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Cohen-Esrey Request for Urban Revitalization Designation for Holy Ghost School BuildingCopyrighted November 6, 2017 City of Dubuque Consent Items # 31. ITEM TITLE: Cohen -Esrey Request for Urban Revitalization Designation for former Holy Ghost School SUMMARY: City Manager recommending approval of a Resolution supporting the Low -Income Housing Tax Credit program application to be submitted to the Iowa Economic Development Authority by Cohen -Esrey for the redevelopment of the former Holy Ghost School and Convent into affordable housing. RESOLUTION Supporting Cohen -Esrey application for low-income housing tax credit for Central Avenue historic residences SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type Cohen -Esrey Application for Redevelopment -MVM City Manager Memo Memo Staff Memo Staff Memo Resolution Resolutions Request for Urban Revitalization Support Supporting Documentation Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager Dubuque 1111•1.eda City 'VIII®' 2007 2012 2013.2017 SUBJECT: City support for Cohen Esrey's Application to Iowa Economic Development Authority for Low Income Housing Tax Credits to Finance the Redevelopment of Former Holy Ghost School and Convent DATE: October 31, 2017 Housing & Community Development Department Director Alvin Nash recommends City Council approval of a Resolution supporting the Low Income Housing Tax Credit program application to be submitted to the Iowa Economic Development Authority by Cohen -Esrey for the redevelopment of the former Holy Ghost School and Convent into affordable housing. The City Council designated the area at 2887 and 2901 Central Avenue as the Paragon Square Urban Revitalization with Ordinance 11-16, 4-18-2016. The area was designated for Urban Revitalization after Frantz Community Investors was awarded a 2016 Low Income Housing Tax Credit award to develop 29 affordable senior apartments on the Holy Ghost site. Unfortunately, Frantz Community Investors was unable to proceed with the proposed development. Cohen -Esrey is now requesting City support for the 2018 LIHTC application to develop the former Holy Ghost school and convent at 2887 and 2901 Central Avenue into 27 historic and affordable apartments know as Central Avenue Historic Residences. This application is consistent with the adopted Urban Revitalization plan; however, the project City Council supported in 2016 was for affordable senior housing. The 2018 application is different from what City Council supported in 2016 because the target population is individuals and families. Seniors will be able to apply, but the project will not be exclusively for senior populations. The proposed development will rehabilitate two vacant and underutilized structures on the Holy Ghost campus. The property is currently zoned OR -Residential, and will require no zoning changes as the proposed use is allowable with current zoning. The project is specifically designed to provide housing and the requested support from the City is limited to the rehabilitation of the existing structures. The buildings have been vacant for over a decade. This project will add quality, affordable housing in an area of the city targeted for economic and housing revitalization and will help support Dubuque's True North — Greater Dubuque Development's new initiative to bring transformative change to the north side of Dubuque. Brian Sweeney, Development Director with Cohen -Esrey, met with the members of the North End Neighborhood Association during their regular meeting on Wednesday, November 1, 2017. Mr. Sweeney provided a description of the proposed re- development of Holy Ghost campus as well as the population served. The housing proposes to serve income eligible households, including seniors and families with children. Mr. Sweeney also provided an update on another housing re -development, Marquette Hall, located in the former Sacred Heart building. Neighborhood Specialist, Jerelyn O'Connor, attended the meeting and reported the proposed Holy Ghost re- development was well received by neighborhood association members. I concur with the recommendation and respectfully request Mayor and City Council approval. /Pi P:"12Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Teri Goodmann, Assistant City Manager Cori Burbach, Assistant City Manager Alvin Nash, Housing & Community Development Department Director 2 Masterpiece on the Mississippi TO: Michael Van Milligen, City Manager FROM: Alvin Nash, Housing & Community Development Director DATE: October 31, 2017 RE: Dubuque It wail All -America City I.' 2007 • 2012 • 2013 City support for Cohen-Esrey's application to Iowa Economic Development Authority for Low Income Housing Tax Credits to finance the redevelopment of former Holy Ghost school and convent Introduction This memorandum requests City Council support the Low Income Housing Tax Credit (LIHTC) application to be submitted to the Iowa Economic Development Authority (IEDA) by Cohen -Esrey for the redevelopment of the former Holy Ghost school and convent into affordable, housing. Background The City of Dubuque is committed to providing quality, affordable housing. One of the tools available to create affordable housing opportunities is the State of Iowa Housing Tax Credit Program, administered by the Iowa Finance Authority. This program provides incentives for developers to invest in quality, affordable rental housing for individuals and families with fixed or limited incomes. The Housing Tax Credit provides a dollar for dollar reduction (or credit) to offset an owner's federal tax liability on ordinary income for a 10 -year period. Each year, Iowa Finance Authority opens for applications in the fall. Eligible applications are scored and awards are made based on a number of criteria. The City Council designated the area at 2887 and 2901 Central Avenue as the Paragon Square Urban Revitalization with Ordinance 11-16, 4-18-2016. The area was designated for Urban Revitalization after Frantz Community Investors was awarded a 2016 Low Income Housing Tax Credit award to develop 29 affordable senior apartments on the Holy Ghost site. The City also provided support for three other 2016 LIHTC applications: Applewood IV, Horizon Development Group; Marquette Hall, Cohen -Esrey; Paragon Square; and University Lofts, MV Residential Development. The Iowa Finance Authority awarded credits to Paragon Square and Applewood IV in the 2016 Low Income Housing Tax Credit competition. Unfortunately, Frantz Community Investors was unable to proceed with the proposed development. The City of Dubuque provided support for three LIHTC projects in the 2017 competition: University Lofts, MV Residential Development; Marquette Hall, Cohen -Esrey; and Fifteenth Street Apartments, Full Circle Communities. All three applications received awards from the State, however MV Residential was unable to proceed with the University Lofts Project. The developers for the projects at Marquette Hall and Fifteenth Street Apartments are currently moving forward. Discussion Cohen -Esrey is now requesting City support for the 2018 LIHTC application to develop the former Holy Ghost school and convent at 2887 and 2901 Central Avenue into 27 historic and affordable apartments know as Central Avenue Historic Residences. This application is consistent with the adopted Urban Revitalization plan; however, the project City Council supported in 2016 was for affordable senior housing. The 2018 application is different from what City Council supported in 2016 because the target population is individuals and families. Seniors will be able to apply, but the project will not be exclusively for senior populations. To finance the project, Cohen -Esrey is seeking funding from multiple sources, including private funding, State and Federal Historic Tax Credits, Low Income Housing Tax Credits (9%), and support from the City of Dubuque. The City of Dubuque has supported similar projects using the Urban Revitalization Tax Exemption (URTE) to provide a ten year 100% tax abatement of the value added to the property by the improvements. URTE is a tool made possible through Iowa Code 404 and is designed to encourage the development and re -development in the interest of public safety, health, and well being. City support for this project ensures the project is financially feasible and demonstrates to the State of Iowa the community is supportive of the project. The proposed development will rehabilitate two vacant and underutilized structures on the Holy Ghost campus. The property is currently zoned OR -Residential, and will require no zoning changes as the proposed use is allowable with current zoning. The project is specifically designed to provide housing and the requested support from the City is limited to the rehabilitation of the existing structures. The buildings have been vacant for over a decade. This project will add quality, affordable housing in an area of the city targeted for economic and housing revitalization and will help support Dubuque's True North — Greater Dubuque Development's new initiative to bring transformative change to the north side of Dubuque. The City of Dubuque Consolidated Plan identifies a need for housing for elderly populations, homeless, and persons with disabilities. These populations often have limited income and housing choices and will likely benefit from the additional affordable housing options. The Consolidated Plan is a five-year plan for the use of Community Development Block Grant funds in the community. The plan examines housing needs for low and moderate income populations, earning up to 80% of area median income. The City Consolidated Plan, updated for Fiscal Years 2016-2020, identified housing cost burden as the primary housing problem faced by low and moderate income renters in Dubuque. The ACS five year estimates for Selected Housing Characteristics provides information on the number of households experiencing cost burden. Economists call a household "cost burden" when housing costs exceed 30% of the household income. 2014 ACS estimates show 52% of renter households are cost burdened, compared with 21 % owner occupied with a mortgage (Figure 1). With over half of the renters in Dubuque experiencing cost burden, the addition of affordable, accessible rental units will provide opportunity for residents to live accessible in housing they can afford. Brian Sweeney, Development Director with Cohen -Esrey, met with the members of the North End Neighborhood Association during their regular meeting on Wednesday, November 1, 2017. Mr. Sweeney provided a description of the proposed re -development of Holy Ghost campus as well as the population served. The housing proposes to serve income eligible households, including seniors and families with children. Mr. Sweeney also provided an update on another housing re -development, Marquette Hall, located in the former Sacred Heart building. Neighborhood Specialist, Jerelyn O'Connor, attended the meeting and reported the proposed Holy Ghost re -development was well received by neighborhood association members. Budget Impact Urban Revitalization tax abatement is for a 10 -year period, providing 100% tax abatement on the value added by the improvements to the property. The City Assessor worked with the Developer to determine the estimated real estate taxes per year. Based on the projected improvements to the structures, the estimated taxes would be $14,288 per year. After the abatement period expires the property will be taxed based on the assessed value for taxation as determined by the assessor. City of Dubuque Economic Development Director, Maurice Jones, has recommended supporting the project with $65,000 in grants for facade work, planning and design, financial consultant, and creation in the downtown. Recommendation I recommend that the City Council approve the attached resolution supporting the Low Income Housing Tax Credit program application to the Iowa Economic Development Authority by Cohen -Esrey for Central Avenue Historic Residences, housing project. Prepared by: Erica Haugen, CDBG/HCV Supervisor CC. Maurice Jones Laura Carstens Jerelyn O'Connor RESOLUTION NO. 359-17 SUPPORTING COHEN-ESREY APPLICATION FOR LOW-INCOME HOUSING TAX CREDIT FOR CENTRAL AVENUE HISTORIC RESIDENCES. Whereas Ordinance 11-16 of April 18, 2016, designated the Paragon Square Urban Revitalization as defined in Section 404 of the Iowa Code; and Whereas, the Developer Cohen -Esrey requested City support for the Tax Credit application to the State of Iowa to redevelop 2887 and 2901 Central Avenue and; Whereas, the Low -Income Tax Credit Application by Cohen -Esrey to the State of Iowa is consistent with the development of affordable, housing described in the Paragon Square Urban Revitalization Plan. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The City Council supports the development of affordable housing located at 2887 and 2901 Central Avenue and; Section 2. The proposed development for Central Avenue Historic Residences is located within the Paragon Square Urban Revitalization Area and eligible for a 10 -year 100% tax abatement from the value added by the improvements, estimated at $14,288 per year. Passed, approved and adopted this 6th day of November, 017. Roy D. BuMayor Attest: Keviirnstahl, City Clerk COHEN ESREY Petition to the City of Dubuque for Designation of 2887 And 2901 Central Avenue to become an URBAN REVITALIZATION AREA Petition submitted by: Cohen -Esrey Development Group October 18, 2017 Overview Cohen -Esrey Development Group (developers) has proposed to redevelopment the former Holy Ghost school and convent at 2887 and 2901 Central Avenue, into 27 historic and affordable apartments known as Central Avenue Historic Residences. Several funding sources will be utilized to finance the project including private funding, State and Federal Historic Tax Credits, Low Income Housing Tax Credits (9%), as well a support from the City of Dubuque through its willingness to utilize the state tool called the Urban Revitalization Tax Exemption (URTE) for a ten year period, and other city funding sources. 1. Eligibility of the Proposed Designation: Central Avenue Historic Residences qualifies for an Urban Revitalization area for the following reasons (language is quoted from Section 404.1 of the Iowa Code) It is in • "3. An area in which there is a predominance of buildings or improvements which by reason of age, history, architecture or significance should be preserved or restored to productive use." • "5. An area designed as appropriate for public improvements related to housing and residential development, or construction of housing and residential development, including single or multifamily housing." 2. Legal Description: Paragon Square -Sub of Lot 1 2887 Central Avenue — Lot 2. Parcel #1013155016 2901 Central Avenue — Lot 1. Parcel #1013155016 3. Valuation of Property: On October 17, 2017, Dubuque City Assessor, Rick Engelken, determined that the value of the property, based on the income and expense approach required of all Section 42 properties, would be assessed at $468,043, with the yearly taxes being $14,288. 4. Property Ownership and Neighborhood Participation: The current owner of the property is Holy Ghost, LLC. On September 29, 2017, Cohen -Esrey Development Group entered into a Purchase Agreement with the Seller for the sale of the property pending the approval of the state housing tax credits. On November 1, 2017, Brian Sweeney from Cohen -Esrey Development Group, is on the agenda of the North End Neighborhood Association (NENA) to introduce the project to the community. Mailings have been sent to the immediate homeowners in the area (names provided by the City) and NENA and Holy Spirit Parish are communicating to their members. 5. Zoning Classification: OR -Residential. No zoning changes will be requested. Proposed use is allowable with current zoning. 6. Applicability of Proposed Designation: The petition is applicable to the entire two parcels for use as senior housing. The petition is limited to rehabilitation of existing structures. LRJ .. ll If �_v LJN } it of ki..U. IIS 6800 West 64th Street — Overland Park, Kansas 66202 www.cohenesrey.com 7. Relocation: There are currently no residents or offices that occupy the properties and no relocation will be required. 8. Proposed Improvements: When completed, the development will have 27, one and two bedroom apartments. 19 units will be housed in the old school and 8 units in the old convent. The project will restore both of the buildings on the proposed parcels to their original historic significance. 9. Anticipated Impact of Improvements: The two buildings have been vacant for over a decade and have become a blight and a safety concern to the neighborhood. With a total development cost of $7.1 million and restoring the buildings to their original historic design, it will greatly improve the site and the neighborhood options for housing. 10. Funding Sources: Funding sources for the redevelopment will include private funding, State and Federal Historic Tax Credits, Low Income Housing Tax Credits (9%), as well as support from the City of Dubuque through its willingness to utilize the Urban Revitalization Tax Exemption (URTE) for a ten-year period. 11. Economic Justification: The historic rehab of old buildings into quality affordable housing is a very challenging and a very expensive endeavor. The City of Dubuque support of this petition is absolutely critical in receiving state housing tax credits from the Iowan Finance Authority. Given the very small margins for a project like this, the ten-year tax exemption is critical in helping make the project work financially. Summary Statement: The redevelopment of these historic buildings will be a boost to the neighborhood and the community by addressing the concern of a blighted property in a key development area and providing additional quality housing options for the area.