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TO: Mayor Thomas J. Weisner
FROM: Daniel Barreiro, Chief Community Services Officer
DATE: October 6, 2015
SUBJECT:
A Resolution Approving a Development Agreement for a HOME Program Loan Between the City of Aurora and VeriGreen Development, LLC (DBA Aurora St. Charles Senior Living L.P.) for a Senior Housing Development in the City of Aurora
PURPOSE:
This staff report seeks approval of a Resolution to fund a HOME Development Agreement with Aurora St. Charles Senior Living L.P., LLC for $500,000 in HOME Investment Partnership Act funds to assist in the creation of 60 affordable senior housing units in Aurora. In exchange for its loan proceeds, the City will receive 12 units of housing (six one-bedroom units; six two-bedroom units) to be rented to senior citizens (55 years and older) who earn at-or-below 50% of the area median income. All 12 units will be held as affordable senior rental housing with legal covenants for a period of 30 years.
BACKGROUND:
As an entitlement community, the City of Aurora annually receives $494,000 in HOME funds that are used to provide decent, safe, and sanitary housing for low-to-moderate income persons (defined as earning at-or below- 80% of the Area Median Income, or $48,650 for a family of two in 2015). To support VeriGreen's Aurora St. Charles Senior Living project IHDA Low Income Housing Tax Credit application, the City provided a letter of funding support for the project, pending project financing and readiness. A contribution of up to $500,000 in the form of a loan from a to-be determined City source such as HOME, CDBG, and/or local fee deferrals was identified in the letter. The City's loan would be a non-amortizing loan and would accrue interest at a 1% rate with a 30-year term and without current debt service payments and financing fees. The letter of support was offered due to project's location within the City's NRSA and the revitalization that its use and high visibility could provide to the area. The site is also located within the newly expanded River Edge Redevelopment Zone and within walking distance to downtown Aurora.
DISCUSSION:
The Aurora St. Charles Senior Living project involves the acquisition and rehabilitation of the former St. Charles Hospital located at 400 E. New York St. The project’s total development cost is approximately $22 million, which will be funded by a private first mortgage, federal and Illinois state historic tax credits (River Edge Redevelopment Zone credits), Low Income Housing Tax Credits from IHDA, and deferred developer fee. A Memorandum of Understanding has been executed among VeriGreen, Seize the Future Foundation and the Northern Lights Development Corporation to develop the project. The City of Aurora’s HOME funds are requested in order to provide gap funding for the project. More specifically, the HOME funds would be used for construction costs.
The proposed project has been presented as a Substantial Amendment to the City’s 2014 and 2015 Annual Action Plans. The 30-day citizen comment period for this Amendment is currently open, and the proposed Amendment is scheduled for review by the Planning & Development Committee on September 23rd, with a public hearing scheduled for September 28, 2015 and City Council review/approval requested on October 13, 2015.
Because time is of the essence, approval for the Development Agreement is being sought concurrent to the Substantial Amendment request to accommodate the project's historic tax credit timeframe. Approximately 25% of the financing for this project is coming from additional State Historic Tax Credits made possible through the River Edge Redevelopment Zone (RERZ). In order to receive these vital tax credits, the developer must have a Certificate of Occupancy by the 12/31/16 expiration of the RERZ program-and in order to allow enough time for the construction schedule, the Developer needs to complete closings for all funding components before Thanksgiving 2015. To facilitate the process and with respect to the project's timeliness, the Development Agreement has been presented for review simultaneous to the proposed Substantial Amendment. Through the proposed Substantial Amendments, the City will commit its entire 2014 HOME Direct Project Activity Funds ($392,304.74) towards the VeriGreen St. Charles Housing Project, with the remainder of the applicant's $500,000 request paid from a portion of the City's 2015 HOME Direct Project Activity Funds ($107,695.26).
The building will be rehabilitated to provide 60-senior housing rental units, 56 of the units will be rented to low-income households, with four units rented at market rates. The project will receive 44 project based vouchers from the Aurora Housing Authority. The estimated development costs (inclusive of acquisition, hard costs, soft costs, construction contingency, permanent financing, interim financing, syndication, reserves and Developers fee) per unit is $380,617. The requested HOME subsidy amount is 2.2% of the development costs.
Funding will be available in the City Budget, through budget amendments to program account 213-1330-801-40-22.
IMPACT STATEMENT:
This projects meets the priority goals of the City’s Consolidated Plan for Federal Funding, particularly a need to provide senior housing. The Project will also allow the City to report the creation of 12 affordable senior housing units to HUD. The Developer's 3rd party market study supports the need/market demand for senior housing within Aurora.
RECOMMENDATIONS:
That the City Council approve the attached Resolution Approving The Development Agreement for a HOME Program loan between the City of Aurora and VeriGreen Development, LLC (d/b/a Aurora St. Charles Senior Living L.P.) for senior housing development via rehabilitation of twelve low-income senior housing rental units is hereby approved as provided in said Development Agreement, and further, that the Mayor and Chief Community Services Officer are hereby authorized to sign all contracts and documents associated with said Development Agreement.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Approving a Development Agreement for a HOME Program Loan Between the City of Aurora and VeriGreen Development, LLC (DBA Aurora St. Charles Senior Living L.P.) for a Senior Housing Development in the City of Aurora.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora has initiated numerous community development and
housing activities through funding by the U. S. Department of Housing and Urban Development; and
WHEREAS, the City of Aurora has a Consolidated Plan and Annual Action Plan which
have been adopted by the City Council and which have defined priorities for CDBG and HOME funding; and
WHEREAS, the HOME Investment Partnership Act guidelines established that the City would enter into an agreement with Developers to assist the City to implement the programs in an effective and efficient manner; and
WHEREAS, this Developer Agreement contemplates a loan of $500,000 in HOME Investment Partnership Act funds and the 2015 City Budget for the HOME program account 213-1330-801-40-22 will be amended to reflect additional funding allocations for said program; and
WHEREAS, the City of Aurora’s Block Grant Working Committee recommended
adoption of the Action Plan Substantial Amendment # 2015- 2 to reflect CDBG funding re/allocations at its September 2, 2015 meeting.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: Resolution Approving The Development Agreement for a HOME Program loan between the City of Aurora and VeriGreen Development, LLC (d/b/a Aurora St. Charles Senior Living L.P.) for senior housing development via rehabilitation of twelve low-income senior housing rental units is hereby approved as provided in said Development Agreement, and further, that the Mayor and Chief Community Services Officer are hereby authorized to sign all contracts and documents associated with said Development Agreement.