Loading...
1. Big Sky Manor/Hampstead Request for Tax Increment FundingINTER OFFICE MEMORANDUM DATE: February 2, 1999 TO: Al Thelen, Interim City Manager FROM: Susan Moyer, PECDD SUBJECT: February 8, 1999 Council Workshop Agenda The attached letter is self-explanatory. The writer has been aware for quite some time of the valiant efforts of Montana Board of Housing and numerous Human Resource agencies to save the eight complexes across the State from coming on the open market at market rents. Many of the 60 low income residents in Big Sky Manor have resided there since the early -years of construction. By policy adopted last night, the City can provide the needed gap financing through a 15 year 3% TIF loan to the new buy rs. If you concur with placing this item on Monday night s agen I �11ntact Hampstead Partners immediately. C:\myfiles\TIF\Affordable House Investment Division January 18, 1999 Ms. Susan Moyer, Housing Manager Department of Planning, Economic, and Community Development City of Kalispell P.O. Box 1997 Kalispell, MT 59903 Re: Request For City Tax Increment Funding Big Sky Manor Dear Ms. Moyer: 1619► 551-` 02 Fax (61g)456-0i(hi Thank you for taking the time to speak with my partner Jay Wentz and myself about the possibility of accessing a portion of the City of Kalispell's tax increment funds for the purpose of filling a financial gap related to the purchase and renovation of Big Sky Manor Apartments in Kalispell. The Property. As you know, Big Sky Manor is a well -maintained 60-unit multifamily property located at 110 Second Avenue West in Kalispell. It is currently HUD regulated under Section 221(d)(3). The property is made even more affordable due to the fact that it is covered under a project based Section 8 rental assistance payments contract. Without this assistance, many of the project residents might not be able to afford adequate housing. Clearly, Big Sky is a significant asset to the community and downtown vibrancy. Statewide Preservation Effort Hampstead Partners contemplates the purchase of Big Sky in conjunction with the Northwest Montana Human Resources non-profit organization as part of a larger effort to purchase and preserve the affordable status of seven other western Montana Section 8 apartment complexes, all totaling 504 units. For Big Sky, we plan to utilize 9% Low Income Housing Tax Credits allocated through the Montana Board of Housing. The project -based rental assistance contract would be maintained in place. As you can well imagine, there are many moving pieces we have to put in place given eight projects, four sellers, and five non-profit partners. We have been working on this for over six months and are excited about the enthusiasm and support of the Montana Board of Housing and Montana Board of Investments for this iP1r:1r1�, IIIC. venture. The City's participation will leverage the significant state and federal resources contemplated to be a part of the effort. Future Operations. It is important to the communities involved that Big Sky Manor Apartments and the others maintain their long-term affordability. If this property and the others are not preserved as contemplated by this transaction, the owners are likely to make the determination to prepay the mortgages and raise the rents to market which will undoubtedly involve the loss of the units to the seniors who are currently residing there. Just as importantly, these properties now exceed 20 years in age and must be recapitalized in order to continue to operate successfully. Although well maintained, each of the properties contains project systems in need of replacement or upgrade. Such systems include heating, air-conditioning, flooring, kitchen cabinetry, plumbing, etc. Unless the repairs or upgrades are completed, it will only be a matter of time before significant problems arise. There will be significant involvement in the future operation of the building by our non- profit partner, especially as it relates to providing more and better services for the residents. Long Term Use. There will be at least 30 years of restrictions imposed on the project's new owners, thereby guaranteeing continued affordability. Our proforma for Big Sky contemplates keeping 50% of the units rented to residents at 50% or less of median area income (affordable to Very Low Income residents) and 50% of the units rented to residents at 60% or less median area income. This is a noble goal which all the parties want to achieve. but completing the renovation and assuring that the property can maintain operations over the long-term is financially challenging under such circumstances. It is for this reason that we seek the City's assistance. Request We have preliminarily determined that $1 75,000 is needed from the City of Kalispell's tax increment funds as soft money to successfully complete the purchase and upgrades. I understand that we have set a tentative date of February 8* to appear before the City's committee in Kalispell. After you have had a chance to review this letter, we would very much like to discuss any additional information with you that may be necessary to have in place or to be provided beforehand to make the appropriate presentation. I have enclosed a Preliminary Improvement Schedule and Project Summary on Big Sky for your review. We anticipate closing this transaction no later than the second quarter of this year, so time is of the essence to move forward. 2 Thanks again for assisting us to date and considering our request. I look forward to speaking with you further. Sincerely, STEAD PARTNERS Chris Foster President 3 Preliminary Schedule of Improvement Summary Big Sky Manor 60 Units Revised 1028/9� item Work to Ge Done Quantity Unit Cost Total Comment 1 R&R Unit Carpet 60 509 $30,540 Per C.N.A. w/ only 1 Yr. remaining useful life. 2 R&R Unit Tile 60 225 $13,500 Per C.N.A. w/ only 1 Yr. remaining useful life. 3 R&R Kit. Cabinets 6 $ 1,100 $6,600 10% 4 Refinish Kit. Cabinets 54 $ 200 $10,800 90% 5 R&R Kit. Counters 60 12 $720 20% 6 R&R Ranges 58 400 $23,200 Per C.N.A. w/ only 1 Yr. remaining useful life. 7 R&R Range Hoods 59 80 $4,720 Per C-N.A. w/ only 1 Yr. remaining useful life. 8 R&R Refrigerators 57 430 $24,510 Per C-NA. w/ only 1 Yr. remaining useful life. 9 R&R Garbage Disposals 60 100 $6,000 Per C.NA. w/ only 1 Yr. remaining useful life. 10 R&R Windows 0 800 $0 Not Needed 11 Refinish Tubs 60 350 $21,000 Repair cost per management 12 R&R A/C Units 9 540 $4,860 15% 13 R&R Bath Fans 60 50 $3,000 14 Misc. Unit Refinishing 60 500 $30,000 15 Retop Parking Areas WA - 0 $0 16 Upgrade Landscaping N/A 0 S0 17 Install Playground WA 0 $0 18 Rework Existing Rec. Room WA 0 $0 19 Upgrade Signage N/A 0 $0 20 Upgrade Hallway Carpeting 609 $36,514 Carpet, paint and lighting. Convert Units To Comply W/ 21 ADA 500 $30,000 22 Upgrade Office WA 0 $0 23 Install Plug -ins For Parking Lot WA 0 $0 24 Repaint Building Exteriors WA 0 $0 25 Roof Replacement 200 $12,000 26 Misc. 60 300 $18,000 27 $0 28 $0 29 $0 30 $0 Subtotal $3,865 $231,924 $0 $0 Total Cost $3,865 $231,924 Units bid price. Hampstead Partners Inc. 1205 Pm-.nRrf Sf fiArm Hampstead Partners. Inc, Investment Division (619)456-6500 Fax (619)-456-4590 PROJECT: BIG SKY APARTMENTS LOCATION: 110 Second Avenue West Kalispell, Montana AGE: Constructed 1970 in a very good downtown location. TYPE: Section 221 (dx3) with Section 8 Assistance DESCRIPTION • 60 unit senior apartment property subject to LMSA contract. 20 handicapped units. Property is in better than average condition. • Low-rise four story elevator building with a recreation room and community laundry facilities. Open parking spaces. Security entry system. • Electric heat. Sleeve air conditioning units. Mastered metered for electric. CURRENT OCCUPANCY: 990/0 AREA MEDIAN INCOME: $36,400 (effective 1/7/98 for Flathead County) Census Tract #0010 is a Montana Designated QCT Flathead County is not a Montana Designated DDA UNIT MIX: �) > sm PBE ! CMS CLWIt HUD BASIC r j �7 Y[,t5� » i 4 PA&W 60%M "SIRFSr i MAXS0% MAX 60% : 1m � TC� I 1 28 mdme 1 415 9D I so, i SM no SM 3D I S318 5382 32 ondnoe 4671 SD j $334 i 5335 SW SM! SD 1 5341 1 5409 0 tadaoo So $O ! So So So I $01 SD I SD 0 d mace SO SD SO 9D 30 : 9D 1 SDI So 0 be. SD SO So SO $D i So 1 SD ! So 6D larAu)WE X6.%41 $O IE.220. 1 1012 517,692 $19,672 ; SD I I i •nVDIcaTEDf�rTSAREPErcFunUTYALLarMMIFAW. i •• STREET F MB AS YET UNUETERMtE. PROPOSED REtM UMTED BY FMt M m nm Proposed Reiss am capped at 90%d M wkK PC or TC lied I F:IUSERS*M&ruw%\Dev. ProittWonmu Propma Immtmem ' Sky &west Summwy.doe dui!._ 4i'), I'alnlla. C'ali;:: 2 UTILITY METERING Mastered metered for all utilities. INFORMATION: NUMBER OF SECTION 8 25 efficiency and 28 one bedroom units: Total 53 units of 60 UNITS: units. 1 ST MORT. INT. RATE: 8.5% (effective rate) IST . MORT. BALANCE: $428,275 @ 7/31/98 DEBT SERV. ON 1ST.: $56,362 FINANCING: Refinance existing debt with lower loan constant. Keep existing project based HAP contract and utilize 9% LIHTCs. ESTIMATED REHAB. $4,000 per unit AND IMPROVEMENT See attached Preliminary Schedule of Improvement Summary. COSTS: — 1997 OPER. EXP. BEFORE DEPRECIATION: $ 146,807 ($2447/u) Does not include mortgage interest or MIP PURCHASE Purchase price is $1,315,875 ($21,93l/u) INFORMATION: CONTACT: Chris Foster Hampstead Partners (619)551-5302 f:WSERSV PartnmV)ev. PropWo PnVertiesUnvestmem Sumf\Big Sky Invest Summaty.doc