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CP100 (Affordable Housing Fund Policy)CITY OF JANESVILLE Policy No. 100 Page 1 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division PURPOSE The purpose of the Affordable Housing Fund is to assist developers in addressing the lack of quality and affordable housing stock available in the City of Janesville, especially for its lowest-income residents, through incentivizing the construction of new multi- family units by non-profit or for-profit developers. The goal of the Affordable Housing Fund is to provide gap financing for projects in the City of Janesville that seek to increase the supply of safe, quality, affordable rental housing that facilitates long-term affordability and sustainability. In addition, the funds seek to achieve a wider dispersion of affordable rental units throughout the City The fund will prioritize projects that subsidize such residential units and that set-aside units for people transitioning out of homelessness. STATEMENT OF POLICY Background The State of Wisconsin created the Affordable Housing Extension program (“AHE”) to the Tax Incremental Finance law in 2009. Under this provision, cities with a Tax Increment District (“TID”) that has retired its debt and paid for all of its project costs can extend the life of the district for one year. The funds captured in the one-year extension must be used solely to benefit affordable housing and improve housing stock anywhere in the community. A city must use at least 75% of those tax increments to benefit affordable housing anywhere in the community. Affordable housing is defined as housing costing no more than 30% of the household’s gross income. Any remaining portion of the increment must be used by the municipality to improve its housing stock. Affordable Housing Funding 1.1 Funding Availability Funding will become available intermittently as TIDs close and the one-year extensions are approved by the City Council through a resolution. 1.2 Funding Amounts CITY OF JANESVILLE Policy No. 100 Page 2 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division • The City of Janesville anticipates providing gap financing ranging from $15,000 to $60,000 per unit of affordable housing • The amount of subsidy offered will reflect the extent to which proposals match the City’s overall needs, goals, and objectives • Maximum amount per project: $1,500,000 1.3 Loan Terms • A project creating all of the units for households exiting homelessness, the loan shall be 0% interest with the principal deferred for 20 years or until time of sale • For projects where at least 50% of the project is set aside as affordable units for those making 60% or less of county median income, the loan shall be 1% simple interest due annually, with the principal deferred for 20 years or until time of sale • For all other projects, the loan shall be 2% simple interest due annually, with the principal deferred for 20 years or until sale • A mortgage or land use restriction will be recorded at the Rock County Register of Deeds Office, and the affordability and income requirements will be in place as long as funds are owed to the City • Eligible costs include acquisition, demolition, site preparation, construction costs, architecture, and engineering. Affordability Definition 2.1 Affordability The maximum program gross rents will not exceed 30% of the household’s gross income and affordable units cannot exceed the current rent levels in effect for the City of Janesville Housing Choice Voucher (Section 8) program. Tenants must be qualified upon initial leasing of the unit by the developer or the assigned management and may be required to re-certify annually. The City of Janesville retains the right to conduct a property inspection at any time to ensure that the property is being maintained properly. Eligibility and Application 3.1 Applicant Eligibility • For-profit and non-profit developers with demonstrated experience managing and developing multi-family projects with an affordability component CITY OF JANESVILLE Policy No. 100 Page 3 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division • Projects must be located in the City of Janesville • Projects must meet the affordability definition in section 2.1 of this document • Projects where the developer owns the land in fee simple or has the land under a binding offer to purchase 3.2 Application Process • The Developer must meet with the Economic Development Office and the Housing Services Division to determine eligibility • Staff will review the application for eligibility and against the criteria outlined in this policy • Prior to closing on the loan, staff will collect the following documents from the developer: o Evidence of all secured financing, including all terms and conditions o Copy of a partnership agreement or operating agreement if the applicant is a partnership or limited liability corporation. o Statement of cash contributions of any partner or LLC members o Copy of construction cost estimates, construction contract, and preliminary bids o For Low Income Tax Credit projects, documentation of the syndication costs (legal, accounting, tax option) for the organization/individual(s) who will syndicate and sell the offering to ensure that the project can support the fees necessary to syndicate/fund the project o Agreements governing the various reserves which are capitalized at closing to verify that the reserves cannot be withdrawn later as fees or distributions • The City of Janesville Economic Development Office will receive draw requests and process loan disbursements 3.3 Application To apply for the Affordable Housing Fund, applicants should complete the Affordable Housing Fund application. The application will allow the developer to describe the proposed development concept and their experience developing and operating multi-family, affordable housing projects. CITY OF JANESVILLE Policy No. 100 Page 4 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division Project Summary- Describe basic information on project sponsors and project ownership Project Description- Include the following: • Project narrative-Describe how the proposed project meets the City’s goals • Design and Quality-Describe the construction of the units and the materials used • Units by Bedroom Count and Income Levels • Project Schedule • Low Income Housing Tax Credit (LIHTC) self-score if applying for LIHTC funds • A concept plan and site plan-Submit both plan view and elevations • Location of the site regarding proximity to schools, shopping, employment, recreational activities, and public transportation Development Budget • Sources and uses budget Financing Sources • Financing narrative Project Operations • Operating narrative • Relationships with agencies providing supportive housing services, case management, and residential support services • Proposed rents detailed by unit size and income level • Operating, services and rent subsidy sources • Tenant selection plan, sample lease and all lease addendums Organizational Capacity • General Ownership experience • Personnel • References • Property Management relationships • Resume of Lead Project Manager CITY OF JANESVILLE Policy No. 100 Page 5 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division • Commitment letter for non-profit organizations providing supportive services • Experience with low-income populations and the Housing Choice Voucher Program • Ongoing involvement with the project, building management, and maintenance plan • Corporate philosophy on affordable housing, fair housing, and diversity, equality, and inclusion Evaluation of Application 4.1 Project Description and Technical Approach Evaluation of the organization’s approach to the project, proposed design quality, and success in understanding and meeting the City’s goals and visions for multi- family development. Conformance with adopted plans. 4.2 Development Concept, Site Design, and Proposed Location Strength of design concept, sensitivity to neighborhood context, readiness to proceed. Demonstrated commitment to energy efficiency and sustainable building design. Proximity of proposed site to public transit, schools, employment opportunities, and shopping districts. Project amenities. Location in a low poverty census tract. 4.3 Financial Soundness and Capacity to Obtain Funding for the Project Evaluation of the financial soundness of the proposed funding plan and the capacity of the developer to successfully obtain the funding necessary for the project, including operating subsidies. 4.4 Property Management Experience and reputation of the developer, owner, and property management company. If the developer, owner, or property management company currently conduct business in the City of Janesville, staff will review a history of Order to Correct, complaints, and police calls regarding those properties. If the parties have no current projects in the City of Janesville, staff will rely upon references of other similar projects in other communities. CITY OF JANESVILLE Policy No. 100 Page 6 of 6 CITY COUNCIL POLICY STATEMENT Date Issued: 7/11/2022 Revised: 9/11/2023 General Subject: Affordable Housing Fund Effective Date: 9/12/2023 Specific Subject: Allocation of the Tax Incremental Development Extension Funds Cancellation Date: Supersedes No. Responsible Economic Development Office/ Dept./Div.: Housing Services Division Property management should have experience with the specific type of housing being proposed. 4.5 Supportive Housing Quality of the plan to provide housing units intended for households who are exiting homelessness. Experience with individuals with disability, serious mental illness, or substance addiction. Experience with domestic violence survivors Established relationship with and support of local area service providers. Plan to lower barriers for people experiencing homelessness. 4.6 Organizational Capacity The City is seeking to invest in a developer that represents a sound, long-term investment in scarce housing resources. The City will evaluate whether all involved parties have demonstrated the experience necessary to execute the project within budget, secure funding, and operate the development over the long term. The City will also determine if the mission, vision, and values of the applicant aligns with those of the City of Janesville.