RES 2008-25 HOUSING TRUST FUND POLICY PLAN-RESOLUTION NO. 2008-25
A RESOLUTION of the City of Bainbridge Island, Washington,
relating to adoption of a Housing Trust Fund Policy Plan to guide the
management, establishment of funding priorities, and administration
f the Housing Trust Fund outlined in Chapter 3.38 of the Bainbridge
Island Municipal Code to support the development and preservation
f affordable rdable housing in accordance with the City's Comprehensive
Plan
WHEREAS, the City of Bainbridge Island (the "City") adopted a Comprehensive
Plan on September 1, 1994, which establishes the long-range vision for the island and
identifies the important characteristics that the 'eom unity desires to retain, promote and
foster; and
WHEREAS, the City adopted an updated Comprehensive -Plan. on December 8,
2004; and
WHEREAS, the City's Comprehensive Plan, required . by the Growth
Management Act, includes a Housing Element that establishes goals and policies for the
provision of housing for the citizens and the City; and
WHEREAS, a 90 -Day ay Mayor's Committee recommended the framework for a
local source and use of funding for the City for Bainbridge Island Housing Trust Fund;
and
WHEREAS, it is in the public ihterrest t establish the' 'City of inridg Island
Housing Trust Fund for the promotion, retention, preservation and creation 6faffird4ble
housing as defined in BIMC 18.06.565 and for the accomplishment of other public
purposes as set out, in the Comprehensive Plan; and -
WHEREAS, the City Council established a new chapter of the Bainbridge Island
Municipal Code, Chapter 3.3 8, that establishes a special revenue fund to be designated as
the "Affordable Housing Fund"; and
WHEREAS, the Advisory Board outlined in BIMC. Chapter 3.38.050, and the
Housing Trust Fund Executive Committee, which consists ofvolunteers appointed by the
City to administer this sub -fund, jointly reviewed, the existing policy plan and completed
its review of the management, .t, funding priority and administration goals set forth therein;
and
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WHEREAS, this plan shall be officially lly designated the "Housing Trust Fund }
Policy Plan" to guide the City of Bainbridge Island's contribution to affordable housing
for the poor and infirm; noir, therefore
THE CI'T'Y COUNCIL of THE CITY of BAINBRIDGE ISLANDS
WASHINGTON, Ido ORDAIN, AS FOLLOWS:
Section 1. The Housing Trust Fund -Policy Plan is hereby added as the official policy
guide as follows;
"PURPOSE .AND MISSION OF THE CITY OF BAIN-BRIDGE ISLAND
HOUSING TRUST FUND
"The mission ofthe Housing Trust Fund is t ...encourage devel rn t of
moderate and lower income housing and to provide funding for income groups not
serviced by other funding sources currently available."
"...The targets of the Housing Trust. Fuad are those households on which the Island
depends upon ' s clerks,. teachers, public employees, wait staff, artists, crafts
people, skilled workers short, those people who make the Island run day to day
in an interesting and economically Friable ay."
Mayor's 1995 Housing Trust Fuad 90 Day Study,
Sources of Funding
The City of ainbridge Island -Housing Trust Fund ("B IHTF" is a funding source
o support the development of affordable housing within the City of Bainbridge
Island. There are three revenue sources that capitalize the EIHTF.
I. Private Contributions, Private donations are accepted from any individual,
organization.. or. group, ;
. city matching Funcs. The second source is a dollar for dollar match of the
private contributions made to the fHTF by the City of Bainbridge Island from
general funds,
. City Funds. A third source is the City of Bainbridge Island. The City of
Bainbridge Island shall work with the BMTF Executive Committee to help provide
stable finding. This will include, but not be limited to, payments of fee -in -lieu
related to the inclusive (inclusionary) housing ordinance and annual funding
requests in the budget. The City funds shall help the EIHTF to meet funding
targets as set by the EIHTF Executive Committee, which will help to ensure
regular funding oppor-tunnies.
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BIHTF 11aaeet
These are three agencies with roles in ' the financial decisions involving BIHTF
funds:
1. Health,.Housing. and Human Services Council "H IHS" ;
. BIHTF Executive Committee, supported by a Financial Advisor that i
appointed by the BIHTF and the .Mayor; and
. Bainbridge Island City Council.
H HS holds one iron -voting position on the Executive Committee.
The remainder of the Executive Committee is comprised of five to seven citizens
at -large. The Committee reviews the applications for funding. Their findings and
recommendations are submitted to the City Council for final approval. Should they
wish, the BIHTF -Executive Committee may utilize the services of a Financial
Advisor in rviwirrg any applications they deem necessary due to the complex
nature of the application or project. Additionally, the BIHTF Executive Committee
may convene, with the help of HHHS and City Staff, a Citizen Advisory Board
("CAB")to review any applications for additional community input.
The City Council is the final authority regarding the use of BIHTF funds.
In its first few years, the HTF conducted one open, competitive funding round each
year. Since the BIHTF Executive Committee determined that the HTF process
should be flexible to be able to respond quickly to certain requests for funding,
emergency requests may be made on an "as needed basis" throughout the year.
XiLiFiie Auuilant
The BIHTF provides assistance, to:
• Non-profit organizations
_ 0 For-profit developers
0 Public housing authorities
0 Public development authorities
Partnerships of any combination of the above,
Use of Funds
BIHTF assistance may be used for:
•Acquisition of real property for affordable housing
Construction of affordable housing
Rehabilitation of existing structures to be used for affordable housing
Refinancing of existing loans.
Seed money to facilitate affordable housing projects, including but not limited to
due diligence and design.
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Benefit
The City's funds may be used only to assist projects benefiting households whose
incomes are at:or below % of median income as outlined in the BIMC 3.38.015 and
18.06.565. Eligible projects may include housing that is available t -households with
incomes above % of the median, However, the applicant must demonstrate that
the benefit resulting from'public f r'ds in the BIHTF is restricted to households with
incomes at or below % of the area median income. Notwithstanding this
restriction, private funds donated to the Housing Frust Fund -may be used to assist
households below middle income as defined in BfMC 3.38.015 and 18.06.565.
Form of Assistance (loan/rant)
Funds can be given to the applicant in the form of a grant, deferred loans or repaid
over time as amortized loans at attractive interest .rates. The type of assistance will
e deterrnin d by the applicant and evaluated by the criteria contained in this Plan.
The applicant requests the type -f assistance they believe will hest serve their
project. The final determination as to the type of assistance will be made by'the
City Council.
Policies
Consistency ith Bainbridge Island ousin feed /Goals
The City of Bainbridge Island housing goals, policies and objectives are set forth to its
Comprehensive Plan. Proposals are evaluated for consistency With these policies, In
addition, the .1998. Mayor's is 9 -day Committee recommended a long -terra objective
that funds be distributed proportionally between. several types of housing i.e., rental,
transitional, home ownership).
Ivey issues include;
Is the project consistent with local horsing goals and policies?
Has the community already taken some steps to help initiate. the: proposal, or
expressed support for the proposal?
Timeliness
Can the components of the project described in the- application, individually and
collectively, be delivered in an appropriate time frame? Is the applicant premature in
requesting funding
Key issues include:
• 'what are the time frames for commitment of funding sources?
0 hoes site control cover all the time frames'for funding commitment?
0 How soon will the project be ready to go
0 If the project is in the early stages of 'he development process, does making a
commitment now help the project in any way e.g., help to secure other
funding)?
Are there any warning flags that suggest possible delay? If s, have they been
accounted for, or could they adversely afflict the proposal?
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F Level of Affordai
S
The applicant Haut identify the income (expressed as a percentage of the Seattle IVDA
median income) of the intended tenants. Key issues to evaluate include:
• Are the tenants low-income?
• Are the proposed rents (including utilities) affordable to the proposed tenants?
• If applicable, have the proposed rents been compared to the existing rents in
the project?
• Has there been a comparison of proposed rents to average rents in the
project's local area?
Diml errt l to at^ ion
This section only applies to "existing" residential units, and new construction that
requires displacement of households. It also sloes not apply to vacant units. If existing
tenants are displaced or must be relocated, they may be eligible for financial
compensation.
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The key issues include.-
nclude.Will
Willtemporary or permanent displacement/relocation occur?
• Is there a reasonable' plan to address any potential displaacement relocation?
• Have all reasonable efforts been made to avoid/reduce
-
displacement relocation?
1. PRIORITIES
The following is a last of criteria -that c r`sh the priorities funding.
The criteria will be assigned a "weighting" value and be used in
conjunction with th o criteria for , to establish an era score
and ranking.
Creates permanently affordable housing, Le.:
' o Year Commitment or more
5
15 - 29 Year Commitment
.
Provides rental housing
(The lower the income served the higher the score) Up To
5
Provides home ownership opportunities Up To
.
Provides mixed -income housing to more than one income
level within a single development
(The lower the income the higher the score) Up To
.
Demonstrates a high 'd gr a of -leverage Of other funding sources
Less than 5% of overall budget requested:
5
' % to 10% of overall budget requested
' Greater than 10% of overall budget
.
Type of Funding Requested
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8.
9,
1.
11,
1 2.
13.
Bridge Loan
Amortized Loan
Grant
1
Hew well does this project preserve existing
Affordable lousing opportunities?
(The lower the income served the higher the score)
Up To 5
Makes existing housing more affordable
(The lower the income seared the higher the score)
Up To 5
Provides a continuum of housing i.e. shelter or
transitional housing, nursing homes, aging -in-place)
Up To 5
Duration of HTF Commitment
(The shorter the Period the higher the score)
Up To
Number r f Units Proposed
(The higher the number of units the higher the score)
Up To
Per Unit Amount of BIHTF Funds Requested
(The higher the amount, the lower the score)
Up To
Total Cost/ [.Unit
The higher the cost unit, the lower the score)
Up To
Maximum Points Achievable
65
11, FEASIBILITY
The following criteria will provide a basis for determining whether the pr jeet
and organization is capable of accomplishing establishedgoals in
reasonable time frame. The City's housing planner will assist the BIHTF
Executive Co4mittee in their evaluation of proposals using- the following
criteria.
A. Organization/Team (15 points maximum)
A successful project starts with a sponsor who is experienced and well
organized. when appropriate, the sponsor may pull in other pliers for the
team to Delp 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,,, the BIHTF Executive Committee is
more able to evaluate the potential success of the proposal.
Key issues include:
0 Are the key team members identified --- do they have the right experience?
0 Does the sponsor have experience developing projects ,like the proposal? Jf
not, has the sponsor brought in team members that have appropriate
experience?
* Is the a n- trueti n manager identified --- does she/he have: sufficient- -and
successful ul prior experience?
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0 For providing housing -related social services, are the agencies/individuals
identified, and do they have the appropriate skills?
0 Will the proposal have the potential to - increase the capacity of the sponsor
thou increasing the area's overall. organizational capacity to provide affordable
housing?
B. Budgets 0 points maximum
There are numerous elements to any project budget. The various elements of
the budgets are evaluated to determine whether the proponent -leas -carefully
considered all costs associated with the project such as reasonableness of
costs, timeliness and matching or leveraged funds.
1. Development Bud t(20 points maximum)
Applicants must provide detailed breakdowns of development cons.
The development budget will be evaluated and scored based upon criteria
such s:
Completeness - are all lira items addressed?
Ho any of the line items appear to stand out (too high or tee low)?
Are the overall per unit costs reasonable?
Are the BIHTF per unit costs reasonable?
How do the Costs compare with other projects with similar type work?
Are the BIHTF costs eligible for CIG fund use?
. Operations/ Support Services Bu (20 points maximum)
The purpose ofthis budget is to slow all the costs associated with the daily
operation and management of the project after it is completed, such as staff,
supplies, insurance, professional services, utilities, repairs, reserves and the
like.
Evaluation criteria. include:
0 Completeness - are all of the costs included, or are important items
missing?
Is the vacancy rate built into the rent income project appropriate? 4
0 Are there "rainy day" funds (operating reserves and replacement
reserves)`?
0 leo the costs provided appear reasonable?
Continuity - will the budget support maintenance and operations for
the life of the project?
Is the net operating income sufficient for the projected debt service?
Is there a positive cash flow e.g,, for projects with debt is there an
appropriate debt coverage ratio)?
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 sernin r , 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.
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Key issues to evaluate include:
0 Does the support services budget account for all services provided?
0 Are the funding sources for the support services realistic?
0 Is funding for support services potentially available on an ongoing
basis? If not, what plans does the sponsor have in the event a specific
funding source is lost?
. Fundi'm Sources Uses and Commitments (20 points maximum) .
Most projects begin with a series of cost estimates useful for conceptualizing
and preliminary review Yet before funds are actually committed to a project,
costs are verified. An appraisal, the Purchase and Sale Agreement, inspection
reports; bids and the like, give certainty to costs - arraonfidence that there
won't be any financial surprises down the road. To the extent confirming
information e.g., appraisal) is not provided with the application, conditions
will be included in the contract requiring the missing information be provided
prior to receiving local funds.
Key issues include;
0 Are the cost confirmations . current?
0 who performed the confirmations?
0 Ido the confirmations verify the proposed project?
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 ofthe funds --whether they have been approved r not) for
the project.
Key issues include;
0 foes the total of all sources equal the total of the development budget?
Does the ratio of BIHTF dollars to other dollars seem high/have other
potential sources of funding been reasonably assumed?
0 Are private funding sources included at a reasonable level?
0 Is it realistic to expect other public funding sources to commit at the
level indicated? a k
0 Does the schedule for the commitment of other funds seem -timely?
0 Is there too much dependence upon a single funding source?
C. Management flan (15 points maximum)
This section addresses management staff, tenant selection, tenant involvement
with management decision-making such as tenant councils, apartment
manager, etc., terms of occupancy, routine facility maintenance, and if
emergency or transitional housing) ghat are the support service provisions for
the proposal.
Key issues to be evaluated include:
Are the daily and overall management provisions clearly set forth and
sound?
Ido the provisions (including, if appropriate, the availability of services)
seem appropriate for the type of facility?
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If support services are included, how are they integrated into the
project?
Ido the tenants have reasonable opportunities for interaction with
management?
D. Site Control/Site Issues (10 points maximum)
Does the applicant have the "rights' to use the property as proposed? This
evaluation also includes the appropriateness of the site for the proposed use.
Key evaluation criteria include;
0 Is there formal site control e.g., ownership, binding option or purchase
agreement)?
• Does the agreement allow sufficient time for the project -to secure all
financing, permits, etc.`
• Is the proposed use allowed under local land use regulations - applicants
are required to provide information confirming that the proposed use i
allowed (letter from, etc.)?
• Is the site appropriate for the proposed use e.g., is there access t
necessary services for residents?
0 Potentially significant site constraints must be identified and addressed.
derwritir
Underwriting criteria establish the documentation and other relevant
information required to evaluate project feasibility and to ensure that funds are
not made available until certain conditions are met, therefore minimizing the
likelihood a project will not he completed.
Good underwriting can maximize the City's ability to protect its long-term
interests in the property such as maintaining affordability, sound property
maintenance, and ensure repayment or recapture of BI TS` funds. Finally,
underwriting criteria will determine in what fin funds will he made available
e.g., grant, amortized loan, or deferred loan). These underwriting criteria are
incorporated into the funding contract, the promissory note and/or regulatory
agreement.
Funds can be given to the applicant in the form of a grant, or repaid over time in
the form of an amortized or "'deferred" loam.
Ivey criteria include:
Does the project have enough cash flow initially t 'make e loan
repayments immediately?
0 Toes 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 operating income is greater
than a predetermined percentage of gross income)?
• would loan repayment affect affordability in the project?
Is a project incapable of repayment due to the income of the residents
(e.g,, transitional lousing, very low-income families, - r handicapped
individuals)?
Formal Agreements
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Legal agreements -(contracts, promissory note,- deeds of trust and regulatory
agreements) are used to formalize the financial relationship between the lender,
the City of Bainbridge Island,. and the recipient.
Ivey elements of these agreements include:
Contract:
• Lists conditions as described above) that must be met prior to releasing
funds e.g, other' fun ing commitments, permits, final budgets).
All fanding conditions must be met before funds are released.
• Any significant revision 'to the scope of work or budget must be
submitted for review and approval of the BIHTF Executive Committee.
• Establishes time frames in Which key steps must be completed or funding
reservation can be withdrawn unless an extension is approved by the
BfHTF Executive Committee.
0 Establishes timing/procedures- for drawing funds. In chat 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 an y BIHTF monies not expended or not used for
intended purposes.
0 Allows that percentage of total funds may be withheld until substantial
completion of funded activities.,
Upon final completion of funded activities, a final report shall be
submitted to the BIHTF Executive Committee within the calendar year
that demonstrates in text, pictures, and/or graphics how the project scope
has been carried out to completion.
Promissory Note:
0 Establishes any terms for reps ment of funds.
9 Secured by recorded deed of trust.
0 City can cure defaults on any "senior" loans.
• Subordinates City loan t "senior" loans (typically private loans).
• Funds made available as a non-recourse loan to applicant.
Regulatory Agreement:
• Recorded agreement, establishing the levels, duration and terms of
affordability.
• Specifies project's monitoring/reporting obligations.
• If an ownership project, establishes process for resale, and how to
calculate 'future affordable price,,'
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Section 2. If any section, sentence, clause or phrase of this resolution shall be held t
be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or
unconstltutio alit ' shall not affect the validity or constitutionality of any other section,
sentence, clause or phrase of this resolution.
PASSED by the City Council this 1 th day of September, 20.
APPROVED by the Mayor this 11"' day of September, 200 8.
Darlene Kordonowy, Mayor
ATTEST/AUTHENTICATE:
Rosalind D. Lassof, , City Merl
FILED WITH THE CITY CLERK: Se tem er' , 2008
PASSED BY THE CITY COUNCIL: September Io, Zoo
RESOLUTION NO.: 2008.25
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