed in further detaiL The overall intent is to determine whether the project will be capable of accomplishing established goals in a reasonable time frame, -or whether assumptions/omissions made by the proponent cast doubt on project feasibility. Developm,ent budget Applicants provide detailed breakdowns of development costs, including: acquisition, construction/rehabilitation, professional services, finance', site development and others. Issues which may be evaluated from this information include: · Completeness-any line items missing from the budget breakdown, including inappropriate contingency for the type of project. · Do any of the line items ,appear to stand out (too high or too low) · Are the overall per unit costs reasonable · Are the HTF per unit costs reasonable · How 'do the Costs compare with other projects -with~similar type work · Are the RTF cos'ts -eligible for CDBG fun~~' use Operations Budget The purpose of this budget is to show all the costs associated with the daily operation and management of the project after it is complete.d, such as staff, supplies, insurance, professional services, utilities, repairs, reserves and the like. ~ey issues include: ' · Completeness - are all of the costs included, or are important items missing · Is the vacancy fate built into the rent income project appropriate · Are there "rainy day" funds (operating reserves and replacement reserves) Housing Trust Fund 90- Day Committee Report to the Mayor Page 12 · Do the costs provided appear reasonable · Continuity - will the budget support their needs years down the road · Is the debt service less than the net operating income · Is there a positive cash flow (e.g., For projects with private debt is there an appropriate debt coverage ratio). Support Services Budget For some projects, support services are an integral part of the housing program. In these cases information is requested on the support services budget. The purpose of this budget is to identify all the casework, assessment, counseling, training/seminar, and other support services, which are provided by the sponsor or by another agency (for or in cooperation with the sponsor). These may be provided on or off-site. Key issues to evaluate include: . · Does t~e support services budget account for all services provided., · Are the funding sources for the support service~ realistic~ · Is funding for support services potentially available on an ongoing basis? If not, what plans are there in the event a specific funding sources is lost. Funding Sources/Co,mmitment In this section, the applicant identifies the amounts and sources of all the funds required for development of the project The applicant also provides the current status of the funds -- whether they have been approved (or not) for the project Key issues include: ' · Does the total of all sources equal the total o.f the development budget · Does the ratio of HTF dollars to other dollars seem high/have other potential sources of. funding been reasonably assumed. · Are private funding sources included at a reasonable level · Is it realistic to expect other public funding sources to commit at the level indicated · Does, the schedule for the commitment of other funds seem timely .. Is there too much dependence upon a single funding source Organization/Team A successful project starts with a sponsor who is experienced and well organized. When appropriate, the sponsor may pull in other player for the team to help with the project, as well as to operate it after construction. By knowing who is involved in project development, and who will be involved in operating the project after construction, it will be easier to evaluate the potential success of the proposal. Key issues include: · Are the key team members identified -- do they have the right experience' · Does the sponsor have experience developing projects like the proposal. If not, have they brought in members to the team that have appropriate experience · Is the construction manager identified -- does she/he have experience Housing Trust Fund 90-Day Committee Report to the Mayor Page 13 · For proyiding h0using-related social services, 'are the agencies/individuals identified , and do they have the appropriate sldlls · Will the proposal have the potential to increase the capacity of ' a local organization, thus increasing the area's overall organization capacity to provide affordable housing Management Plan This section addresses tenant ~election, tenant interaction with managemen~ decision- making (such as tenant councils, apartment manager, etc.), terms of occupancy, routine facility maintenance, and (if emergency or transitional housing) what are the support service pr,?vision for the proposaL key issues to look for -include: · Are the dally and overall management provision clearly set forth and sound · Do the provision (including if appropriate the availability of services) seem appropriate, for the type <?f facility , · If support services are included, how are they integrated into the. project · Do the tenants have reasonable' provisions for management interaction Site Control/Site Issues Does the applicant have the IIright" to use the property as proposed? This evaluation also includes the appropriateness of the site for the proposed use~ Key issues include: · Is there formal site control (e.g~, ownership, binding option or purchase agreement) · Does the agreement allow sufficient ti~e for the project to secure all financing; permits, etc. · Is the proposed use allowed under local land use regulations: · Is the site appropriate for the proposed use (e.g., is there access to necessary services for residents) , . Dis p'lacemenVRelocation This section only applies to lIexistingJl residential units, and not new construction. It also does not apply to vacant units. If existing tenants are displaced or have to be'relocated, they may be eligible for financial compensation. The key issues include: · Will temporary or permanent displacement/relocation occur · Is 'there 'a reasonable plan to address a~y potential displacement/relocation · Have all reasonable efforts been made to avoid/reduce displacement/relocation Timeliness Addresses whether the components of the application can" individually and collectively, be delivered in an appropriate time frame. Also if the application is premature to be . req.uesting funding. (Note: Other communities have created local funding programs with severai public funders to provide predevelopment loans. One purpose of such a program is to provide some funding so that projects can address some basic issues before reques~ing funds from public funders) Key issues include: Housing Trust Fund 90-Day Committee Report to the Mayor Page 14 · What are the time frames for commitment of funding sources · Does site- control cover all the time frames for funding commitment, · How soon will the project be ready to go · If a project is relatively early in the process, does making a commitment now help the project in any way (e~g., help to secure other funding) · Are there any warning flags which suggest possible delay. If so, have they been accounted for, or could theY,adversely affect the proposal. Priority For Funding , Once applications are determined to be feasible, they are then evaluated against several other overall objectives of the HTF. This procedure is especially important when the total 'HTF funds requested by an applicant exceeds th~ total RTF available. This evaluation can help make the eJecision about whether proposals should be funded at ~the current time. Level of Affordability The applicant must identify th~ income targets (expressed as a percentage of Seattle MSA median income) of the intended tenants. Key issues to evaluate include: · Are the intended tenants low or moderate income (no more than 95% of area median income) · If middle income (up to 120% AMI), what special circumstances justify the proposal · Are the proposed rents (including utilities) affordable to the proposed tenants · If applicable, comparison of proposed rents to existing rents in the project · Comparison of proposed rents to average rents in the project's local area Duration of Affordability The ~pplicant must propose a specific time period for which rents will remain affordable to targeted tenants~ The key issue here is: · Will the applicant provide a duration of at least 30 years? Shorter time periods maybe allowed, but the preference is for.a minimum of 30 years~ Consistency with Bainbridge 1~land Housing Needs/Goals The City of Bainb~idge Island has housing gpals, policies and objectives set. fo~h in its Comprehensive Plan.. Proposals are evaluated for consistency with these policies.. In addition the HTF has established a long term objective that funds be distributed proportionally between several types of housing. If certain types of housing have disproportionately been funded in previous rounds, the application packet will state a preference for under funded types of housing.. Key issues include: · Is the project consistent with local housing goals and policies · Has the community already taken some steps to help initiate the proposal, or expressed support for the proposal Housing Trust Fund 90-Day Committee Report to the Mayor Page 15 Underwriting Underwriting .criteria provide the documentation and other ,information necessary to ensure that funds are not made available until certain conditions are met, therefore minimizing the likelihood a project will not be completed as finally proposed~ It can also provide protections to maximize ,the city's ability to protect its long, term interests in the property ~ This can include items such as maintaining Affordability, property maintenance, and repayment or recapture ~f city funds~ Finally, underwriting criteria will determine in what form funds will be made available.(e.g., grant, loan, or deferred loan). Some underwriting criteria w'ill determine in what form funds will be made available (e.g", grant, loan, or deferred loan). Some underwriting criteria will be standard to all projects' while others may be developed to address ~pecific unique issues for a certain project These underwriting criteria are incorporated into the funding contract, promissory notes and/or regulatory agreements. Key criteria include. Cost/Funding Confirmations Most projects begIn with a series of cost estima~es, that suffice for conceptualizing and preliminary review " Yet before funds are actually committed to a project, costs are verified. AppraisaVpurchase - sales agreements, appraisals, inspection reports/bids, and the like, give certainty to costs - and confidence that there wontt be any financial surprises down the road. To the extent confirming information (e.g., appraisal) are not provided with the application, there will be conditions included in the contract that this information needs to be provided prior to receiving local funds. Key issues include: · Are the cost confirmations current · Who performed the confirmations · Do the c9nfirmations verify the proposed project Land Development Issues Applicants are required to provide information confirming that the proposed use is allowed (letter from permits, etc.), and any potential significant site constraints identified and, if applicable, addressed. Types of reports that can be required include: · Inspection report · Hazards/W etlands survey · ,Soil test · Zoning verification Form of Assistance (loan/grant) Funds can be given to the applicant in the form of a grant, or repaid over time in the form of a straight or 'deferred'-loan. In recommending the form of assistance issues include: · ' Does the .project have enough cash flow initially to make loan repayments immediately, Housing Trust Fund 90-Day Committee Report to the Mayor Page 16 · Does the project have the potential to increase cash flow in the future, thus allowing repayment at some future point in time, or when certain cash flow standards are achieved (e~g., net cash flow is greater than 'a predetermine % of gross income) · Would loan repayment affect Affordability in the project · Is a project serv.ing certain types of a households that funds should be made available' as a grant (e.g~, transitional housing, very low income families, handicapped ~ndividuals) Formal Agreements Legal agreements (contracts, promissory notes, regulatory agreements) are used to formalize the financial relationship between the lender: (local jurisdiction) and the recipient, governing the award of RTF dollars.. Key elements- of these agreements include: Contract: · List conditions (as described above) tnat must be met prior to releasing funds (e~g. other funding commitments, permits, final,budgets) · All funding conditions must be m~t before funds are released · Any significant revision to the scope of work or budget must be submitted for review and approval of staff' · Establishes time' frames in which key steps must be completed, or funding reservation can be withdrawn unless an extension is -approved by staff · Establishes timing/procedures for drawing funds. (In what proportion local funds will be drawn relative to other finding sources. For example, for private developers, developer funds may be expected to be spent proportiot:1ally to local funds) · City can recapture funds if not used for intended .purposes Promissory Note: · Establishes any terms for repayment of funds · Secured by recorded deed of trust · City can cure defaults on any .seniort loans · Subordinates city loan to 'seniort loans (typically private loans) · Funds made available as a non-recourse loan to applicant Regulatory AgreeJTlent: · Recorded agreement that establishes the levels and terms of Affordability · Specifies projects monitoring/reporting obligations · If ownership project, establishes process for resale, and how to calculate future affordable price Housing Trust Fund 90.0ay Committee Report to the Mayor Page 17 . PROGRAM/FEASIBiliTY Program/Feasibility Subcommittee of the Housing Trust Fund The Program/Fe'asibility Subcommittee was charged with making recommendations about the target population, eligibility and what kinds of projects/programs the funds should support The City of Bainbridge Island Comprehensive Plan Housing Element , (1994) established affordable housing needs on the Island~ The data and conclusions of , the Housing Element form the foundation for our recommendations. The Need · A ,need assessment was done by Kitsap County in 1993~ Based on that assessment, the County recommended 2,900 affordable housing units (rental and purchase) on Bainbridge Island. Please refer to pages 1, 2, 3 of the Housing Element · Ross Thomas provided OUf Program/Feasibility Subcommittee with demographics for the Island from 1997. This data showed that 45.7% of Island citizens make less than $49,000 a year. This number represents 3,104 households. Given the current incomes of existing households of the Island, 290/0 of the total households could qualify to buy only 6.5% of the existi~g housing stock on the Island~ In other words, 93.5% of the housing stock is out of reach to most moderate and middle income households~ · If rental units were available, the market price for 2-bedroom rental units in the City Center of Winslow would range from $625-$850 per 'month. The market prices for three bedroom rental units in Winslow would range from $950~$1200. Based on 30% of income spent on.housing, the 10.33% of households who make up to $15,000 income per year could afford $375 per month rent 8~5% of our population could afford $375 to $625 per month oil rent. 10.6% could afford $624 to $850 per month on rent. ,It is in this range that households could find market rate units. The housing needs asses~ment denotes that there is an almost zero vacancy rate in rent assisted units (around ,2%~overall according to Trends). · The ProgramIFeasibility Subcommittee saw the need and it is great The Ct?!TIpre~ensive Plan recommends an adqitional 550 multi-family rental unit,s by the year 2012. The maJority of the 550 should be affordable to moderate and lower income households. _ Currently, there are 73 guaranteed affordable rental units (less senior housing). This includes ,projects by HRB and KCCHA. There are a number of market ~ate rental units on the Island that are affordable to moderate, and lower income households. We have anecdotal evidence from Helpline House, HRB and KCCHA that corroborate the continuing need for affordable housing~ The Subcommittee was unable to determine the number of accessory dwelling units available . Housing Trust Fund 90- Day Committee Report to the Mayor Page 18 · Types of projects and programs the RTF is proposed to support based on identified need in the community: (a) pr~servation of existing affordable housing stock, (b) rental units - singles and large households, (c) first time home buyers-funding to support education and identify loan sources, Cd) education to promote development of affordable housing by attracting,developers, encourage lenders to participate in affordable housing financing, to inform those in need and to gain community support · Other criteria: (a) allows for affordability in the future, (b) design consistent with Island values, (c) create conservation of energy efficient homes to improve affordability; Cd) environmentally friendly home design and function. Subcommittee Observations There are two gaps between recommended housing-cost related guidelines for Kitsap County and Bainbridge Island. One gap is the difference in median household income on the Island as compared to Kitsap County~ Bainbridge Island's median income ($54,337) is , 13% higher than the median income of Kitsap County ($48, 100)~ The County guidelines are used to generate funds from affordable housing grants~ For the purpose of the Housing Trust Fund, and perhaps other affordable housing programs initiated by the City, Bainbridge Island incomes and housing costs correlate more closely to SeattlelKing County rather than Kitsap County. Using S~attlelK.ing County figures makes home ownership opportunities more feasible to develop given high land costs. The second gap is the difference median home values between jurisdictions. In 1997, the median home value in Kitsap County was $136~OOO, whereas the median home value in the same year on B.ainbridge Island was $229,077. Moreover, developers tell us that development costs are 15% higher on the Island compared to the County: These factors, in acldition to the high cost of land on Bainbridge Island make it difficult for developers an'd non-profits to build affordable housing. In today's economy, a full-time employee must make more than double minimum wage to affordable an average two-bedroom rental in our state's urban areas~ The Programs/Feasibility Subcommittee interviewed Island stores, Day Road businesses, Safeway, Thriftway, Bainbridge Island Police, the City and the School District employees and discovered that half of these people live olf-Island~ Of course, we cannot determine if the location of their housing is by choice or affordabillty. People with median incomes for 'Bainbridge Island cannot afford to buy here.and people wit~ moderately low incomes cannot afford to rent here. Amazingly, there are some households who manage to find housing despite rising housing costs~ The Subcommittee's study found that 25% of Island household make $25,000 or less per year. More study IS needed to learn more about the condition of the housing, its age, tenancy and cost burden to such households (See appendix: "Housing Opt~ons for Seattle Residents with Low and Moderate Income"). Housing Trust Fund 90-Day Committee Report to the Mayor Page 19 Recommendations In general, linkages to other Island affordable hou.sing-related programs should be encouraged and supported~ Affordable housing is linked to the local economic, environmental and community health, and should be linked to a broader range of policy decisions to support affordable housing goals. The PrograrnlFeasibility Subcommittee and the ,Committee as a whole debated the issue of target populations and the types of programs the Housing Trust Fund could support at each of its meetings~ One exercise, presented in detail in the appendices, helped the Committee identify and prioritize who would be assisted through the RTF and how (see appendices: Housing Trust Fund Criteria Worksheet and Ranked Housing Trust Fund Cri teri a) ~ Findings · Target population of the RTF is the median income level and below ~ . The majority of the HTF would pay to assist development of new, affordable units. · The RTF ~ould pay to provide opportunities to potential home buyers to purchase permanent affordable homes~ · Eligibility for RTF dollars: (a) non-profit organizations, (b) developers, (c) recommend that HTF fund be used to leverage other funding sources to assist developers in creating affordable units. The ProgramIF~asibility Subcommitt,ee suggests that the Housing Trust Fund initially assist affordable housing ~y: . · Proyiding down payment assistance to for-purchase units created through the Affordable Housing Ordinance (whether rental or for-purchase and at the income- level required per unit). For example, the RTF could provide down payment assistance uP.to $10,000 per unit for low, moderate or middle income home owners~ · Re.habilitation loans for low-income households (up to $5,000) . A final key issue for the Housing Trust Fund to evaluate is the amount of ftinding.'needed to effectively serve the development and preservation of affordable housing. The Committee asked the question: How ~uch money each year is necessary to support and sustain a RTF? -Given the goals set forth in the Comprehensive Plan, production thus far, due to the Affordable Housing Ordinance (Bllv1C 18.90), and other information available it is possible to estimate the potential need. The revenue sources may not provide all that is need to create all the affordable housing needed on the Island, the amount provided by the HTF could ,help leverage this amount. The amount needed will depend on the range of loans and grants and the specific income levels of households to be served in any given year~ However, as an estimat~, the funding, needed to serve 50 ~ouseholds per year with a down payment a~d rehabilitation loan/grant program, as mentioned above, could be in the range of $285,000 to $375,000. These estimates are a reasonable goal given the revenue, sources identified by, the Committee (For detail, see appendix: How much funding is needed' per_ year to be effective?). Housing Trust Fund 90~Day Committee Report to the Mayor Page 20 APPENDICES Housing Trust Fund 90.Day Committee Report to the Mayor Page 21 fn c:: .0 ~ & tn .5 -a r:: Lt ba .5 ~ ~ .!!! -Q (\1. -e ~ ~ o ~ ...c ~ 8 o ~ to CI) 4) ~ .d ~ g \() :;:s ('.1C1) II .~ ~ bJ) s= -~ d fa a:: s:= o ~ ~ .I-f :::s CI) +-' CfJ o otJ bJ)+-, ~.~ > c1J ...(P-c ~ 0 V) t'; t""' 0 00 l/') V) -'" 0 ("t') 00 '00 (V) 00 N ".... r-- 0 00 ('f') ('f') 0 0 0 v ("f) a v 1"""""C ,........ C"l \0 N 00 .....-t. 1""""'l ,.-I C'l t'-O("t')~OOO ......-4~\o\o("f")O N<'l ~ &7 ..q-oor-....oo~vO'\ ~.......,-...tOV)t.nl"-........r ('r'),......c~ ......-l \r) 0 0 V) 0\ 0 0 0 v 0 0 0 00 00- .....-t00"1Cf100000V10000 oOod~('i")c:ivido\~ovl\Ci..n \o\cV')tr)v)Ot'("-\DOooO'\l"' 00 0\ C'l C"4 ~ V ........ C"t.. -.::t \0", N N C'l ~ 'EI7 T"""'4 ,......c ("f).....r..q.......-4o\("I)NO'f""""4VlOOO\O~ . 00 .....-t t.n T"""I ("f"l C't ~ ,........ ("f) ~ if tf) .,...,.-40("f)(f)t'"--Ot"'MOI:'t'"'("f')("t")(t') OOO('f"l('f')\oO\o('f")C"lt'\O(1')("f)('t') lrl~Mt--O\OvO\-.:::t\O-.::tO'\(f')lO C'f ...: .....: M~ C'f ...r \IS ~ 0" r.: 0 \CS c-..f ("'t') .......! .,...-.I ......-I ....... ......... ('f') ~ \oOOOOOOOtnoooooo t'"'\OooanOtno\OOOOtnO ('t"')O'\OOOON("t)~\r}O\O"'('-.O\ 0\ ~ C'i 0\ ~ C'f -.q-" 00 to 00" 'V.. -,...:- V ..........-4 ('.l -&47 t::= C d -9 Q.) 0 ~ c-a 0 J:;( 0.. r8 ~ cu o. ~(J ~ co >< > ~ ~". CI) v v- Q.) = 8 Q CI) ~ -> .61> ~ .~ ::J d,) 4) Cd (J) -~ s::; to ...... ~ ~ d (.) ::> ~ 00 > > .8 ~~~82~<{J) ~ s:::: ~ r= .> {) ~ 0 ~. < Cd :0 .M ~ & ~"51 ~ ~ :f: :2 ~ .....c ".,J ~ u.:! ~ ::S..::S o...o...5-4......--Cf)P-pqCl) Housing Trust Fund 9~-Day Committee Report to the Mayor +-' 5 o ..,.d Ub.O =:s ~~ "'d Q.) N ~ ~ a ~~ ~ if (I) ..d - 0.0 00 :;:j ~~ ; . ~- .5 41) d g ~ 0.) lj g .~ ~ "~ "~ .~ 0 0 -> :9 u ~ ~ ...... .......... ~"~ 0 ~ v 0 en .n s:: ~ ~ :::> ::s · ....c 'ta 4.) Cl)Cf.)~otl.t"a 1d ....... ~ ~ 4) d s:: 3 (tJ 8::E.15 o-O...(o;.a t:: bJ) E I 1-r d o ~ 0 co 0 0 t5 ~ ~ O:::t5"U -a ~ t'"-. 0\ lI} Q N C'\ 'C... Q .-[ .00- QO II r-.. tU ~bJl ~ ~ N (U ~.c: CJ ~ = CI"J 0\ ~- lOll) ~N ~~@ tf') ~ ~ o E-c I.() 0\ ~ 40 Q . ,.-..t QO l' \C ...-( 'lIl::t M \C ,...( ~... It) -6f9- l' M ObJ) r'1~ M cu ~~ ~ 00 ~ C:>N 00 ,-..[ O\~@ ~ ("f") .23 .~ ~ bJ) = :a :s ~ ,-...[ 0\ M o C Q ,ff- ,.... \0 ,......j 0. . i: 11 o . .~ . E-c CLl cu .~ bll = .~ ~ ...... -8 ~ '1:j = ,~ blJ = -8 s::: Qi s:: Page 22 . Other sources of revenue: a special property tax levy per RCW 84.52. 105. "In 1993, the Washington Legislature passed a bill that enables a county, city or town to impose additional regular property tax levies of up to 50 cents per thousand dollars of assessed value of property in each year for up to ten consecutive years to finance affordable housing for very low _ income households [for BI: very low = $22,800 for a 4-person household]. It requires a majority of the voters of the taxing district voting on a ballot proposition that authorizes the levy" (Current Topicsfrom the Housing Trust Fund Project, ,-August 1996, p~ 17)9 84.52.105 Affordable housing levies authorized-Declaration of emergency _and plan required. (1) A .county, city, or town may impose additional regular property tax levies of up to fifty cents per thousand d~llars of assessed value of property in each year for up to ten consecutive years to finance affordable housing for very low-income households when specifically authorized to do so by a majority of the voters of the taxing district voting on a ballot proposition authorizing the levies~ If both a county, and a city or town within the county, impose levies authorized under this section, the levies of the last jurisdiction to receive voter approval for the levies shal.l be reduced or eliminated so that the combined rates of these levies may not exceed fifty cents per thousand dollars of assessed valuation in any area within the county. A ballot proposition - authorizing a levy under this section must conform with RCW 84.52~054" (2) The additional property tax levies may not be imposed until: . (a) The governing body of the county, city, or town declares the existence of an emergency with respect to the availability of the housing that is affordable to very low- income households in the taxing district; and (b) The governing body of the county, city, or town adopts an affordable housing finandng plan to serve as the plan for expenditure of funds raised by a levy. authorized under this section, and the governing body determines that the affordable housing financing. plan is consistent with either the locally adopted or state-adopted comprehensive housing affordability strategy, required under the Cranston-Gonzalez' national affordable housing act (42 U.S.C. Sec. 12701, et seq.), as amended. . (3) For purposes of this section, the term "yery Jow-income household" means a single person, family, or unrelated persons living together whose income is at or below fifty percent of the median income, as detentiined by the United States department of housing and urban development. with adjustments for household size, for the county where the taxing district is located. (4) The limitations in RCW 84.52.043 shall not apply to the tax levy authorized in this ~ Housing Trust Fund 90-Day Committee Report to the Mayor Page 23 Housing Trust Fund Criteria Worksheet Criteria Income Cd teria: Extreme Low Income;:::: 30% and below AMI Very Low Income:::: 300/0 to 50% AMI Low Income = 50% to 80% AMI Moderate lucorne:::: 80% to 95% AMI Middle Income = 95% to 120% AMI Multiplier* Extreme Very Low Low IncoDle IncoD1e 30% and 30% to below 50% .:: L:;. .--..' .._-.':,,-:::"- _ __ _ .' ,.... --: , :/;:':;. ,'.':'- . .,:. -;-: - --. :,\:: k .. _:". . .._.7_._-.._ .;:-:;-:: .:~'. .::.~f~' ~::::- .)} /(((/3-\.-._. :'-.: ;: .G.enetaLGQ:al~>:.~-::~ -. . - . -. ~ _ __."- .- :R~tjlt_Qrl~cQme-;U_v~f(i~!rt ..--:;::::--::::, .:. -:-:-: '::':~::;, Meets a Comprehensive Plan goal Ease in monitorin,2 Creates permanently affordable housing for 30 years .Proxi mi ty to public transportation, or, development includes transportation component Provides a continu urn of housing Pro vides education concerning affordable housing Provides affordable housing in ~ area with few .existing affordable opportunities Provides affordable housing to several income levels wi thin a single development Compatibili ty with neighborhood Environmentally friendly 8 8 24 5 5 15 10 10 10 8 10 8 9 9 27 10 10 10 10 10 .10 10 10 10 10 10 10. 6 6 6 Low Moderate Middle Income Income Income 50% to 80% to. 95% to 80% 950/0 120% - .. .. -- .. . - -. ..-3:>:_:.._.._:~-.: ~i5. ~'4: 24 40 32 15 25 20 30 50 40 +- 24 40 32 . . 27 45 36 30 50 40 30 50 40 - 30 50 40 30 50 40 18 18 30 .4' 40 28 . - . - :~J;t~.ijWl. , ~.'. 'Rank:-otinc9meJi~y~f(1~SJ:::' .. Provides rental opportunities -. '.':.' . .; : -. --:: , .', ..5.-..: .. ,.:4 SO 40 10 _ . ". . .,. ... _.. .' -..~..:->.: - /itJ)jan~~f..'.::- ,.:~:: -::.:. ~:~ ~_.~J.(~.~l\t-QtXhiCQmfi:Levef l~$):~::~.':::<:):: ::':'>~::;:::>.:-:::::::'~({'.~:- Demonstrates high degree of leverage of other fundin sources Grant fundin , Lon -tenn loan fundin Brid' e (short...term) loan fundin 10 10 8 10 10 . 8 10 30 .24 30 4. 2 1 40 20 10 3' ..---.~ 4 30 50 40 30 50 40 24 40 32 30 .50 40 .- : : ;)\\.)/j/)(n:D:()ll$btRtt~)1:~{/j:}~~:~:jrt{mu~:?:~~~:r::t:~ ):)::1 :';', ;} .:.: ;.: : -- : : - - ~ '.',- ..;'-:-:./ :.' : -- : .J;~~~#k~:6.t~lli~ijm~~x%~jt~(t~$i{}{rY;~(~j::~)}t:{?)f?~)H)~ '... '.-..,- '3 - ...-.- k .;' ..:,3:: : ~ : :: 4 . I ~ . I I _ ~ . _ ~ :;:$-:-_ . . - ~ - I - ~ ~ I I I r .- ";r- _~_ ~ ~ ::~;.;:::;~;:::::~' >:~.- ::-;. :::'< .. ,- .. -. Preserves existing affordable housing I 0 1 0 30 30 50 40 Makes existin~ housin~ more affordable 10 1 0 30 30 50 40 Reco gnizes exi sting housi ng need 10 10 30 30 50 40 Promotes mixed-income housing 10 10 30 30 50 40 . Housing .Trust Fund 90-Day Committee Report to the Mayor Page 24 en C1.l e. 0-- c.J = .' .1--4 .4) td~ ~. <1J.-, '0_ . .0' ;?j 't:l ~t ~f, ~. ~ t f"..O -;.: Q~. .-0: · ,-("- m d)". ~. Q;).: ~ ~ ~.~ 00. ~ cS en I::t o ~ ~ o bJ). .=.. . ...... 00 =~ .0..' ~ cO @ S. .- O~ J38'O' o c....... 8 ~ 0 0 . cQ: 0 :u ~ .s ~O ON Sc o ~ S .- 09'CJ ocu~ .E S S dJ ...... 0 ~ 0 0 b ~.8 '~8- e. c dJ ~ ~ ., (. ~ fl. ~~ . f.e :a~. ~ : t)~ ~;- ~ (5 ~ 8: ~ -gl ~ .~ : ~. et d~ ~ ~~ ~ - i,s- . .. 6. t.. t ~ I f' . - ~ ~ - ij "- !g~}-6~ !~:~.ai ~_s CI- 8- ~ t.~~.s- ~.9 5i. ' r ~ ~ U' d : ~ a~ Cd~ . : B~ :g .~.- :.5~ .e~ 8 '.' ~~, 'a 3 ~ ~.E" ~ t-.o . ~ !l'o ; ~ v. s: o o s-s -.0'- ~ 0.- .5 'g 8!: o ~ S -u bJ) ~ CQ o ~ ..c: ""- ~.o ::i 0 0"'-' .c --- ca c:: u o .- en 0.. ...... :>-.. u - a.. 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'0= 0 ~ ~ ~'oo6 BSMM u 0 en (4 o u V 4.J :r..s sa V1~a~ 0\ 0\ CI1 t.I1 ~~<< . . .. e:.. -0. fa: ....., g. ... CJ ~.... 1-4 .~ ...r:;:: ~.... ~ . So .-'<<8":J . ('tl , ~_ ~ · .~C'l.... .. ~ t' '-.:t t'-- · ~ I.t\ O~~M:a.~ "'=U~*::J""" i j i . .. .. J,..:: ..... o -;t 9 4.) :0 cu c =' . a. U. ...... ......,.: . :9 . .. i ~ en ~ ~ e E 0 :5 :5 0.. ... e E 0 c:: . . . . OJ} c "~ ;:I ("'I 0 v...c:: E- o 5 u c:: Q"<<J . _ L.... u e o .c:: ""0 .tJ .~ I....!- c..u e rJ =,.t:: E ~ .- ::s :;j O-t E E . . . - ~ ...,. .... Housing Options for Seattle Residents with Low and Moderate ,Income The next page illustrates what is ~ffordable to the various income levels. There is a gap between what working people can~'eam on, the Island and the cost housing available. ' While generated for Seattle for 1997, the -next page applies to income levels appropriate for Bainbridge Island in 1998. Housing Trust Fund 90-Day Committee Report to the Mayor Page 29 How much funding is needed per year to be effective'? , The following are exalJ'lples of po.ssi~le funding scenarios that could be considered upon implementation of the Housing Trust Fund. For 50 units per year: A combination of $10,000 and $5,000 loans o~ grants. The variation of the loan/grant from 50% to 1000/0 is meant to reflect the possible variation in need per households served. . Down payment Program 25 loans/grants reserved for up to $19,000 (maximum amount) -OR- 13 loans/grants @ 100% and . 12 loans/grants @ 50% Subtotals Scenario 1 Scenario 2 $250,000 $130,000 $60,000 $250,000 $190,000 Rehabilitation Program 25 loans/grants reserved for up to $5,000 (maximum amouqt) -OR- 13 l~ans/grants @ 100% and 12 loans/grants @ 50% Subtotals $125,000 Grand Total $375,000 $65,000 $30,000 $95,000 $285,000 .$125,000 The funding needed to serve 50 households per year with a down payment and rehabilitation loan/grant program could be in the range. of $285,000 to $375,000. Housing Trust Fund 90-Day Committee Report to the Mayor Page 28 Provides affordable hous~~g in an area with few'existing affordable opportunities for Very Low Income' Provides affordable housing in an area with few existing affordable opportunities for Extremely Low Income ' _ Provides affordable housing to several income levels within a single development for Very Low Income Provides affordable housing to several income levels within a single development for Extremely Low Income Compatibility with neighborhood for Very Low' Income Compatibility with neighborhood for Extremely Low Income Provides home ownership opportunities for Very Low Income Provides home ownership opportunities for Extremely Low Income Demonstrates high degree of leverage of other funding sources for Extremely Low Income Grant funding for Extremely Low Income Bridge funding for Extremely Low Income Preserves existing affordable housing for Extremely Low Income Makes existing housing more affordable for Extremely Low Income Recognizes existing housing need for Extremely Low Income Promotes mixed~income housing for Extremely Low Income Provides rental opportunities for Middle Income Provides education concerning affordable housing for Extremely Low Income Score of 9 Provides a continuum of housing for Extremely Low Income Score of 8 Meet a CP Goal for Very LC?w Income Proximity to transportation for Very Low Income . Long-term loa~' funding for Extremely Low Income Score of7 Down payment assistance to income qualified Very Low Income Down payment assistance to income qualified Extremely Low Income Score of 6 EnyironmentaUy friendly for Very Low Income Environmentally friendly for Extremely Low Income Score of 5 Ease in monitoring Extremely ~ow'Income Housing Trust Fund 90-Day Committee Report to the Mayor Page 27 Provides education concerning affordable housing for Low Income Provides affordable housing in an area with few ,exi,stin~ affordable opportunities for Low Income Provides ~ffordable housing to several income levels within a single deveJopment for Low lncom'e Compatibility with neighborhood for Low Income Provides home ownership opportunities for Low Income Demonstrates high degree of leverage of other funding s.o\lrces for Low Income Grant funding for Low Income Bridge funding for Low Income Preserves existing affordable housing for Low Income Preserves existing affordable-housing for Very Low Income Makes 'existing housing ~ore affordable for Low Income Makes existing housing' more affordable for Very Low Income Recognizes existing housing need for Low Income Recognizes existing housing need for Very Low Income Promotes mixed-income housing for Low Income Promotes mixed-income housing for Very Low Income Environmentally friendly for Middle Income Score of 28 Down payment assistance to income qualified Middle Income Score of 27 , Provides a continuum of housing for Low Income Provides a continuum of housing for Very Low Income Score of 25 Ease in monitoring for Moderate Income Sco-re of 24 Meet a CP Goal for Low Income Proximity to transportation for Low Income, Long-term loan funding for Low Income Long-term loan funding for Very Low Income Meet a CP Goal for Extremely Low Income Score of 21 Down payment assistance to income qualified Low Income Score of 20 Ease in monitoring for Middle Income Provide rental opportunities for Moderate Income Score of 18 Environmentally friendly for Moderate Income Environmentally friendly. for Moderate Income Score of 15 Ease in monitoring Low Income Ease in monitoring Very Low Income Score of 10 Creates permanently affordable housing for 30 years for Very Low Income Creates permanently affordable housing for 30 years for Extremely Low Income Proximity to transportation for Extremely Low Income Provides education concerning affordable housing for Very Low Income Housing Trust Fund 90.0ay Committee Report to the Mayor Page 26 Ranked Housing Trust Fund Criteria Hi1!hest Priority (Score of 50) Creates permanently affordable housing for 30 years for Moderate Income Provides educatiQn c'onceming affordable housing for Moderate Income Provides affordable housing in an area with few existing affordable opportunities for'Moderate Income Provides affordable housing to several income levels within a single development for Moderate Income Compatibility with neighborhood for Moderate Income' Provides home ownership opportunities for Moderate Income Provides rental opportuniti~s for Extreme Low Income Demonstrate high degree of leverage of other funding sources for Moderate Income Grant funding for Moderate Income Bridge funding for Moderate Income PreserveS existing affordable housing for Moderate Income Makes existing housing more affordable for Moderate Income Recognizes existing housing need for Moderate Income Promotes mixed-income housing for Moderate I~come Score of 45 Provide continuum of housing for Moderate Income Score of 40 Meet a CP .Goal for Moderate Income Creates permanently affordable"housi.ng for 30 years for Middle Income Proximity to transportation for Moderate Income Provides education concerning affordable housing Middle Income Provides affordable housing in an area with few existing affordable opportunities Middle Income Provides affordable housing to several income levels within a single development Middle Income Compatibility with neighborhood Middle Income Provides home ownership opportunities for Middle Income . Provides rental opportunities for Low Income Preserves existing affordable housing for Middle Income Mak~s existing housing more affordable for Middle Income Recognizes existing housing need for Middle Income , Promotes mixed-income housing for Middle Income Pro.vides rental opportunities for Very Low Income Demonstrates high degree of leverage of other funding sources for Middle Income Grant funding for Middle Income Bridge funding for Middle Income Long-term loan funding for Moderate Income Score of 36 Provides a continuum of housing for Middle Income ;' Score of 35 - Do~n payment assistance to income qualified Moderate Income Score of 32 Meet a CP Goal for Middle Income Proximity to transportation for Middie Income Long-term loan funding for Middle Income Score of 30 Creates permanently affordable housing for 30 years for Low Income Housing Trust Fund 90-Day Committee Report to the Mayor Page 25