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BAHT Meeting Minutes February 21 2018CITY OF BEVERLY PUBLIC MEETING MINUTES Board: Beverly Affordable Housing Trust Date: February 21, 2018 Location: Beverly City Hall, Conference Room "B" Members Present: Chair Aaron Clausen, Mayor Michael Cahill, Treasurer Bryant Ayles, Clerk Sue Gabriel, Richard Dinkin Others Present: Assistant Planning Director Darlene Wynne, City Clerk Wes Slate Andrew DeFranza, Harborlight Community Partners, Kristin Carlson, Harborlight Community Partners, George Binns, Assistant City Solicitor Eitan Goldberg Recorder: Donna Musumeci Adjournment The meeting was called to order at 2:13pm Slate of Officers Wes Slate swore in Michael Cahill, Richard Dinkin and Susan Gabriel as Trustees of the BART. Meeting Minutes: There were two sets of outstanding minutes. Ayles: Motion to approve the meeting minutes of October 25, 2017. Gabriel seconded. Motion carries (5 -0). Cahill: Motion to approve the meeting minute of November 29, 2017 with the following changes: Two items regarding guidelines; on criteria, change "top and bottom scores" to "high and low ". Change "Q &A " , to "FAQ ". Dinkin seconded. Motion carries (5 -0). Discussion on HOME Funds: Mayor Cahill asked if we know yet what the annual allocation of HOME funds is. Clausen says the allocation is $65,000 in HOME funds for Federal FY2018 and we don't know FY2019 yet, but can expect it to be the same. Clausen notes that we cannot access FY2017 funds, because at the end of the fiscal year they use it for any unallocated funds for a competitive round available for all communities. Mayor asks if we can access those funds in the future. Clausen will confirm if in the future we can put that money into the Housing Trust, but believes the City Cannot. Mayor asks about the disagreement as to whether the city owes the consortium from a penalty on a prior project, Star House. Clausen notes their claim is that if the project closes before the affordability is met, there is a recapture of the funds. The City Solicitor's office was able to negotiate with the overseeing entity repayment by the City of $37,500 back to the HOME fund. The Consortium requested a waiver of that payment, which HUD denied. The City believes there is information in that request that was overlooked. Clausen notes that if HUD does not accept the Beverly Affordable Housing Trust Fund Regular Meeting February 21, 2018 waiver, the City would be required to pay the $37,500. Clausen believes that it should be resolved. However, they'd he notes to the City building would not pay it from the Trust. by 2023. Letters of Intent Review: The Trust received three Letters of Intent (LOI): 1) 2 Hardy Street, (6 new units), Harborlight Community Partners, Inc., request $200K; 2) Rehabilitation of Cabot House, YMCA of the North Shore, Harbolight Community Partners, request $300K; and 3) Anchor Point, Sohier Road (new construction, 75 units), Harborlight Community Partners, request $300K. Mayor asks for a clarification regarding the number of homeless set -aside units will be in the first phase of the Anchor Point project. DeFranza notes that it would be a similar percentage of the entire project, so approximately 7 or 8 units to house homeless families in the first phase. Clausen asks about timeline. DeFranza describes where they are in the process, noting they will likely aim to submit in December 2018 with the expectation that they may not get funded. They would therefore resubmit in December 2019 and approved in the middle of 2020 and start construction in 2021. Mayor asks what happens if they get funded in 2018. DeFranza answers everything would advance by one year, so construction would start in 2019/20. He notes that HCP submitted a pre - application this past year for the YMCA project and were not invited to apply because the local funds were not secured. He expects the pre - application deadline will be December. He notes you have to be invited to submit the full application after the pre - application. Gabriel asks about the timing of the phases. DeFranza answers that the 2nd phase will be one year behind, so they'd hope to be building Phase 2 in 2022 and open by 2023. Clausen asks about the LOI for the YMCA. DeFranza notes that they have a small ownership stake in the YMCA Cabot House project and have helped to coordinate their applications. He states this project's pre - application was not successful and therefore will be on the same timeline as the Anchor Point project. Gabriel asks if it will hurt them to have two projects under review. It is challenging to have two projects in Beverly at the same time, as the state likes to spread the funds around, so usually will not do fund two. DeFranza says they will consider the merits of the project and the need for housing types, noting that these projects serve different populations. Mayor asks DeFranza to briefly explain the LOI projects. YMCA of the North Shore DeFranza describes the YMCA Cabot House project, noting that they will be retooling the 45 units to add kitchenettes and bathrooms and add 24 new units, for 69 total units that have been modernized. He notes that the financing will be four parts: existing capital rolled over for extended term of 30 years; new subordinate debt (trust money, CPA, HOME), significant money from the state; and new tax credits. 2 Beverly Affordable Housing Trust Fund Regular Meeting February 21, 2018 DeFranza notes that some of the units will be dedicated to residents served by the Department of Developmental Services (DDS), scattered among the units, and Northeast ARC will be the service provider. The residents are expected to be high- functioning to live in a larger setting versus a group home. HUD also provides vouchers for people with disabilities. The Mayor asks about the Area Median Income (AMI) that will be served. DeFranza notes they need the income to make the operating budget. For example, they can't take a unit at 30 percent unit and need an extra $200 a month so make it a 60 percent. But, they can manage to the budget by renting at different levels. Mayor asks him to explain how that works. He notes that if tenants bring vouchers and can cover the rental, you can't say no. The Mayor asked about today's percentage of vouchers. DeFranza didn't know the answer, but he said that in the 45 units today rent levels are lower than they have to be. Existing tenants will be grandfathered in at current rates, of $565; but as they leave, the rent can then be significantly higher. The required rent may be $950, though you don't have to charge that. Anchor Point, Sohier Road: DeFranza explains that Anchor Point is a two -phase deal, with 75 new family units, with approximately 15 allocated for families at risk of homelessness. There will also be a supportive housing environment to include a social worker, and other services for the common good, in particular for kids living there. There is also the possibility of the HCP personnel moving offices to this location. There will be two phases - Phase 1, will have 38 units with approximately 7 -8 units for families at risk of homelessness. De Franza discusses the financing and application schedule. This project will be driven by Low Income Housing Tax Credits, using the 9% credit which is the most competitive. It is the hardest stuff to get, but the most powerful. Will also have bank related debt and soft affordable housing money (e.g. Trust, HOME, etc.). Mayor asks about phasing and whether it will be two or one buildings. DeFranza notes that they may need two buildings that are connected due to the site conditions, but the phasing is more about the site rather than financing. DeFranza says there will be a 60% AMI tier, for a family of 4 that is about $60,000 per year, and a 30% AMI tier for the formerly homeless families, which is about $30,000 per year. The hope is that these 30% units will be supported with vouchers to stabilize their income. Mayor asks about the final number of bedrooms. DeFranza says it would be about 180 -190 bedrooms. Mayor asks if those would be phased in 2- and 3- bedrooms and how many are allocated to different incomes. DeFranza answers that they've anticipated everything is phased as ratios of entire project. DeFranza notes the second phase would have the same funding as the first phase and for all intents and purposes it will look like one project. Clausen notes that the City held a public meeting in January and had one attendee, Russ Queen from Family Promise. He notes that Family Promise did not submit an LOI, but they are doing some interesting things with primarily private funding to provide temporary housing to families. Mayor asks if they should be paired up with Habitat for Humanity. 3 Beverly Affordable Housing Trust Fund Regular Meeting February 21, 2018 Gabriel clarifies that there is currently $750,000 in the fund and asks when there might be additional funds. Wynne says the only other payment would be from Congress Street (the Ventron site), if that proj ect is constructed. She notes that proj ect is not likely now. Mayor says they should have made a request to the CPC by now. Gabriel would like to think of it in context of the other two. Clausen says that is fair and notes that the total request is $800,000, which is not far off. He adds that we could consider additional funds from CPC but notes that these projects are also going to CPC for funds separately. Gabriel asks, in the context of this application, it is important that funds come from the Trust and the CPC? Clausen asks if they can step back and hear more about the funding of this project, noting that the structure is very different. Dinkin discloses, whether mandatory or not, that in the past he has been a contributor to Harborlight Community Partners. Ayles asks if when these projects come online, is there a method of selection that is mandated by the state, local, or organization. DeFranza answers it is the distillation of multiple processes which helps to prioritize how things are reviewed. He said you could have a project that scores very well, but is a new application when compared to others that have been submitted for three years prior, so the new application is told to wait. Ayles clarifies he is asking about completed projects and reviewing applicants for vacancies. DeFranza says every project has to submit a tenant selection plan, which might include a local preference that is included in the application for the funding sources. It has to be approved by the state. You then run a lottery process and the list is set. When a vacancy arises, the next person on the list is selected. Anyone who applies after the list is made, goes to the back of the line — unless they have a specific preference (e.g. disability). DeFranza explains the nature of local preference. Dinkin notes a local preference makes a project much more sellable to the public. Funding Application Review: 2 Hardy Street, Beverly, MA — Harborlight Community Partners Mayor asks how they decided on the exact amount requested and how important is that to the whole. DeFranza indicates it is generally arbitrary, but it has to be an amount that exists and is large enough to be satisfactory to the state for leverage. He says the local is usually the last number you get to. DeFranza says it doesn't matter where the local money is coming from, they just care that there is a local commitment. He notes that because Hardy is so small and the financing is different, it is the most vulnerable to the dollar amounts. DeFranza explains that this project will utilize a separate state funding mechanism — the Community Supported Housing Initiative (CSHI), which is new; this is only the 2nd round. The fund is for smaller projects in communities under 200,000 people and projects under 20 units. DeFranza notes you can only get a maximum of $1M or $150K per unit, so the project in reality only allows for projects under 10 units. He said it is outside the normal funding round and there are no tax credits involved, but it is a small window available. The Hardy Street project is a natural fit — it is already permitted, the developer was willing to donate it, and it is the right size. 0 Beverly Affordable Housing Trust Fund Regular Meeting February 21, 2018 The application is due on March 28 th and they'd prefer to show the local commitment then, but at the latest by the May deadline. They are planning to ask for $900,000 in subordinate debt, 2- years of HOME fund allocation from the City (at $65K each), Trust funds, and CPA funds, as well as significant debt from MassHousing. They will also be asking the state for rental vouchers. If awarded funding in late July, could begin construction later this year and be opened sometime in spring of 2019. DeFranza explains the Hardy Street project involves 6 new units at the corner of Pleasant and Hardy Street downtown. He says the new construction will have some interesting environmental features and amenities, i.e. passive house, solar array, etc. Clausen clarified that it is because the CSHI program has a $1M limit that you see higher per unit requests for funds. DeFranza says as you do more units you would expect it to be less money per unit requested. He says a 6 -unit project would not otherwise work well without this state program. DeFranza explains that Beverly Crossing will donate the land and received a special permit from the Planning Board for 6 affordable unit credits, per the City's Inclusionary Ordinance, to be used later and on another location. The Mayor asks how that is quantified. Clausen clarifies that in this case, since there was already an approved market rate project, the credit was based on what was permitted. Wynne says there is no specific value to the units; the future units don't need to be worth a certain amount. The land was valued at $420K. Wynne notes the Planning Board was concerned about the affordable unit credits becoming commodities to be sold, therefore the Planning Board required that if these units were to be transferred to any other entity Beverly Crossing would need to return to the Planning Board. Mayor asks whether the project has been donated. DeFranza says it has not been donated yet. Wynne explains that the credit units are not available until when the building permit is pulled. Gabriel asks when they take ownership. Harborlight has a site control agreement (an "option agreement ") until late this year, which they can execute once the financing comes together. If they don't get financing, they would not accept the donation. Gabriel asks, of the 3 projects, is this the one that needs the most funding? DeFranza answers, yes. Dinkin asks if the option agreement is binding in the sense that a Purchase & Sale Agreement is binding. DeFranza says it is. Mayor says that he would be ready to make a motion, if others are ready. Clausen says he has some questions. He asks, this project require 6 vouchers? DeFranza says yes. Clausen says there could be HOME funds dedicated to this project, and notes there is also the competitive round funds that are available every year. He wonders if they might be able to apply to those and lower the need for local funds. DeFranza says that is possible, but they will probably apply in this competitive round for another project — creating some internal competition. He notes they have applied for funding from a federal source — but didn't think their chances were very good. 5 Beverly Affordable Housing Trust Fund Regular Meeting February 21, 2018 Clausen clarifies that what they need for the application is a letter of commitment from the Trust rather than an actual loan agreement. DeFranza agrees. Clausen clarifies that as long as an eligible project —HOME Consortium typically would approve a project. Mayor suggests that at next meeting, they should discuss next steps and whether the Trust should ask the CPC for control of affordable housing funds up to 10% or beyond. Gabriel clarifies that the Trust has control of $750,000 and doesn't include control of any CPA funds or HOME funds. She notes that the Mayor has some decision - making ability with the HOME funds. Clausen agrees and confirms that HCP will be seeking HOME funds for most future projects in addition to the Trust. He cautions about conflating those two funding sources. Ayles says that when you think of it as a per unit basis, the cost is about $155K per unit for all city costs, including the land value ($80K when not using the land value). He says this is the first application they've seen so he's not sure how it compares. The Board discussed whether or not to consider the value of the land donated ($420K) in the per unit calculation. Clausen argues that the benefit here is that the units provided by Beverly Crossing would have been at 60% or 80 %, and these units will be provided at a much deeper subsidy. Clausen asks if they would be willing to seek a local preference with DHCD as a condition of a commitment letter. DeFranza agrees. Clausen asks if they would be open to a condition that if additional cost saving measures or funding arises, that the City could recoup some of the funds, up to 50% of the commitment. Dinkin doesn't want to slow the process down much, but asked if the draft commitment letter could be circulated among the Board. Clausen suggests that the draft commitment letter can be drafted, including the affordable housing restriction, promissory note, and other required documents, could be assembled and reviewed and approved at a meeting early next month. Mayor asks if the other four members are comfortable with the application, as he is. Gabriel says she is comfortable. Ayles says he's still struggling with the issue of cost per unit and needs to think about it more. Gabriel says she thinks about it as, homeless individuals will get into a unit faster if they approve the money now. Dinkin says it's not the most efficient use of dollars, but it is real and he is willing to favor real over efficiency. Clausen says he is in favor because there has been a lot of interest in smaller scale housing in Beverly, particularly affordable units; it is transit - oriented; there is a quality partner; and it is using a unique funding source. Clausen proposes to draft a letter of commitment to consider and vote on at the next meeting. Wynne asks for the scoring to be completed and provided prior to the vote. Clausen suggests considering a 30 -year zero interest loan rather than a grant. Adiournment• Dinkin: Motion to adjourn at 3:55pm. Gabriel seconded the motion. Motion passes (5 -0). 0