HACSA M E M O R A N D U M TO: HACSA Board of Commissioners FROM: Steve Ochs, Real Estate Development Director AGENDA ITEM TITLE: DISCUSSION/ Richardson Bridge Rehabilitation briefing AGENDA DATE: June 21st, 2016

I. ISSUE

The Richardson Bridge Apartments are part of the Rental Assistance Demonstration (RAD) conversion program and need rehabilitation work which require that Housing and Community Services Agency of Lane County (HACSA) compete for 9 percent tax credit allocation through Oregon Housing and Community Services (OHCS).

II. DISCUSSION

A. Background HACSA intends to apply for Oregon Housing and Community Services Department (OHCS) Low-income Housing Tax Credits and other financial subsidies necessary to rehabilitate the Richardson Bridge Apartments. The Richardson Bridge Apartments which were built in 1992 are located at 1210 Acorn Park Drive. The project and consists of nine (9) buildings total, including eight (8) two-story residential apartments and one (1) single story community center. In the past few years HACSA has reinforced its Asset Management Team by hiring an Asset Manager, Beth Gyde who is assisted by the Capital Projects Manager, Kurt von der Ehe and his team. This group has developed monitoring tools to measure asset performance and is continuously assessing the physical and financial condition of HACSA’s portfolio. As part of this assessment, an envelope study was conducted 2015 that uncovered extensive water damage and the need for rehabilitation work. The rehabilitation will include exterior envelope work, some interior work and may include landscaping. PIVOT Architecture has been selected as the architect and Meili Construction Company was selected as Construction Manager General Contractor CM/GC.

B. Analysis

Need for 9% Competitive Tax Credits

HACSA staff modeled various financing scenarios to rehabilitate Richardson Bridge. The 9% tax credit model was by far the most feasible of the possible options. If successful it would require little to no gap financing by HACS, while the non-competitive 4% tax credit scenario and other scenarios would require from 1.6 to 3.2 million dollars of HACSA money. In addition, the RAD program requires that projects pursuing 9% tax credits do so in the next available funding round. There is a dire need for affordable housing in the community and several other local affordable housing providers are also pursuing competitive tax credit financing this year. St.Vincent de Paul is building affordable housing in downtown Springfield and Cornerstone is pursuing financing for an affordable housing project in the River Road area of Eugene. The Richardson Bridge preservation project may not compete directly with these new projects as this project will likely be pursuing money that is set aside by Oregon Housing and Community Services (OHCS) specifically for preservation and is not available for new construction. It could compete with Ya Po Ah Terrace which is another preservation project in Eugene. Ya Po Ah Terrace is a 222 unit senior living facility originally built with a HUD loan that needs rehabilitation and refinancing but it is not certain if the project will pursue competitive tax credits in this round. Historically HACSA has worked with other local affordable housing providers to minimize local competition for competitive tax credits. In this instance it appears unavoidable given the dire preservation needs HACSA currently faces and the need to meet RAD requirements. Completion of this first phase of this RAD conversion will allow the sale of 12 scattered site homes. HACSA can then move on to the next phase of the RAD conversion and sale of 100 homes which will free up approximately 18 million dollars that can be used for the preservation of HACSA’s housing portfolio.

III. Next Steps:

The Notice of Funding Availability (NOFA) for the 9% tax credits is expected to be released in early July with the application due in September. Tax Credit allocations are expected to occur in November or December of 2016. HACSA staff will come to the board with an order in July asking for authorization to pursue tax credits for this project.

The “Original” Tax Credit Project

Richardson Bridge

Building Envelope Condition Assessment • Assessment Report completed April 30, 2015 by Structural

Waterproofing Consultants.

• Capital Needs Assessment in progress

Richardson Bridge Rehab

• Recommended structure: 9% LIHTC, with modest

permanent loan

• Team: PIVOT Architecture and Meili Construction

Financing Program9% LIHTC with

substantial renovation

4% LIHTC with

substantial renovation

No LIHTC with

substantial renovation

Development Revenue Sources

Tax Credit Equity $4,050,000 $2,275,000 $0

Permanent Loan $350,000 $350,000 $350,000

Seller Financing $2,275,000 $2,275,000 $0

Sponsor Subordinate Financing $0 $0 $0

Soft Funding $0 $0 $0

Deferred Developer Fee $360,000 $205,000

Gap Financing $0 $2,135,000 $3,275,000

$7,035,000 $7,240,000 $3,625,000

MULTI-FAMILY FINANCIAL REPOSITIONING ANALYSIS SUMMARY

Richardson Bridge Apartments

Other community projects possibly seeking

competitive tax credit funding.

New Construction

• St. Vincent de Paul and Mainstream Housing – Main on

Main in Downtown Springfield

• Cornerstone Community Housing Delta Court Phase II

Development – River Road area

Preservation

• Ya-Po-Ah Terrace Rehabilitation – 222 Senior Apartments

Preliminary Design

PIVOT Architecture and Meili Construction are providing

initial design work and construction estimates.

Preliminary Design

HACSA – Richardson Bridge - RAD

• Convert Public Housing rent subsidy into Section 8 rental subsidy and attach these subsidies to 112 units of similar bedroom size. Full relocation for current residents and right to return to new/rehabilitated units

• Sale of 12 units converted into Richardson Bridge

• Next phase of multi-phase application will allow sale of remaining units which which will free up approximately 18 million dollars to be put towards affordable housing preservation.