PRIORITY: Economic and Neighborhood Vitality
AGENDA DATE: May 13, 2020
COUNCIL DISTRICT(S): 7
DEPARTMENT: Department of Housing & Neighborhood Revitalization
EXECUTIVE: Michael Mendoza Dr. Eric A. Johnson
______________________________________________________________________
SUBJECT
Title
Authorize (1) the sale of up to 11 Land Transfer lots, for up to 13 single family homes, included in Jeffries-Meyers cluster 1 and/or 3, to Muse Family Foundation and/or its affiliates (Developer), subject to restrictive covenants, a right of reverter, and execution of all necessary documents pursuant to the City’s Land Transfer Program and the New Construction and Substantial Rehabilitation Program; (2) the release of all non-tax City liens, notices, or orders that were filed on the 11 Land Transfer lots prior or subsequent to the deeds transferring the lots to the City of Dallas; and (3) execution of a conditional grant agreement with Developer and/or its affiliates in an amount not to exceed $1,141,000.00 in 2017 General Obligation Bond Funds for the development of up to 13 single family homes and for public infrastructure costs; - Not to exceed $1,141,000.00 - Financing: ECO (I) Fund (2017 General Obligation Bond Fund)
Body
BACKGROUND
The Department of Housing and Neighborhood Revitalization (Housing) administers two related programs that seek to appropriately incentivize private investment for the development of quality, sustainable housing that is affordable to the residents of the City: (1) the New Construction and Substantial Rehabilitation Program, which seeks to provide financial assistance to new developments or substantial rehabilitation developments, where such assistance is necessary; and (2) the Land Transfer Program, which allows Housing to sell qualifying City-owned real property and resell tax-foreclosed real property to for-profit, non-profit and/or religious organizations in a direct sale at less than fair market value of the land, consistent with the authorizing statute or ordinance.
On May 9, 2019, Housing released a Notice of Funding Availability (NOFA) for single-family housing development, pursuant to both the New Construction and Substantial Rehabilitation Program and the Land Transfer Program. The primary purpose of the NOFA was to provide gap financing in the form of a repayable loan or grant to support new development and single family for-sale, lease-purchase or rental housing units or substantial rehabilitation of existing single-family housing units located within the city limits. Additionally, the NOFA served as the means by which proposers could apply to purchase land at a below-market price via the Land Transfer Program. Eligible land was offered in “clusters” of approximately 5 to 24 geographically proximate parcels.
Various sources of funding were made available through the NOFA, including:
• $2,454,933.00 in HOME Investment Partnership Program (HOME) Funds;
• $2,585,000.00 in HOME Community Development Housing Organization (CHDO) set aside;
• up to $8,000,000.00 in General Obligation (GO) Bonds reserved for housing activities in District 4; and
• up to $8,000,000.00 in GO Bonds reserved for housing activities in District 7.
Through its scoring criteria, the NOFA prioritized proposals that: (1) based on feasibility and consistency of the proposed development scheduled, could expeditiously assist the City with meeting its annual production goals; (2) proposed a comprehensive, data-driven approach to solving a housing issue identified in the Comprehensive Housing Policy (CHP); (3) proposed to develop housing units on parcels of real property offered through the Land Transfer Program as well as on parcels of land owned by the proposer; (4) served a range of income bands from 30-120% of Dallas Area Median Income (AMI), based on market, development type and funding source; (5) are mixed income and include both affordable and market rate units; (6) are located near amenities such as full-scale grocery stores, major employment centers, and public parks; and (7) will be developed and managed by individuals or entities who have significant experience in successfully developing and managing projects that include an affordable housing component.
A five-member committee from the following departments reviewed and evaluated the proposals:
• Department of Sustainable Development and Construction;
• Housing and Neighborhood Revitalization Department;
• Office of Economic Development;
• Office of Homeless Solutions; and
• Planning and Urban Design Department
Proposals were evaluated in two stages: (1) threshold review and (2) technical scoring. During threshold review, Housing staff evaluated whether the proposal included the required elements, eligible activities, eligible end users, and whether the composition of the development team was eligible to enter into a contract with the City. Proposals that passed threshold review moved to technical scoring. Technical scoring included an interview with each development team to clarify elements of their proposal. Following the interviews, Housing staff drafted development summaries and made presentations to the evaluation committee. Each committee member scored the proposals based on the evaluation criteria set forth in the NOFA. All proposals that scored at or above the minimum score of 100 out of 140 points were considered eligible for underwriting.
During the underwriting phase, proposals were evaluated for overall feasibility and readiness of the proposed project; management’s capacity to start and complete the project; the proposer borrower’s experience, financial capacity and creditworthiness; and to identify the risks involved in lending City funds and/or selling City-owned land to the proposer.
In response to the NOFA, The Muse Family Foundation, in conjunction with its wholly owned entity, Dade Community Partners, LLC (Developer) submitted a proposal to purchase up to 39 Land Transfer lots in support of the Jeffries-Meyers Planned Development Single-Family Infill Development Project. Developer also requested $1,674,743.00 in General Obligation Bond funding for public infrastructure improvements and construction costs related to the. The proposal included the development of 39 units of affordable housing. The proposal received a score of 111.75 from the evaluation committee. Due to the unknown environmental issues and infrastructure issues on each of the Land Transfer lots-and based on experience with previous projects-the contingency amount of $31,000.00 per lot is necessary to ensure the successful completion of the Project.
The Project
The Project will consist of up to 13 new construction single-family homes, all of which of which will be built on 11 Land Transfer lots (Project). All 13 single-family homes shall be sold to households at 60%-120% Annual Median Income (AMI). Each home will range from 1,697 square feet to 2,083 square feet with an attached garage. Price points will range between $195,300.00 and $241,800.00 with an average sales price of $226,777.00. All units will remain affordable for a minimum of ten years.
The proposed financing structure for the Project is as follows:
Financing Sources Amount
City of Dallas NOFA - 2017 Bond Funds $1,141,000.00
Muse Family Foundation $2,575,300.00
Total $3,716,300.00
Investment in the Project is estimated to exceed $3.2 million with each City dollar leveraging a minimum of $1.81 in private investment. Approval of this project will help the City meet its affordable housing production goals under the Comprehensive Housing Policy.
The Developer presented the Project to the community on January 7, 2020. During that meeting, community members were able to review development plans and ask questions of City staff and the development team.
The project will occur in three distinct phases:
Phase I: 120-Day Due Diligence Period: (Due Diligence Period)
During Phase I, Developer will have authorization to access the Land Transfer lots to perform necessary due diligence. During the Due Diligence Period, Developer will identify lots with significant development challenges that may be undevelopable or may require significant remediation. Following the 120-day Due Diligence period, Developer must submit a revised list of requested lots and the City will adjust the amount of subsidy in the final development and conditional grant agreements, if applicable.
Phase II: Acquisition (45 days)
During Phase II, the City will work internally to release existing liens on the requested Land Transfer lots and will subsequently transfer deeds without warranty to Developer.
Phase III: Construction & Reimbursement:
During Phase III, City will reimburse Developer up to $1,141,000.00 for actual expenditures incurred for eligible expenses related to the development of the Project. City shall not reimburse the Developer for costs related to acquisition of the Land Transfer lots. Funds may be shifted from one eligible category in the development budget to another so long as the total amount of reimbursement funding does not exceed $1,141,000.00.
City Council’s approval of this item will authorize the City Manager to execute the conditional grant agreement, and any other necessary documents.
ESTIMATED SCHEDULE OF PROJECT
Due Diligence Period February 26, 2020 - June 25, 2020
Phase II June 26, 2020 - August 10, 2020
Begin Construction August 11, 2020
Complete Construction Twenty-four months upon sale of each Land Transfer lot to Developer (with up to one one-year extension of the conditional grant agreement if delays are related to installation or improvement of infrastructure or zoning/platting issues), subject to City Manager approval.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On May 9, 2018, City Council adopted a Comprehensive Housing Policy (CHP) that set citywide production goals for homeownership and rental units for the next three years along with respective income bands that will be prioritized within the production goals and also set forth various programs, tools and strategies to be used to meet the production goals while also overcoming concentrations of poverty and racial segregation by Resolution No. 18-0704.
On November 28, 2018, City Council authorized amendments to the CHP to make technical changes to the Home Improvement and Preservation Program, the Dallas Homebuyer Assistance Program, and the New Construction and Substantial Rehabilitation Program by Resolution No. 18-1680.
On May 22, 2019, City Council authorized amendments to the City of Dallas Comprehensive Housing Policy to establish a Land Transfer Program by Resolution No. 19-0824.
The Housing and Homeless Solutions Committee was briefed regarding this item on January 14, 2020.
FISCAL INFORMATION
|
Fund |
FY 2020 |
FY 2021 |
Future Years |
|
ECO (I) Fund (2017 General Obligation Bond Fund) |
$1,141,000.00 |
$0.00 |
$0.00 |
M/WBE INFORMATION
In accordance with the City’s Business Inclusion and Development Plan adopted on October 22, 2008, by Resolution No. 08-2826, as amended, the M/WBE participation on this contract is as follows:
|
Contract Amount |
Category |
M/WBE Goal |
M/WBE % |
M/WBE $ |
|
$1,989,124.00 |
Construction |
25.00% |
19.56% |
$389,000.00 |
|
• This contract does not meet the M/WBE goal, but complies with good faith efforts. |
OWNER
Dade Community Partners, LLC/The Muse Family Foundation
Whitney McKnight, Executive Director of The Muse Family Foundation
MAP
Attached