SUBJECT/RECOMMENDATION:
Title
Approve a grant of $75,000 in General Fund Reserves to be set aside as a commitment for the local government contribution required for applicants to participate in the State of Florida’s Low Income Housing Tax Credit Program (LIHTC) for a proposed 72-unit affordable housing development project, identified as Chestnut Trail, by SP Pinellas II LLC and authorize the appropriate officials to execute same. (consent)
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SUMMARY:
On September 7, 2018, the city’s Economic Development and Housing Department released a Request for Applications (RFA) for projects seeking a local government contribution to apply for the Fiscal Year 2018-19 State of Florida Low-Income Housing Tax Credit Program (LIHTC). The City received one proposal on September 21, 2018.
A review committee, made up of staff from the Economic Development & Housing and Planning & Development departments as well as from the City of Clearwater Community Redevelopment Agency, met and reviewed the application received by the Housing Division. The review committee reviewed the project for consistency with goals and strategies of adopted long range plans, current zoning and land use of the subject sites, appropriateness of scale and other features. The committee recommends approval of Chestnut Trail project application.
Project Overview
SP Pinellas II LLC from Tampa, Florida, submitted an application to develop Chestnut Trail, a 72-unit affordable housing project. The proposal calls for 72 two- and three-bedroom units to be located in a new five-story structure inclusive of two-levels of parking located at 645 Chestnut Street. Ninety percent of the units will be made available to residents at or below 60% of Area Median Income (AMI) and 10% of the units will be made available to residents at or below 35% of AMI.
The subject site is a vacant lot located within the City’s Community Redevelopment Area fronting Chestnut Street and is located approximately .25 miles from the Pinellas County Courthouse and other downtown amenities. The proposed development team includes Southport Development, Inc. (Developer), Vaughn Bay Construction, Inc. (Contractor) and Architectonics Studios, Inc. (Architect). The estimated total development cost is $19.43 million. In this application cycle, the minimum value of contributions required from a government agency for a Tax Credit Program application to receive the maximum points is $75,000. To meet this requirement, the local government must make a commitment to a project they are supporting.
Staff Recommendation
Staff is recommending a funding commitment to Chestnut Trail if chosen by the FHFC as the successful applicant.
The proposed funding commitment from General Fund Reserves will be reimbursed by Housing Division funds at the time of project award. If the project is selected by FHFC, the commitment for General Fund Reserves would be released.
About the Request for Applications (RFA):
Florida Housing Finance Corporation (FHFC) issued RFA 2018-112 to open the application period for the LIHTC Program for Large Counties. According to LIHTC program rules, only one project per Large County (Broward / Duval / Hillsborough / Orange / Palm Beach / Pinellas) will be funded for development through this tax credit cycle. FHFC determines the successful applicant through this competitive process. Should this proposal be awarded LIHTC funding through this tax credit cycle, staff recommends City support of the successful project with a $75,000 contribution which is the minimum amount that can be committed as a representation of local government support. This contribution represents City of Clearwater support of the successful project; it does not represent development approval. Final FHFC approval is anticipated to occur in March 2019.
About the Low-Income Housing Tax Credit Program:
The Low-Income Housing Tax Credit Program is governed by the U.S. Department of Treasury under Section 252 of the Tax Reform Act of 1986 and Section 42 of the Internal Revenue Code, as amended. The program was established to provide for-profit and non-profit organizations with a dollar-for-dollar reduction in federal tax liability in exchange for the acquisition and substantial rehabilitation or new construction of low- and very low-income rental housing units (60% of the AMI and below with a set aside for 40% of AMI and below).
USE OF RESERVE FUNDS:
Funding for this contract will be provided by General Fund reserves in the amount of $75,000.
Inclusive of this item if approved, a net total of $75,000 of General Fund reserves has been appropriated by Council to fund expenditures during fiscal 2018/2019. The remaining unappropriated balance of General Fund reserves, after the 8.5% reserve, is approximately $9.3 million, or 6.3% of the current General Fund operating budget.