Title
Local Government Contribution to Gainesville Housing Authority for an Affordable Housing Project (B)
This item is a request to the City Commission to approve the Gainesville Housing Authority’s request for a local government contribution, as required by the Florida Housing Finance Corporation Universal Cycle Tax Credit Program, to develop an affordable housing project.
Explanation
This item supports City Commission Strategic Initiative 6.1: Ensure the quality and broad distribution of affordable housing throughout the City.
At the September 3, 2015 City Commission Meeting, the Gainesville Housing Authority (GHA) requested that the City provide a local contribution of $37,500 to allow the GHA to apply to the Florida Housing Finance Corporation (FHFC) Universal Cycle Tax Credits Program (File Number: 150288). At that meeting, the City Commission approved the GHA’s funding request in concept; and directed staff to come back with a recommendation and an identified funding source for the affordable housing project.
The Universal Cycle Tax Credit Program (Program) provides for-profit and nonprofit organizations with a dollar-for-dollar reduction in federal tax liability in exchange for the acquisition and substantial rehabilitation, substantial rehabilitation, or new construction of low and very low income rental housing units. Since these tax credits can be worth millions of dollars, receiving this funding can determine whether or not an affordable housing project is developed in cities and counties across the State of Florida. The FHFC uses a competitive application system to determine which projects are awarded the tax credits to a housing project. Part of that system awards points to projects that meet certain criteria as established by the FHFC. Those criteria include affordability, sustainability, and serving an identified housing need.
The use of tax credits subsidizes the cost of developing housing units, thereby producing decent, safe, and affordable housing available to low-income households. One of the criteria the FHFC reviews is Local Government Contribution. Typically, a larger local government contribution enables FHFC to award more points to the project. However, to be eligible to be considered for Tax Credits, each project must receive a written commitment for a minimum local government contribution. The minimum contribution varies depending on the size of the county where the project is located. For Small/Medium counties similar to Alachua County, the minimum local government contribution is $37,500. While this is a small contribution, compared to the overall cost of a project, it demonstrates the local government’s commitment to providing affordable housing. To maximize points for the project, a local funding contribution must be provided in the form of a grant. If the local government contribution is awarded in the form of a loan (deferred and/or repayable), the funding will be discounted using the FHFC’s net present value calculation, which would then require the City to provide a much larger local government contribution to the project.
The GHA is proposing to redevelop Woodland Park, which was built in the 1960s and currently has 170 residential units. Located at 1900 SE 4th Street, the proposed project is to demolish the existing buildings and construct approximately 300 new affordable residential units, to be built in three phases. The first two phases consist of multiple-family rental apartments (two- and three-stories high) and 5,200 square feet for non-residential uses. The third phase consists of affordable two-story townhomes reserved for owner-occupants. The new community will include a clubhouse with a fitness facility and a computer lab. The GHA has applied to the City of Gainesville for Master Plan Development Plan approval, and has notified the City that they will apply to the FHFC for Tax Credits to develop an affordable housing project in Gainesville, if the City will commit to provide a local government contribution (Attachment A).
As part of this process, GHA will be required to complete a housing project application for review and evaluation by staff, along with presenting its proposal to the SHIP Affordable Housing Advisory Committee (AHAC) to receive a funding recommendation for their housing project. Thereafter, the GHA will submit their application to FHFC for consideration of tax credit funding for their housing project. Should the GHA’s housing project be selected by the FHFC to receive tax credit funding, staff recommends that the City provide a minimum local contribution of $37,500 from the general fund revenue currently reserved in the City’s Infill Housing Program.
The development of an affordable housing project would benefit the City by addressing an identified affordable housing need, creating quality housing, creating jobs and increasing the value and tax base of the property.
Fiscal Note
On January 8, 2007, the City and Santa Fe College (SFC) formed a partnership to build a new affordable infill home. Through that partnership, the City Commission approved a $46,500 grant to the Charles R. Perry Construction Institute at Santa Fe College to build the new home. In mid-2009, SFC and the City invited Alachua Habitat for Humanity, Inc. (Habitat) into the partnership as the general contractor to complete the construction of the new home, which was built onsite at the Charles R. Perry Construction Institute. On April 21, 2011, the City Commission authorized the donation of one parcel of City-owned land (Tax Parcel #15995-043-000, 2404 SE 13th Street) to Habitat to relocate the new home to the site and sell it to a low-income, first-time homebuyer to complete the project. As part of the partnership with SFC and Habitat, the City’s $46,500 grant was returned to the City and approved by the City Commission to be reserved in the General Fund for future Infill Housing Program projects. The $46,500 is currently available in the General Fund Infill Housing Program account and will be utilized only if the FHFC awards tax credits to an affordable housing project.
Recommendation
The City Commission: 1) approve a local government contribution to the Gainesville Housing Authority for $37,500 from the City’s Infill Housing Program; and 2) authorize the City Manager or his designee to execute all necessary documents to provide a grant commitment to the Gainesville Housing Authority, including other program documents required by the City and Florida Housing Finance Corporation related to the approval and completion of the housing project, subject to approval by the City Attorney as to form and legality.