STRATEGIC PRIORITY: Economic and Neighborhood Vitality
AGENDA DATE: May 27, 2020
COUNCIL DISTRICT(S): 7
DEPARTMENT: Department of Housing & Neighborhood Revitalization
EXECUTIVE: Dr. Eric A. Johnson
______________________________________________________________________
SUBJECT
Title
Authorize (1) the sale of up to 17 Land Transfer lots, for up to 35 rental units, identified as Bonton Land Transfer cluster 2, to Notre Dame Place, Inc. and/or its affiliates (Developer), subject to restrictive covenants, a right of reverter, 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 17 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 in an amount not to exceed $730,072.00 in 2017 General Obligation Bond Funds for public infrastructure and construction costs for up to 35 rental units, approved as to form by the City Attorney, an “affiliate” shall be an individual or entity that is either a parent company to the Developer or a subsidiary of the Developer - Not to exceed $730,072.00 - Financing: ECO (I) Fund (2017 General Obligation Bond Fund)
Body
BACKGROUND
The Department of Housing and Neighborhood Revitalization (Housing) administers two related programs under the Comprehensive Housing Policy (CHP) 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 Housing Development Organization (CHDO) set aside;
• up to $8,000,000.00 in 2017 General Obligation (GO) Bond Funds reserved for housing activities in District 4; and
• up to $8,000,000.00 in 2017 GO Bond Funds 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; (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 Housing and Neighborhood Revitalization;
• Department of Planning and Urban Design;
• Department of Sustainable Development and Construction;
• Office of Economic Development; and
• Office of Homeless Solutions
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, Notre Dame Place, Inc. (Developer) submitted a proposal to purchase up to 17 Land Transfer lots in support of the Bonton Rental Development Project. Developer also requested $840,000.00 in 2017 General Obligation Bond Funds for public infrastructure improvements and construction costs related to the Project. The proposal included the development of 35 units of affordable rental housing for households earning between 30-120 percent of the AMI. The proposal received a score of 106.00 from the evaluation committee.
The Project
The Project will consist of 35 rental units, all of which will be built on Land Transfer lots. Of the 35 rental units in the Project, 7 units will be rent restricted for households at less than 80% of the Area Median Income (AMI); 14 will be rent restricted for households at 30% of the AMI; and the remaining 14 units will be rented to households up to 120% of the AMI. All units will remain affordable for a minimum of 20 years beginning on the date that the first rental unit is occupied by an eligible tenant. At the conclusion of construction, Developer will transfer control of completed project to Bonton Farms and maintain a role in the management of the assets throughout the compliance period.
The proposed financing structure for the Project is as follows:
Financing Sources Amount
Notre Dame Place, Inc./Bonton Farms Equity $1,520,000.00
Construction Period Financing/Permanent Debt $1,156,500.00
City of Dallas NOFA - 2017
General Obligation Bond Funds $ 730,072.00
Total $3,406,500.00
Investment in the Project is estimated to exceed $3.4 million with each City dollar leveraging a minimum of $3.67 in private investment. Approval of this project will help the City meet its affordable housing production goals under the CHP.
The Developer presented the Project to the community via a teleconference on April 30, 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 four 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 will 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: Replatting & Zone Change (270 days)
During Phase III, the Developer will submit the necessary applications for a zone change and for replatting of the lots to accommodate the project.
Phase IV: Construction & Reimbursement:
During Phase IV, City will reimburse Developer up to $730,072.00 for actual expenditures incurred for eligible expenses related to the development of the Project. City will 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 $730,072.00.
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 May 27, 2020 - September 24, 2020
Phase II September 25, 2020 - November 9, 2020
Phase III November 10, 2020 - August 7, 2021
Begin Construction August 8, 2021
Complete Construction Twenty-four months upon completion of zone change and replatting (with one, six-month 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 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 CHP to establish a Land Transfer Program by Resolution No. 19-0824.
The Housing and Homelessness Solutions Committee was briefed regarding this matter on March 23, 2020.
FISCAL INFORMATION
|
Fund |
FY 2020 |
FY 2021 |
Future Years |
|
ECO (I) Fund (2017 General Obligation Bond Fund) |
$730,072.00 |
$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 $ |
|
$16,850,000.00 |
Construction |
25.00% |
29.67% |
$5,000,000.00 |
|
• This contract exceeds the M/WBE goal. |
|
• Notre Dame Place, Inc. - Local |
OWNER
Notre Dame Place, Inc.
Bill Hall, Executive Director
Joseph Dingman, Treasurer
MAP
Attached