Transcript Suns - Ann Arbor, Michigan

Housing Commission
FY 13/14 Annual Plan & RAD
WWW.hud.gov/RAD
City of Ann Arbor February 11, 2013
Jennifer Hall
Executive Director
Ann Arbor Housing Commission
[email protected]
734 794-6721
Agenda
• Recent AAHC Improvements
• AAHC Funding Challenges
• HUD funding solution through the Rental
Assistance Demonstration (RAD) Program
• Annual Plan
• Family Self Sufficiency program
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Improvements in 2012
• Unit Turns Maintenance/New Occupant
• Previously 190+ days average to turn & occupy
• Currently 21 day average to turn
• Currently 45 days average to turn & occupy
• Occupancy
• Currently 99% (1-5 vacant units)
• Previously 95% (12 – 20 vacant units)
• Hired Facility and Maintenance Manager
• Received Family Self Sufficiency Grant
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Policies and Procedures
• Hired Consultant
• Every policy and procedure for public housing and voucher
program reviewed and revised
• Ensure compliance with HUD, Fair Housing, landlord/tenant
laws etc.
• Maximize efficiency and standardization
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Updated Lease
Created Preventive Maintenance Plan
Updated Maintenance Policy
Working on Tenant and Staff Manuals for Public
Housing Units
• Working on Disaster Response and Emergency
Response Plan
Technology
• Implemented Mobile Maintenance
• Maintenance Techs use mobile devices to access
work orders and enter completions
• Implemented On-line Waitlist for Vouchers
• Open for 48 hours
• Over 15,000 applications
• Pulled 500 names by random lottery to be on the
waitlist
• Laptops for public housing management staff so
that they can hold office hours at remote sites
• Working on option of on-line payments for
tenants and electronic payments for vendors
Positive Impact
• No Longer in Troubled Status
• REAC Physical Inspection Score
• Increased score from a 78 to a 81 on the East side
• Increased score from a 64 to a 86 on the West side
• Eligible for new HUD grants
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Maintenance
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Duct cleaning all sites
Gutters cleaned and fixed
Retaining walls and landscaping
Sidewalk grinding and concrete replacement
Fire Stops above stoves to prevent stove fires
Footing drain disconnects
Roof replacement
Marmoleum flooring (similar to linoleum)
Tuck pointing (brick exterior of buildings)
Jetting sewer lines
Boiler and A/C maintenance
Replace Carpet
with Marmoleum
Baker Lounge
Tenants voted for color scheme
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Replace Carpets
with Marmoleum
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Installed in 2012/2013
Funding through HUD Capital Funds
$96,000 all common areas at Baker and Miller
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Replaced Asphalt Roof with Steel
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New Steel Roof installed in 2013
Funding provided by the Downtown Development Authority
Initial bid $246,000. Extensive rafter damage increased cost to $305,000
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Green & Energy Efficiency
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LED and photocell exterior lights
Energy Star appliances
Water sense bath fixtures and toilets
Wrapping duct work and water pipes
DTE direct install program for units
• CFL lighting, aerators and showerheads
• DTE rebate program
• Common area energy improvements
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Low VOC paint
Tank-less water heater (pilot) at N. Maple
Demand circulating hot water pump
Boiler control valve to sequence boilers at Miller
Started insulating attic spaces
Started replacing windows
Additional Needs
• Air Conditioning all units
• Health as well as security ($300,000 - $375,000)
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Roofs and Windows
Security Cameras ($200,000 - $300,000)
Security Guards ($80,000 - $300,000/year)
Energy Efficiency ($900,000 +)
Some sites need to be demolished and rebuilt
• Age, functionally obsolete, flooding
Two Funding Problems
• Annual Operating Subsidy
• Maintenance
• Staffing
• Capital Re-investment
• Replacing major systems like roof, furnaces etc.
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Federal Funding
• Historical decline in Congressional support
for HUD
• 1976 HUD’s budget was $86.8 billion
• 2012 HUD’s budget was $41.7 billion
• HUD losing 10,000-15,000 public housing
units/year due to disrepair requiring
demolition
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AAHC Capital Needs
• National HUD study
• Immediate capital repair needs in excess of $25.6B
across HUD public housing portfolio, or
$23,365/unit
• Capital Accrual 20–year projection of $82,125/unit
• AAHC Capital Needs Assessment
• A 2009 AAHC Capital Needs Assessment indicated
$40,337/unit in capital needs over next 15 years
• At current HUD rates, AAHC will get $18,000/unit
• Which is $22,000/unit shortfall in capital repair funding
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Decreased Funding Public
Housing
• Operating Fees (rent subsidy)
• In 2012 HUD reimbursed the AAHC at 95% of the
operating fees owed
• $62,700 less than owed
• In 2013 HUD is reimbursing the AAHC at 81%
due to sequestration
• Estimated at $262,000 less than owed
• Capital Funds (building improvements)
• 2010 Capital Funding from HUD $557,000
• 2012 Capital Funding $440,478
• 2013 Capital Funding TBD (sequestration)
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Three Options
to Fund AAHC Properties
1. No Change
Negative impact on units, tenants & neighborhood due
to lack of funding, continued deterioration of units
2. City of Ann Arbor provide annual gap funding
Cover the gap between HUD funding and shortfall
Approximately $500,000/year for capital needs
If Sequestration permanent, much greater problem
3. Convert Public Housing to Project-Based
Vouchers with private funding reinvestment
Immediate rehabilitation of all properties
Long-term operating subsidy from different HUD
program that has more stable funding by Congress
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Rental Assistance Demonstration
(RAD)
HUD’s goal is to convert 60,000 public
housing units to Project Based
Vouchers
• NEW rent subsidy with vouchers
(Operations)
• NEW access to capital funding
• Reinvest in physical structures
• Leverage private capital to preserve assets
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How RAD rent/operating subsidy will be determined
Sample Public Housing Conversion
Per Unit Monthly (PUM)
$900
$800
$700
$600
Operating Fund
$330
Housing
Assistance
Payment
$474
$500
$400
Capital Fund
$144
$792
$300
$200
$100
Tenant
Payment $318
Tenant
Payment $318
Pre-Conversion
Post-Conversion
Public Housing
Voucher
At conversion,
PHAs will
convert
funding to a
Section 8 rent
subsidy (HAP)
$-
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AAHC RAD Rents
• First year limited to current per unit funding
• Annually re-evaluated by HUD and increased
(based on operating adjustment factor)
• Will never be less than first year
• No longer subject to public housing decreases
Bedrooms
AAHC EAST
AAHC WEST
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$466
$470
2
$567
$572
3
$713
$719
4
$734
$741
5
$844
$852
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Rehabilitation
• Physical Condition Assessment must be completed
• 20 year schedule
• all replacement costs in replacement reserve
• Rehab budget determined by architect/engineer and
actual bid
• Minimum 10% rehab contingency
• Market competitive upgrades (a/c) must be included
• Must use energy efficient products as finances allow
• Must use general contractor
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Pre-Development Work
• Issued Request for Proposal
• Co-Developer and Development Consultants Selected
• Surveys
• Environmental Reviews
• Radon, Lead, Asbestos
• Physical Needs Assessment
• Energy Audit
• Title Search
• Appraisals
• Architectural Analysis and Scope of Work
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Development Team
• Dykema Gossett
• Legal Counsel
• Recap Real Estate Advisors
• RAD Consultant
• Avalon Housing
• Supportive Housing Consultant
• Norstar Development
• Co-developer
• O’Brien Construction
• General Contractor
• Mitchell and Mouat
• Architect
• Equity Investor/Equity Partner
• TBD
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How will Construction be financed?
• Equity from Low Income Housing Tax Credits
• Grants
HOME
Community Development Block Grant
Federal Home Loan Bank
AAHTF
DDA
Private Foundations
MSHDA Community Development Funds
Corporation for Supportive Housing
• Debt
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Low Income Housing Tax Credits
(LIHTC)
• Created in 1986 pursuant to the Internal
Revenue Code Section 42
• Incentivize private sector to invest in housing
• Single largest funding source for affordable
rental housing development
• Tax Credits allocated to States
• Developers compete for 9% tax credits
• Developer sells tax credits to private sector
• Creates Cash (Equity) for affordable property
• 10 years of tax credits to Equity Investor
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LIHTC Continued
• Credit is a dollar for dollar credit -10 years
• Compliance Period of Affordability is
minimally 15 years under Section 42
• Extended Low-Income Use Period can be
greater time period … up to 99 years
• Limited Partner or Equity Investor will remain
partner for that initial compliance period
• Governed by a MSHDA Regulatory
Agreement – a recorded document
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Legal Structure
• IRS requires Equity Investor to be part of the
ownership structure
• known as equity limited partner or equity member
• Create a limited partnership or limited liability
company with developer/owner
• known as general partner or co-general partners/ comembers
• Must be single purpose entity
• Purpose is to utilize tax credits to invest in a specific
property (or group of properties)
• No cross collateralization & liability with other
properties/businesses
• Under RAD, HUDrequires permanent affordability
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How does current structure work?
City of Ann Arbor
d
e
e
d
AAHC
HUD
funding
& regs
P
r
o
p
e
r
t
y
m
a
n
a
g
e
r
Public Housing
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How will new structure work?
City of Ann Arbor
AAHC
Co-General Partner/
Co-Developer
HUD
funds &
regs
Affordable
Housing
Nonprofit
General Partner/
Managing Partner
Equity Partner/
Limited Partner
Limited Dividend Housing
Association, LP or LLC
15 year limited partnership
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Phase I Properties
• Convert under RAD and rehabilitate using
Low Income Housing Tax Credits (LIHTC)
if awarded in December 2013
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Baker Commons
Miller Manor
Green/Baxter
Hikone
S. Maple
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Phase I Properties
• Convert under RAD and rehabilitate using
existing AAHC funds in 2014
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Mallets Creek
Hillside Manor
S. Seventh
Upper Platt (Colonial)
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Phase I Properties
• De minimis or Section 18 disposition
• Evelyn Court
• one 3-bedroom single family home
• W. Washington
• 1 bedroom units - duplex
• Oakwood
• three 5-bedroom single family homes
Continuing analysis on whether to dispose of by selling or
converting to project based vouchers using AAHC
existing vouchers, not RAD vouchers
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Phase II Properties
• Demolition and new construction LIHTC
• N. Maple Estates and Duplexes
• Lower Platt
• Evaluating whether demolition and new
construction or rehabilitation LIHTC
• Broadway
• White/State/Henry
LIHTC application in 2014
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Impact
• Reinvestment in properties
• Increased energy efficiency
• Remedy structural problems
• Higher quality living conditions for residents
• $25 - $45 Million economic impact
• Construction, professional services, tenant jobs
• Diversifies & Stabilizes AAHC revenue
• More stable source of rent (operating) subsidy
• AAHC staff continue to manage properties 34
Impact on Tenants
• Improved units
• AAHC pays for any short-term or long-term
relocation if needed to fix up unit
• Lower utility costs (unless rates increase
significantly)
• Tenants still pay 30% of income on rent
• Still permanently affordable, cant turn into
market rate units
Impact on Tenants
• AAHC cannot re-screen tenants, must allow
current tenants who are compliant with
lease to stay in units
• Public Housing type grievance policies
which are more favorable to tenants
• Continue to receive services
• Peace, CSTS, ROSS, CAN etc.
• Can continue to have Resident Councils
• $25/unit stipend if follow HUD rules
PBV – Project Based Vouchers
• Tenant can voluntarily request a tenantbased voucher after 1 year of residency
• 100% of units will be designated as
receiving services
• HQS inspections – focus on inside of units
• Termination notification consistent with
public housing requirements
Next Steps
• Feasibility Analysis of every property
• Phase I projects - Scope of work
• Phase II - Rehab or demo & new construction
• Resident Meetings
• Council approval of PILOT
• Council approval of a Resolution to
transfer the properties to AAHC, with
contingencies
• Apply for financing
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Examples of Norstar, O’Brien, and
Avalon Affordable Housing Projects
Partnerships with Public Housing
Authority & non-profits using
Low Income Housing Tax Credits
Carrot Way
Apartments
30 units & Community Center
$5.5 million Total Cost
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Tax credit syndication: Great Lakes Capital Fund, limited partner equity
MSHDA HOME Funds
City of Ann Arbor HOME Funds
Religious Action for Affordable Housing
Federal Home Loan Bank Affordable Housing Program
General Partner Equity
 Avalon Housing Developer, Owner, Property Manager
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Arbordale
Apartments
39 units
$4.6 million Total Cost
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Tax credit syndication: National Equity Fund, limited partner
MSHDA HOME Funds
City of Ann Arbor HOME Funds
Ann Arbor Housing Trust Funds
General Partner Equity
Federal Home Loan Bank Affordable Housing Program
Washtenaw County General Funds
 Avalon Housing Developer, Owner, Property Manager
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BEFORE: Herman Gardens
Public Housing – Detroit MI
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AFTER:
Garden View
Estates
490 Rental Units
$109.5 million Total Cost
 Tax credit syndication: Great Lakes Capital Fund & Bank of America,
limited partner equity
 HUD Hope VI Funds
 Neighborhood Stabilization Funds
 MSHDA Tax Exempt Loan
 Brownfield Tax Credits
 MSHDA HOME loan
 NORSTAR Developer hired by Detroit Public Housing Commission
 O’Brien Construction
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BEFORE: 1630 Dewey Ave –
Rochester NY
Former Dry Cleaning Factory – view from the front
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AFTER:
1630 Dewey
80 Rental Units
$16 million Total Cost
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Tax credit syndication: Goldman Sachs, limited partner equity
NYS Homes and Community Renewal Urban Initiative
NYS Housing Trust Fund Corporation
NYS Homeless Housing Assistance Program
City of Rochester HOME Funds
HUD Continuum of Care Grant
Federal Home Loan Bank
JP Morgan Chase Bank
 NORSTAR Developer hired by Common Ground Nonprofit
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Risks/FAQ’s
• Unable to secure capital funds to make project work
• Continues as public housing instead of converting to
Project Based Vouchers
• Cost of pre-development activities absorbed by AAHC
• Co-developer and AAHC disagree on …
• Master Developer Agreement executed regarding roles
& responsibilities
• Equity Partner wants to remove AAHC from
partnership
• AAHC cannot be removed unless egregiously fail to
perform per contract
• Same as current situation with HUD. HUD can remove
if egregiously fail to perform
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Risks/FAQ’s Continued
• Co-developer or Equity Partner want to convert to
market rate
• Cannot be done. HUD has regulatory agreement that
precedes all other agreements and financing. MSHDA
also has LIHTC regulatory agreement
• Construction costs exceed budget
• Use contingency, secure additional funds, change scope
of work, or costs paid for from developer fee
• Construction problems cause delay
• Norstar provides construction and LIHTC completion
guarantees
• Liquidated damages in general contractor agreement to
share in costs
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