TO: Mayor Thomas J. Weisner
FROM: Daniel Barriero, Chief Community Services Officer
DATE: January 8, 2014
SUBJECT: title
A Resolution Approving a Development Agreement for HOME and NSP Program Loans Between the City of Aurora and Brinshore Development LLC (DBA Boreas LLC) for Scattered-Site Housing Development in the City of Aurora.
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PURPOSE:
This staff report seeks approval of a Resolution to fund HOME and NSP Development Agreements with Brinshore Development LLC (DBA Boreas LLC for this Project) for $374,321 in HOME Investment Partnership Act funds and $150,000 in Neighborhood Stabilization Program funds ($524,321 total) to assist in the acquisition of ten (10) vacant/foreclosed single family homes in Aurora for the provision of decent, safe, and sanitary workforce housing. The City will lend funds into this project from mutually agreed terms in the attached term sheet (referenced as "Attachment One"). The HOME and NSP Agreements contemplated will not substantively deviate from the attached term sheet. In exchange for its loan proceeds, the City will receive 4 units of housing to be rented to persons who earn at-or-below 50% of the area median income, and an additional 6 units of housing to be rented to persons who earn at-or-below 60% of the area median income. All 10 units will be held as affordable rental housing with legal covenants for a period of 30 years.
BACKGROUND:
The history of interactions between the City of Aurora and Aurora Housing Authority regarding replacement of 146 housing units at the Authority owned Jericho Circle site are well known. The outcomes of discussions between the City and Housing Authority, combined with recommendations of the Mayor's Housing Task Force led to the partnership between the City, Housing Authority, and Boreas LLC that led to the current project concept.
DISCUSSION:
The Aurora Impact Initiative is a program designed to address the foreclosure crisis in Aurora, and provide affordable rental housing interspersed within homeownership neighborhoods. Working with the Aurora Impact Initiative, Boreas LLC will purchase 40 vacant and foreclosed single family homes containing 2, 3, and 4 bedrooms, and rehabilitate these homes for rental housing. All 40 homes will be made affordable with project based housing choice vouchers provided by the Aurora Housing Authority. Eight of the homes will be designated for special needs clients, including the disabled and veterans.
Boras LLC will acquire all 40 properties from either the Multiple Listing Service, or negotiating directly with banks, Fannie Mae and Freddie Mac. The quality and conditions of the acquisitions will vary, but the purchase price is designed to average $60,000 per unit, with some in better condition costing more, and some in worse condition costing less. The cost of unit rehabilitations are estimated at approximately $150,000 per unit, which will be financed with tax credit and other sources of funding. All buildings will remain on the tax rolls.
All buildings will be rehabilitated to a similar specification, with all new kitchens, baths, mechanical systems, roof, windows, flooring, and composite siding. All units will have new energy star or energy efficient appliances, including refrigerator, stove/oven, dishwasher, and washer/dryer, and will be heavily insulated. The homes will have landscaped yards and private backyards. All units will have on site dedicated parking (some with private garages), as well as street parking.
The total Project budget is approximately $12.5 million. The Illinois Housing Development Authority has preliminarily awarded approximately $7.5 million in tax credits and will lend an additional approximately $3.25 million to this project. Boras LLC will borrow an additional $850,000 in private capital for the project. The Aurora Housing Authority has also awarded 40 housing choice vouchers to the project. Acquisitions are scheduled to begin in early 2014. Completion of acquisitions will lead to an 18 month construction period, with completion in approximately November 2015. Buildings will be completed in four month cycles, with the first buildings ready in October of 2014. Lease up will continue through February 2016.
IMPACT STATEMENT:
This projects meets the priority goals of the City's Consolidated Plan for Federal Funding, particularly a need to expend federal funds to being substandard homes up to local code, assist residents at 40%-80% of the Area Median Income find decent housing, and to assist Aurora residents who spend more than 30% of their monthly income on housing (and are defined as cost burdened). This project also meets a City objective to disburse workforce housing in its neighborhoods; providing a diverse and positive mix of income and amenities for residents in project homes. The Project will also allow the City to report the creation of 10 affordable housing units to HUD.
Because of the alignment of policy goals, the ability to achieve preferable project financing, and past experience with to acquisition/rehabilitation/rental model for single family workforce housing, it is the intent that the current phase of scattered site development is designed to be the initial phase of an at least two-phase partnership between Boreas LLC and the Aurora Housing Authority, which will continue to be supported by the City and could ultimately serve more families from the Housing Authority waiting list.
RECOMMENDATIONS:
That the City Council approve the attached Resolution recommending funding for HOME and NSP Program Agreements with Boreas LLC to acquire 10 single family homes in Aurora to be rehabilitated as workforce housing.
cc: Alderman O'Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Peters, Alternate