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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