SUBJECT/RECOMMENDATION:
Title
Approve a local government contribution of $610,000 in General Fund Reserves to be set aside as a commitment for the Local Government Contribution that is required for Archway Clearwater Gardens, LLC (Archway) to receive a basis boost in the State of Florida’s Low Income Housing Tax Credit Program (LIHTC) for an 80-unit affordable housing development project at 1250 Cleveland Street; approve Section 15.18 of Development Agreement between the Community Redevelopment Agency of the City of Clearwater and Archway as amended; and authorize the appropriate officials to execute same. (consent)
Body
SUMMARY:
The purpose of this item is to request approval of a second amendment to an existing development agreement between the City of Clearwater and Archway Clearwater Gardens, LLC and assigned to Archway Clearwater Gardens, LLC, for the redevelopment of 1250 Cleveland Street and adjoining properties. For the first amendment, in accordance with Section 4.05 Project Schedule of the agreement, Archway requested and was approved a one-year extension of all project deadlines. For the second amendment, Archway is requesting public funds of an amount not to exceed $3,000,000 from the CRA and $610,000 in HOME Investment Partnership Program funds from the City of Clearwater.
After receiving two Letters of Interest that aligned with the goals of the Downtown Redevelopment Plan, the Community Redevelopment Agency issued RFP/Q 43-21 for the redevelopment of its 2.35-acre site at 1250 Cleveland Street on May 26, 2021. The request called for a mixed-use or apartment development that maintained or expanded the existing community garden. The RFP was awarded to Archway on August 16, 2021, because of the project’s excellent site design, developer experience, mixed income approach and rooftop garden. The proposed project is a 4-story, no less than 80-unit mixed income, affordable apartment development. The project has an urban design that fits the downtown design guidelines and will complement the new streetscape as well as provide an appropriate transition between the commercial uses on Cleveland Street and the residential area to the rear of the site. At a minimum, the amount of code-required parking spaces will be provided, a rooftop garden, and preservation of the existing community garden. There are one-and two-bedroom units that range from 650-975 square feet of floor area. The units will be limited to 30-80% Area Median Income (AMI) and will be income restricted for the life of the project. The building will obtain green building certification. The overall project cost is estimated to be $28,288,610.
Construction of the project was contingent on obtaining additional funding through state programs. The developer failed to obtain affordable housing tax credits and SAIL funding in 2021 and will be submitting for 9% tax credit financing as well as 4% tax credit financing/SAIL funding in 2022. Additionally, the developer will be requesting approximately $4 million in County funds. The 9% round requires a Local Government Area of Opportunity amount of $610,000 to maximize basis points during the selection process. The 4% round requires a local government minimum contribution of $75,000; however, staff is recommending a contribution of $610,000 because additional subsidy is needed to ensure the project’s financial feasibility.
Archway believes that they can successfully obtain SAIL or 9% tax credit funding in 2022. The 30% “basis boost” is no longer available on this site; however, since the developer already applied for bonds in 2021, the project has a basis boost if the bonds are closed by the end of 2023. The Developer has also obtained 20 Project-Based Vouchers (PBVs) from Clearwater Housing Authority, adding additional revenue which allows for an increase in available cash flow to support approximately $2 million of additional debt. However, if they are unsuccessful, and the CRA elects not to amend the agreement, the development more than likely will cease due to the large funding gap which has increased primarily as a result of rising construction costs and interest rates. The funding requested from the CRA and the City will allow this development to move forward.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
Funding for this contract will be provided by a commitment of General Fund reserves in the amount of $610,000. Inclusive of this item if approved, a net total of $14,041,675 of General Fund reserves has been appropriated by Council to fund expenditures in the 2021/22 operating budget. The remaining balance in General Fund reserves after the 8.5% reserve is approximately $39.7 million, or 24.1% of the current General Fund operating budget. While a commitment of General Funds Reserves is recommended, HOME Investment Partnership Program Funds will be encumbered for this purpose.