Fondell Exc Eagle Valley Subd.July 21, 2003
The Honorable Mayor and City Council Members
City of Dubuque
City Hall — 50 W. 13th Street
Dubuque, IA 52001
Dear Mayor and City Council Members:
I am requesting that Eagle Valley Subdivision be pulled from the July 21, 2003 City
Council agenda. We plan to resubmit this request along with our final plat approval
for the August 4, 2003 City Council meeting.
Sincerely,
Mark Fondell
Fondell Excavating, Inc.
cc: Michael Van Milligen, City Manager
MEMORANDUM
July 16, 2003
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
City Assistance to Facilitate Development of Eagle Valley Subdivision
James P. Kemp of Fondell Excavating, Inc. has requested City assistance to facilitate
development of Eagle Valley Subdivision, which is a new subdivision of affordable
owner-occupied housing along Roosevelt Road.
Planning Services Manager Laura Carstens is recommending the following:
Request - Loan for water main extension, $232,680.
Consistent with the Task Fome report, staff recommends that the water
installation costs to be paid back as the lots are sold, with a balloon payment at
the end of 5 years. The Water Department has $150,000 available; however,
$75,000 is being designated for the affordable owner-occupied development
proposed by Callahan Construction on Seippel Road. A $75,000 loan is
recommended for Fondell Excavating.
Request - Loan for sanitary sewer extension, $337,470.
Consistent with the Task Force report, staff recommends that the City finance
this cost in the same manner as it financed the Harvest View development. The
developer would make prorated repayments as the lots are sold, with a 5-year
balloon payment for the remaining balance.
Request - Purchase and install playground equipment for 2.25-acre park.
Consistent with the Task Force report, staff recommends budgeting $150,000 for
park equipment to create a neighborhood park. The park would be completed
after the public street to the park is installed, provided that the developer makes
1-2 acres of the parkland fiat and usable. This would be at least 6 years out in
the ClP.
Request - 42' ttqht-of-way for 27' city streets with parking on one side only.
Consistent with the Task Force report, staff recommends approval, provided the
developer meets the parameters for affordable owner-occupied housing.
Staff is further recommending that guarantees be required as the City Council approved
at their July 7, 2003 City Council meeting.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Laura Carstens, Planning Services Manager
MEMORANDUM
July 15, 2003
TO:
FROM:
SUBJECT:
Michael Van Milligen, City Manager
Laura Carstens, Planning Services Manager
City Assistance to Facilitate Development of Eagle Valley Subdivision
INTRODUCTION
This memo transmits the staff recommendations in response to a July 15, 2003 request
from James P. Kemp, Fondell Excavating, Inc. for City assistance to facilitate
development of Eagle Valley Subdivision. This is a new subdivision of affordable
owner-occupied housing along Roosevelt Road.
DISCUSSION
The City Council recently approved rezoning of the property from R-1 Single-Family
Residential to R-2 Two-Family and R-3 Multi-Family Residential zoning districts. A
portion of the subdivision remained zoned R-1.
The submitted final plat for Eagle Valley Subdivision totals approximately 20 acres
subdivided into 87 lots. Twenty-four lots will remain in the R-1 zoning district, 17 lots
wilt be platted within the R-2 zoning district, and 49 lots will be platted in the R-3 zoning
district. Approximately 2.25 acres of property will be dedicated as a park and storm
water detention facility.
Lot sizes wilt vary; most of the lots in the R-1 and R-3 districts are approximately 5,000
square feet in area. Most of the lots in the R-2 area are approximately 6,000 square
feet in area. There are a number of lots in the R-3 area that are in excess of 8,500
square feet, which will be developed for owner-occupied townhouses.
The proposed subdivision will have one main access from Roosevelt Road, which
consists of a 50-foot right-of-way and 31 feet of pavement back-to-back. There will be
sidewalks on each side of the access street with no parking permitted on either side.
The interior streets will have a 42-foot right-of-way with 27 feet of pavement back-to-
back, sidewalks on either side, and no parking on one side. There is a stub street
platted for a secondary access at the northwest corner of the development. This
Fondell Assistance Request
July 15, 2003
Page 2
access roadway will be directly adjacent to the proposed future water tower facility for
the City of Dubuque.
RECOMMENDATION
The assistance requested by Fondell Excavating, Inc. is in italics below. The City staff
recommendations follow. These recommendations are based on the Affordable
Housing Task Force Report.
Loan for water main extension, $232,680. Consistent with the Task Force report,
staff recommends that the water installation costs to be paid back as the lots are
sold, with a balloon payment at the end of 5 years. The Water Department has
$150,000 available; however, $75,000 is being designated for the affordable
owner-occupied development proposed by Callahan Construction on Seippel
Road. A $75,000 loan is recommended for Fondell Excavating.
Loan for sanitary sewer extension, $337,470. Consistent with the Task Force
report, staff recommends that the City finance this cost in the same manner as it
financed the Harvest View development. The developer would make prorated
repayments as the lots are sold, with a 5-year balloon payment for the remaining
balance.
Purchase and install playground equipment for 2.25-acre park. Consistent with
the Task Force report, staff recommends budgeting $150,000 for park equipment
to create a neighborhood park. The park would be completed after the public
street to the park is installed, provided that the developer makes 1-2 acres of the
parkland flat and usable. This would be at least 6 years out in the ClP.
42' r~qhf-of-way for 27' city streets with parking on one side only. Consistent with
the Task Force report, staff recommends approval, provided the developer
meets the parameters for affordable owner-occupied housing.
Guarantee to develop affordable housin,o,,
Staff recommends that the guarantee for development of affordable housing follow the
parameters of the Affordable Housing Task Force Report, with the financials updated.
The updated price of a single-family home for the target household is approximately
$134,000 with current interest rates. Staff is not recommending the use of the home's
sale price or the income of the household as parameters to be met for the affordable
housing development because they would be time-consuming and difficult to monitor.
Staff is recommending parameters derived from the Task Force report, with the
Fondell Assistance Request
July 15, 2003
Page 3
updated criteria in Mr. Harris' report, which would be included in a development
agreement for an affordable housing development. The terms of this development
agreement would be transferred to the buyer of any vacant lots. The intent of these
parameters is to encourage the construction of owner-occupied housing affordable to
the target households.
Parameters for Affordable Housing. These parameters are required to be met for at
least 80% of the lots in an affordable owner-occupied residential development, whether
it is single-family homes or two-family residential units. No requirements would be
placed on the remaining 20% of lots in the subdivision.
Limit on Sale Price of Lot
To qualify as affordable, lots in the R-2 portion cannot sell over $26,500. (This
price has been adjusted based on the Consumer Price Index from the original
price of $25,000 in the 2001 Task Force Report.) If Fondell Excavating, Inc.
builds the homes, then this condition would not apply.
Minimize Lot Frontage
To qualify as affordable, the tot frontage in the R-2 portion must be platted
between 50 and 75 feet wide and the maximum lot area cannot exceed 6,500
square feet.
Limit on Size of Housing Unit
To qualify as affordable, the housing unit cannot be over 1,200 square feet of
livable space.
Surcharge for Extra Square Footage
The builder of any house of more than 1,200 square feet in the R-2 portion must
pay to the City a $25 surcharge per square foot of livable space above the 1,200
square foot threshold. This livable space should not include any improvements
to the basement or garage. The surcharge would be collected in a revolving
loan fund to finance affordable housing projects.
Budqet Impact
The budget impacts of the staff recommendations for City assistance to facilitate the
affordable owner-occupied housing in Eagle Valley Subdivision are as follows.
As shown in the chart below, the amount of City assistance requested by Fondell
Excavating, Inc. is $720,150. The amount of recommended City assistance totals
approximately $562,470 based on availability of funding. Of this total, budgeting $150,000
for new park development is recommended. No portion of this financial aid is in the form of
Fondell Assistance Request
July 15, 2003
Page 4
waivers.
Staff has recommended City assistance of $412,470 through interest free loans, with
$75,000 for water main costs and $337,470 for sanitary sewer costs. Loan payments would
be made as tots are sold, with a balloon payment in 5 years. The amount would be
prorated on the number of lots in each phase of the subdivision.
Item City Service Amount of Amount of City Form of Existing Comments
Dept. Component City Assistance Assistance Program
Service Assistance Recommended
Requested
1 Water Ext. Main $232,680 $75,000 Loan Yes Hook up
fee
2 Sewer Ext. Main $337,470 $337,470 Loan Yes Hook up
fee
3 Park Park dev. $150,000 $150,000 City No Needs a
Div. expense CIP
ACTION STEP
The requested action step is to provide these recommendations to the City Council for
their consideration and direction.
Attachments
cc
James P. Kemp, Fondell Excavating, Inc.
David Harris Housing and Community Development Director
Pauline Joyce, Administrative Services Manager
Bob Green, Water Department Manager
Gil Spence, Leisure Services Manager
Mike Koch, Public Works Director
Gus Psihoyos, Assistant City Engineer
Kyle Kritz, Associate Planner
25 June 03
CITY OF DUBUQUE, IOWA
MEMORANDUM
To: Mike Var~ Milligen, City Manager
From: David I~rris, Housing and Community Development Department
Re: Up-date to Affordable Housing Task Force Report
We are currently in discussions with several developers who have expressed
interest in building affordable housing and utilizing the incentives recommended
in the report of the Affordable Housing Task Force, delivered in worksession to
the Council in December 2001. This memorandum provides an up-date to reflect
current real estate market conditions and to recommend revisions to the 2001
report.
Operating Principles and Assumptions
The City Council's directive to the Affordable Housing Task force was to research
and recommend ways to produce new single-family housing that is "affordable" to
a moderate-income household.
A "moderate-income household," at the time of the Task Force report, was
defined as earning $40 780, household size 4 persons, with two earners,
wages at $1 O/hour. This number was chosen as the target wage we
wanted employers being recruited to the City's newly annexed office and
tech parks to offer to their workers.
"Affordable" housing is defined as costing no more the 30% of gross
income for PITI: principal, interest, taxes and homeowner and mortgage
insurance.
3. Typical financing for this scenario assumed a 7.25% interest rate, 30-Year
term and 5% downpayment.
The Task Force assumed a "modest" new home, affordable to a family at
this income, would cost $90/square foot to build and be no more than
1100 square feet in area.
This home would include a 2-car attached garage, unfinished basement
with a lot priced at $30 000.
5. At $129 000, this home was not affordable.to the target family earning
$40 780. To be affordable, that home could sell for no more than
$118 000, leaving an $11 000 "affordability gap."
Compared with the average sale price of a new home in Dubuque's
market in 2000 - at $146 000 - that gap in affordability was $28 000.
Recommended Incentives to Reduce Development Costs
The Task Force report recommended the following incentives to developers to
reduce costs, in order to lower lot prices.
1. Public street pavement width reduced to 27 feet, right-of-way
width reduced to 42 feet. Parking restricted to one side only.
2. Water main and sanitary sewer connection fees and/or assessments to
be waived.
3. Lot prices capped at $25 000, increases adjusted annually to Consumer
Price Index.
4. Lot frontage minimum reduced to 50 feet; maximum width 75 feet.
Homes in affordable developments built larger than 1250 square feet to
have a $10/square foot surcharge assessed, to be used to capitalize an
affordable housing revolving loan fund.
7. PVC pipe to be allowed for water and sanitary sewer installations.
8. City Enterprise Funds to be used for O-interest, 5-year loans for
installation of water and sanitary sewer and stormwater systems.
8. Engineering Division to evaluate feasibility and cost effectiveness of
alternative street construction standards, to reduce costs.
9. 2000 International Residential Code to be adopted for use by Building
Services Department in permitting new construction.
Up-Date
Interest rates have significantly changed since the Task Force report was issued.
Low financing rates have dramatically impacted affordability, allowing a
moderate-income family to purchase a more expensive home. However, the gap
in price between what that family can afford and the house currently being built in
Dubuque's market has remained relatively constant.
The rate assumed in the 2001 report was 7.25% on a 30-year mortgage. For this
update report, the interest rate used is 5.25%.
The $10/hour wage rate targeted in the 2001 report has been increased by
annual 3% adjustments, resulting in a $10.61 wage for our target family earner.
For a two-earner household, this is a $44 136 annual income.
The $25 000 maximum lot price listed in the 2001 report has also been adjusted
for inflation, resulting in an up-dated price of $26 500.
Using all the other assumptions from the 2001 Task Force report, we calculate
that in today's market a Dubuque family earning $44 000 can afford a home
priced at $134 000.
Analysis provided by the Building Services Department shows that the average
permit cost for a new single-family home in Dubuque in 2002 was $125 000.
Adding an average lot cost of $35 000 brings the new home sale price to
$160 000; The "affordability gap" - between $134 000 and $160 000 - is
$26 000 for our target household.
Incidentally, the median sale price for a MLS-listed home in Dubuque County, in
2000, was $93 500. Figures provided by the Board of Realtors for this report
indicate that the median price in 2002 increased to $105 000.
Recommended revisions for implementation of Task Force proposals for
development of new affordable housing
In the two years since the Affordable Housing Task Force Report was issued, we
have had many discussions with developers considering new subdivisions. The
following recommendations have been generated by staff from the Housing,
Planning, Water and Engineering Departments in response as a means of
establishing standards for implementation of the Task Force Report
recommendations.
The Task Force Report recommended that the buyer's income and the
sale price of the home be restricted. As a practical matter, enforcement of
these restrictions is problematic. Developers have expressed to us a
concern that these restrictions would result in difficulties in planning,
financing and marketing their subdivisions. AS an alternative, the following
conditions are proposed for developers wishing to build affordable new
single-family homes and to take advantage of the incentives
recommended in the Report.
The operative principle is that we can achieve our goal of building housing
affordable to working families by limiting the size of lots and homes -
relying on a "market" model - rather than by mandating income limits
and sale prices.
80% of the homes in the subdivision must meet standards for
affordability. This proposal reflects land development variables and
allows for as many as 20% of the lots in a subdivision to be larger
than for "affordable" standards.
b. Maximum size of the affordable single-family home lot is 6500
square feet; street frontage 50-75 feet.
c. Maximum size of finished space in the home is 1200 square feet.
A surcharge of $25/square foot is levied if this size is exceeded.
The rationale for these figures is explained as follows:
a. The current adjusted maximum lot price, as stated, is $26 500.
b. The maximum home price our target household can afford is
$134 000.
c. This leaves $107 500 as the target price for the new home.
d. At $90/square foot, a 1200 square foot home costs $108 000.
As affordability is markedly influence by prevailing interest rates, staff will
annually review these standards and propose revisions, as needed, to
reflect rate variations.
2. A development agreement will be signed with the subdivision developer,
specifying these standards and requiring repayment of any City subsidies
if conditions are not met. Conditions ofthe agreement will attach to the lot
at sale, requiring the home builder's acceptance and compliance.
Subsequent improvements to the home, done either by the initial buyer or
after resale, will not be regulated by this agreement.
3. Eligibility for use of the City's revolving loan funds for sanitary sewer and
water system installation will be prioritized for developers agreeing to
produce affordable housing.
FONDELL EXCAVATING INC.
July15,2003
2270 Crown Point Road
Dubuque, Iowa 52002
Mark Fondell · (563) 584-0505
Jim Kemp · (563) 590-0406
Fax (563) 583-9065
Mr. Mike Van Milligan, City Manager
City of Dubuque
City Hall
50 West 13t~ St.
Dubuque, IA 52001
RE: Eagle Valley Subdivision
Dear Mike:
We are requesting the City reserve monies ~om the Utility Revolving Loan Fund for
Sanitary Sewer and Water Main Extensions and that Leisure Services provides & install
park equipment in the future in our new development. In addition that the City allow 42'
street right of ways with 27' streets (parking one side only). We believe this will be of
great help in making this project more affordable. Please see attached preliminary bid
schedule for requested amounts.
Thank you for consideration and interest in our development.
Sincerely,
Ivlark Fbndell, Presadem
Fondell Excavating Inc.
.,~/ames 1'. Kemp, X ' , tary, asurer
~/Fondell Excavating, Inc.
CCI
Laura Carstens, Planning Services Manager
Mike Koch, Public Works Director
Gus Psihoyos, Assistant City Engineer
David Harris, Housing Services ~ger
Bob Green, Water Department Manager
Attached:
Eagle Valley Subdivision
Site Improvements
Preliminary Bid Schedule
· 'EAGLE VALLEY SUBDIVIS--------'----------~ON'
SITE. IMPROVEMENTS
PRELIMINARY BID SCHEDULE
DIP '
§"x 8"Te~
11 1/4' Bend
' Bend
Hydrant wNalves, Tees and.F'r['tings
"Water Laterals
Water ValVes
SUBTOTA~
· SE-~/ER "-=
Manholes
Laterals
Laterals