HomeMy WebLinkAboutITEM II-A-3CITYOF
~ RN
WASHWGTON
AGENDA BILL APPROVAL FORM
Agenda Subject:
Date:
HUD Section 108 Loan Guarantee A lication
October 19, 2009
Department: Administration and
Attachments: HUD Section 108 Loan
Budget Impact: approx.
Human Services
Guarantee Application
$2M of HUD funds for
Community Center
construction
Administrative Recommendation:
City Council conduct a public hearing regarding the HUD Section 108 Loan Guarantee Application for
construction of Auburn's Community Center.
Background Summary:
The City of Auburn, Washington, is requesting $2,033,720 in Section 108 Loan Guarantee funds from the
U.S. Department of Housing and Urban Development (HUD) to provide financing for the development of a
22,000 square foot community center facility and parking lot within the Les Gove Park complex. The City
will repay the requested Section 108 Loan with proceeds from the City's annual allocation of Community
Development Block Grant funds. The loan will be structured to use interim financing for up to one year.
Within a year, permanent financing will be obtained through HUD's public offering of notes and amortize
the loan over a twenty year term.
HUD requires a public comment period and two public hearings be provided. The comment period runs
from October 14 through November 13, 2009 and the hearings are scheduled for October 19 and
November 2, 2009.
Adm 1019-2
03.4.1.7
Reviewed by Council & Committees:
Reviewed by Departments & Divisions:
❑ Arts Commission COUNCIL COMMITTEES:
❑ Building ❑ M&O
❑ Airport 0 Finance
❑ Cemetery 0 Mayor
❑ Hearing Examiner ❑ Municipal Serv.
❑ Finance ❑ Parks
~ Human Services ~ Planning & CD
❑ Fire El Planning
❑ Park Board OPublic Works
❑ Legal ❑ Police
❑ Planning Comm. ❑ Other
❑ Public Works ❑ Human Resources
❑ Information Services
Action:
Committee Approval: ❑Yes ❑No
Council Approval: ❑Yes ❑No Call for Public Hearing
Referred to Until _
Tabled Until
Councilmember: Norman
Staff: Hursh/Wilson
Meetinq Date: October 19, 2009
Item Number: II.A.3
Aj.j$[,T~N* MQRE THAN YOU IMAGINED
DRAFf
HUD SECTION 108 LOAN GUARANTEE PROGRAM APPLICATION
PROJECT NAME: AUBURN COMMUNITY CENTER
AT LES GOVE PARK CAMPUS
APPLICANT NAME: CITY OF AUBURN, WASHINGTON
DRAFT PUBLIC REVIEW AND COMMENT PERIOD:
OCTOBER 14, 2009 - NOVEMBER 13, 2009
Draft HUD Section 108 Loan Guarantee Program Applicalion for Community Center
Applicant: City of Auburn, Washington
1. LOAN REQUEST
The City of Auburn, Washington (the "City"), is requesting $2,033,720 in Section 108 Loan
Guarantee (B-94-UC-06-0505) funds from the U.S. Department of Housing and Urban
Development (HUD) to provide financing for the development of a 20,100 square foot
Community Center facility and parking lot within the Les Gove Park complex. Approximately
3,875 square feet of the facility will be utilized for the City's Park Department administrative
space. The City intends to execute a New Market Tax Credit (NMTC) financing structure that
will result in the assignment of the Section 108 loan proceeds to the NMTC investment fund.
The City will repay the requested Section 108 Loan with proceeds from the City's annual
allocation of Community Development Block Grant funds and provide a pledge of the full faith
and credit of the City as a loan guaranty. The loan will be structured to use interim financing for
up to one year. Within a year, permanent financing will be obtained through HUD's public
offering of notes and the loan will amortize over a twenty year term.
II. PROJECT BACKGROUND AND DESCRIPTION
The new Community Center to be funded by the HUD guarantee loan will be one of a series of
improvements to the Les Gove Park campus. Concurrent with this project, the City will also
fund and construct a new activity center/gymnasium on the campus. Auburn has a population
base of over 67,000 but is without a dedicated gathering space for community activities/events.
As a result, this project ranks as a high priority for the community. According to the 2005
Auburn Parks, Recreation and Open Space Plan, the City should have one community center
available per 40,000 residents. The addition of a new Community Center will fill a major
community need and result in accomplishing significant capital program objectives.
The new Community Center will serve the entire Auburn community and be open year-round to
serve the public. The Center would be used for educational, cultural, social activities and large
non-programmed community meeting spaces. The City envisions the focus on the use of the
facility for various health, fitness and wellness programs; multi-generational and multi-cultural
events; special events; evening family programs; art, craft and music; community education and
specialty classes; expanded youth and pre-school programs; and related activities. The City may
also provide facility space to the King County Housing Authority to meet their needs in serving a
low income housing rental project that is being developed adjacent to the Les Gove Park campus.
This multi-use facility will feature a spacious and welcoming lobby and a large community
gathering space for up to 350 people as well as dividable space for recreational activities,
programs and classes. The Community Center will also include meeting space/classrooms,
lobby, kitchen, restrooms and storage space. Facility space will also be available for office use,
meeting rooms, break room and administrative areas for approximately twenty (20) full-time and
seasonal Parks, Arts and Recreation employees.
Draft HUD Section 108 Loan Guarantee Program Application for Community Center
Applicant: City of Auburn, Washington
With the addition of the new Community Center, it is envisioned that the residents of the City
and surrounding community will realize the following benefits:
■ Contribute to community pride and foster a sense of community - create a
community gathering place for neighbors, family and friends to meet
■ Offer a broad range of activities promoting social interaction, especially with new
residents of Auburn
■ Provide maximum flexibility and multiple uses through design; adaptable to changing
interests
■ Provide a facility that is financially feasible, affordable for participants, and can
generate revenue to offset a portion of the operating costs
The Community Center will be situated on approximately thirty five (35) acres of property
within the Les Gove Park campus which is currently owned and operated by the City of Auburn
(Exhibit "A"). Les Gove Park is a recreational and educational campus serving the entire
community. The cluster of amenities in this campus includes the King County library, Parks and
Recreation Administration Building, Senior Activity Center and White River Valley Museum.
The campus also includes the popular Rotary Spray Park, a play structure, public art, bocce
courts, horseshoe pits and two softball fields. A half-mile paved trail encircles an attractive
bermed and treed area. The City offers a diverse population with a high concentration of low
and moderate income residents. The Les Gove neighborhood is an area with a diversity of land
uses and diversity of people. The area adjacent to the Community Center includes single-family
neighborhoods, multi-family areas, and a retail/commercial area.
The City has already invested in the design phase of the Community Center; therefore, the loan
would be used for the construction phase. The City has completed all environment reviews
(Exhibit "B") and permitting to make this essentially a"shovel ready" project.
III. SOURCES AND USES
The City estimates the total project cost to construct the Community Center to be approximately
$8.9 million (see Exhibit "C"). The funding sources for this project are expected to include: 1) a
loan from a qualified community development entity under U.S. Department of Treasury New
Market Tax Credits program, 2) City of Auburn reserve funds and solid waste utility fees, and 3)
HUD Section 108 loan proceeds. It is contemplated that the NMTC financing will be utilized to
carry out the following activities:
■ The acquisition of the Les Gove Park campus real property by a newly-created entity that
will be managed and controlled by the City of Auburn.
■ The new construction of the Community Center.
■ The new construction of an adjacent Activity Center that will be leased to the Auburn
Boys and Girls Club.
2
Draft HUD Section 108 Loan Guarantee Program Application for Community Center
Applicant: City of Auburn, Washington
In addition to the HUD Section 1081oan and other resources, the City will loan the HUD Section
108 loan proceeds (along with other committed capital sources) to an Investment Fund which in
turn will initiate a NMTC financing that will generate approximately $3.4 million in NMTC
subsidy.
All the other identified funding sources have previously been allocated and are available for this
capital project. Below is a summary of the funding sources to date:
Source Amount
City of Auburn - reserved REET funds or other reserves 3,300,000
Solid Waste Utility Fees 500,000
NMTC Structured Finance - Investor's Contribution 3,400,000
HUD Sec. 108 Loan (max. loan; 5 times annual CDBG payment) 2,033,715
8,865,000
V. PROJECT STRUCTURE AND PARTICIPANTS
The City and/or a newly-created ownership entity that is owned and managed by the City will be
the developer and owner of the Community Center facility. The City is also an entitlement
CDBG grantee. Consequently, the City will borrow the Section 108 loan funds through HUD
(by pledging future City CDBG funds) and use the proceeds directly to assist in the funding of
the new Community Center construction. In addition to Section 108 loan, the City will use
existing City revenues and New Market Tax Credits to fund the Community Center. Through the
term of the NMTC financing program, the City's property will be owned and facilities will be
constructed by the NMTC ownership entity. Upon the completion of the Community Center and
execution of a master lease agreement, the City's Parks Department will operate the Center and
administer programs, services and activities in the facility. The City may also provide space
within the Community Center for use by the King County Housing Authority.
VL DEVELOPMENT SCHEDULE
Below is the estimated schedule for the development of the City of Auburn Community Center
proj ect:
■ November 2008 - environmental review completed and DNS was issued
■ April 2009 - initial bids were solicited for the Community & Activity Centers, project
place on hold until additional funding secured
■ April 2010 - solicit bids for the construction of the Community Center.
■ May 2010 - award bid and approve a construction contract with a general contractor for
the Community Center project after open and competitive bid process.
3
Draft HUD Section 108 Loan Guarantee Program Application for Community Center
Applicant: City of Auburn, Washington
■ June 2010 - commence construction, site subgrade preparation, under-grounding utilities.
■ July-August 2010 - pour concrete slab and install framing for the Community Center.
■ Summer 2010 - City will obtain HUD Section 108 loan funds by the end of June.
■ Fall 2010 - exterior of Community Center expected to be completed.
■ Winter 2010 - begin interior work on Community Center.
■ Summer 2011 - anticipated completion of construction w/ grand opening in August 2011.
VII. REPAYMENT SCHEDULE
Below is the City of Auburn's proposed repayment schedule for the $2,033,715 million Section
108 loan request based on a twenty (20) year loan term. For the repayment schedule below, the
City assumed an interest rate of 3.23% (as of October 6, 2009) based on the current 10-year U.S.
Treasury rate, plus seventy-five (75) basis points. The average annual loan repayment made by
the City will be approximately $157,000.
Year Interest Princi ai P&I Principal Balance
2010 40,674 0 40,674 2,033,715
2011 81,349 70,000 151,349 1,963,715
2012 78,549 70,000 148,549 1,893,715
2013 75,749 70,000 145,749 1,823,715
2014 72,949 80,000 152,949 1,743,715
2015 69,749 80,000 149,749 1,663,715
2016 66,549 80,000 146,549 1,583,715
2017 63,349 90,000 153,349 1,493,715
2018 59,749 90,000 149,749 1,403,715
2019 56,149 90,000 146,149 1,313,715
2020 52,549 100,000 152,549 1,213,715
2021 48,549 100,000 148,549 1,113,715
2022 44,549 110,000 154,549 1,003,715
2023 40,149 110,000 150,149 893,715
2034 35,749 120,000 155,749 773,715
2025 30,949 120,000 150,949 653,715
2026 26,149 120,000 146,149 533,715
2027 21,349 130,000 151,349 403,715
2028 16,149 130,000 146,149 273,715
2029 19,949 135,000 154,949 138,715
2030 5,549 138,715 144,264 0
1,006,454 2,033,715 3,040,169
4
Draft HUD Section 108 Loan Guarantee Program Application for Community Center
Applicant: City ofAuburn, Washington
VII. COLLATERAL
The City of Auburn intends to execute a NMTC structured financing which will result in the
assignment of the HUD Section 108 loan to the NMTC investment fund. As a result of this tax
credit initiative, the City will not be able to pledge the Auburn Community Center facility as
additional collateral to HUD. In accordance with HUD's requirement that the City of Auburn
collateralize the Section 108 loan beyond the pledge of its future CDBG entitlement funds, the
City will provide as a"guaranty" to this loan sufficient collateral to meet HUD's loan conditions.
The City is anticipating generating limited program income from the Center; however, the City
may execute a partnership agreement with the King County Housing Authority in providing use
of the Community Center's facilities for Housing Authority services and programs. If such an
agreement is executed, it could result in some financial contributions being made to the City by
the Housing Authority.
IX. CITIZEN PARTICIPATION REQUIREMENTS AND PROJECT ELIGIBILITY
Citizen Particiuation
Prior to the submission of this application, the City published a notice in two newspapers of
general circulation to provide the public with an opportunity to comment on the Section 108 loan
application to assist with the development of the Auburn Community Center Project. In addition
to the notice, a community meeting was scheduled for October 19, 2009, in the City Council
Chambers at Auburn City Hall to consider the use of the annual allocation of Community
Development Block Grant funds to pay principal and interest payments for the HUD Section 108
loan. A second public hearing is scheduled to occur on November 16, 2009.
Eli ibili
Construction of the City of Auburn's Community Center project is eligible under 24 CFR (Code
of Federal Regulations) Section 570.703(1), which states "Acquisition, construction,
reconstruction, rehabilitation or historic preservation, or installation of public facilities...."
Through the development of the proposed Community Center facility, an important contribution
to the City's economic development plan is the creation of construction jobs within the region.
In line with the goals of the American Recovery and Reinvestment Act which is to stimulate the
economy through the creation of jobs, this Section 108 loan funds will finance this "shovel
ready" project resulting in the creation of numerous construction-related jobs over a twelve
month period. These construction jobs will pay the higher of Federal or State prevailing wages,
thereby increasing pay scales for many local residents and contributing to the local economy.
National Obiective The Project meets the National Objective of Activities Benefiting Low-
and Moderate-Income Persons under 24 CFR Section 570.208(a)(1)(i), which requires a service
area containing at least fifty-one percent (51 low and moderate income persons. Based on the
5
Draft HUD Section 108 Loan Guarantee Program Application for Community Center
Applicant: City ofAuburn, Washington
identified service area which consists of the City's entire population base, 55.5% of the City of
Auburn's population is comprised of low and moderate-income persons according to the
statistical data provided by HUD.
X. LOCAL CONTACTS
Please contact the following with any questions or comments on the City of Auburn's HUD
Section 108 loan application:
■ Contact Name: Michael R. Wilson
■ Contact Address: City of Auburn, 25 W. Main Street, Auburn, WA 98001
■ Phone/Fax: (253) 931-3006 / (253) 804-3116
■ E-mail address: mwilson@auburnwa.gov
■ Contact Name: Michael Hursh
■ Contact Address: City of Auburn, 25 W. Main Street, Auburn, WA 98001
■ Phone/Fax: (253) 804-5029 / (253) 804-3116
■ E-mail address: mhursh@auburnwa.gov
6