By Clint Brown
A resolution for conditional support for Overland Property Group's Application for Section 42 Federal Low-Income Housing Tax Credits Through the Iowa Finance Authority was passed by the Pella City Council last week.
At the Policy and Planning meeting on November 20, 2012, Brett Johnson of the Overland Property Group discussed a proposed Section 42 Housing Development for the City of Pella, which would consist of a 32-unit affordable multi-family complex in the View Point subdivision in Pella, adjacent to the Sports Page Grill and across from the Ulrich dealership. After the discussion, Council directed staff to proceed with a conditional resolution of support for the project.
The resolution approves a conditional resolution of support for the Overland Property Group's proposed Section 42 Housing Development. It is important to note, this proposed development is conditional upon the project receiving tax credits through the Iowa Finance Authority (IFA) and in order to receive these credits, the City of Pella will need to approve the conditional resolution of support by IFA's deadline date of December 10, 2012. Equally important to understand is the City is in the beginning development stages for this project, as we have not received any site plans, nor has a pre-application meeting been held with the developer. Therefore, this resolution is conditional upon the developer meeting all of the City's zoning, building, and public infrastructure requirements. In addition, since the developer is requesting financial assistance for the project, the City's support is also conditional upon the legislative actions necessary to form a LMI (low and moderate income) housing urban renewal area for the property and a detailed development agreement with terms mutually acceptable to the parties.
Since the developer is requesting financial assistance for the project, the City's support is also conditional upon the Council approving a development agreement. Listed is background information on the proposed development and staffs recommendation for tax increment financing:
The Proposed Project
The proposed project consists of a 32-unit affordable multi-family complex in the View Point subdivision in Pella, adjacent to the Sports Page Grill and across from the Ulrich dealership. It will feature the following amenities: a clubhouse, a fitness center, a playground, in unit washer and dryers, and free Wi-fi .
The property is a 6.15 acre parcel currently zoned CC - Community Commercial, which allows multi-family residential use. Access for the property would be from W. 16th Street. Electrical and sanitary sewer service is provided by the City of Pella. Water service for the development will be provided by Central Iowa Water.
The estimated valuation of the property is between $4 and $5 million and according to the Marion County Assessor, the property would be taxed based on a formula received by the State of Iowa, which takes into consideration the income generated by the property. For other Section 42 housing developments in Marion
County, this rate ranges between 15 and 50 percent of what the property would pay for property taxes if it was not Section 42.
Financial Request by Developer
The developer is requesting financial assistance; therefore, the City's support would also be conditional upon Council approving a development agreement. Specifically, the developer is requesting City support totaling $310,000, with $290,000 being in the form of property tax rebates through tax increment financing. The remaining $20,000 would be in the form of development fee waivers (i.e. building permit fee, engineering review fees, etc). The financial request letter from OPG is enclosed for Council's review.
In early 2012, OPG submitted a similar request for Section 42 housing in Pella and in support of that application Council approved a conditional letter of support that included up to $300,000 in property tax rebates through tax increment financing. While that particular project did not receive approval from IFA, there was a market study to determine the project's necessity and compatibility with the community. According to the market study, there is a need for Section 42 Housing in the community.
Based on staff's analysis, we recommend approving a Conditional Resolution of Support for the Development. Listed below is a summary of the terms and conditions for the conditional resolution of support:
1) The resolution is based on the condition that the Overland Property Group will build a 32-unit affordable multi-family complex in the View Point subdivision in Pella. The units will be Section 42 Housing with half of the units ADA-accessible.
2) The resolution requires the developer to maintain units as Section 42 Housing for at least 30 years. In addition, Overland Property Group will agree not to convert any of the units to Section 8 Housing.
3) Overland Property Group will be required to build the units to the same quality and character as identified in the attached request letter and supporting information and the application submitted to the Iowa Finance Authority. In addition, the City must consent to any changes proposed by the developer to the IFA application or approve any amendments the developer may request to IFA at a future date.
4) The resolution is subject to the developer meeting all City requirements for zoning, public infrastructure, and other required legislative processes, including but not limited to an approved development agreement.
5) Overland Property Group agrees to reduce its potential fee of 14% and earn no greater than a 9% development fee, as calculated by IFA.
6) The resolution approves support totaling $310,000, with $290,000 in the form of property tax rebates through tax increment financing. The remaining $20,000 would be in the form of development fee waivers (i.e. building permit fee, engineering review fees, etc.).
7) The resolution limits the TIF rebates to a fifteen year period of time.