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Home My WebLink AboutA001 - Council Action Summary from October 22, 2002 meeting COUNCIL ACTION SUMMARY Meeting Date: 10122102 Agenda Item #: Comments SUBJECT: Letter from The ROSE of Ames, LP requesting real estate tax abatement for an affordable assisted-living facility ACTION TAKEN: Referred to staff. MOTION BY: Hoffinan SECOND BY: Goodhue VOTING AYE: Cross, Goodhue, Hoffinan, Quirmbach, Vegge, Wirth VOTING NAY: None ABSENT: None By: Jill Ripperger, beput3aity Clerk Copy to: Duane Pitcher Brian O'Connell R The ROSE of Ames, LP -.41bralal e its.ii3led,ivin y. 1257 2'd Sireef Tlorlk wife #20 1 Saud kapdi /i'/inneida 56379 320-252-2528 Fax: 320-252-0992 September 30, 2002 Mayor Ted Tedesco City of Ames 515 Clark Ave. Ames , Iowa 50010 Re: The ROSE of Ames "an affordable assisted living facility" Dear Mayor Tedesco: One of the greatest unmet housing needs in Iowa, indeed in the entire Nation, is the availability of affordable assisted living for frail elderly seniors. Most of the new developments, 95% or greater, are designed as"market rate-private pay" facilities. According to an Iowa State Department of Elder Affairs spokesperson there are 3,923 assisted living units in Iowa. Of these units, only 13% (524 units) are affordable to low income seniors. To meet the existing need for affordable assisted living in Iowa another 3,662 units would need to be developed. According to a recent study commissioned by the Iowa State Department of Elder Affairs and conducted by Hanna:Keelan Associates, there is an immediate demand in Story County for 164- affordable assisted living units. (And this is projecting a meager 10% utilization factor. In other words, only 10% of the low-income seniors in need of such a facility would choose to live there.) I propose to build and operate a fifty-Six-unit, affordable assisted living facility in Ames. r The major financing tool available to make such a facility affordable in Ames is use of the Federal Sec. 42, Low Income Housing Tax Credit (LIHTC) Program. The applications for the year 2003 round of funding are due at the Iowa Finance Authority on Nov. 25, 2002. The Iowa finance Authority(IFA) is the State Agency responsible for awarding the needed tax credits. The credits are awarded, through a competitive application process, to developers scoring the highest in a competitive process. The Qualified Allocation Plan (QAP) sets out basic "Threshold Criteria" which must be met by all developers as well as incentive scoring categories that, if met, add points to the developers total. Applications meeting all threshold requirements and scoring the highest in the incentive scoring categories are awarded the tax credits. The tax credits are used by investor/owners of the project who, in turn, contribute substantial equity to the project, thus making lower rents feasible. (FYI; under current IFA criteria we will be legally committed to maintaining affordable rents for the facility for fifty-years and, renting the units to households at, or below, the 60% average medium income level for Story County.) One of the threshold tests in the application is local financial participation as stated in rule Sec. 5.5.9 (Threshold Requirements) which requires, and defines, a minimum level of local financial participation. (See attached). Without some level of local financial participation in the project IFA will not consider the project for funding. The minimum financial support acceptable to IFA is financial support equal to 1% of the hard construction costs of the project. In our case, we are estimating hard construction costs of $5,000,000 so financial support in the minimum amount of$50,000 is required. I am proposing the City authorize a three-year, 100% per year, real estate tax abatement (or rebate) which I would convert to cash equity through a private bank loan. This cash would be used as part of the project financing and would satisfy IFA requirements. I would need City Council approval for such an abatement ASAP so I may proceed with the many other details required to assemble a winning tax credit application. As I mentioned, tax credit applications are due by Nov. 25, 2002 for the year 2003 round of funding. If we are granted an IFA tax credit award we could start construction by June 1, 2003. We are currently in the design stages for the facility but can tell you we expect to have about 52- one-bedroom and 4-two-bedroom units. (Unlike many assisted living facilities, our project will provide full kitchens in each apartment). We anticipate a three story structure with, of course, an elevator. The facility will have a central kitchen for full meal service, a beauty shop, library, lounge areas, a family gathering (dining) area for special gatherings and parties and a central bathing area for residents needing bathing assistance. We will also provide office and conference room space needed by Home Health Agency and other professionals serving the residents. The building will have a low maintenance exterior including 60% brick. Please know as well, IFA requires a City Council"resolution of support" for the proposed project. (Proposed form attached). Thank you for your consideration this request. I would be happy to appear before the City Council at any time to make this request formally and answer any question the council may have. I have been in contact with Mr. Brian P. O'Connell, Director of your Department of Planning and Housing, who has been very helpful in terms of providing me with information on zoning and planning issues. As of today, we have not yet secured a site for the project. However, we are looking at two sites, both properly zoned, that would be wonderful locations for the proposed facility. (We will have a site under contract before we ask the Council to meet and consider this request) c ely hard He on General P er cc Daryle Vegge, City Council Sharon Wirth, City Council Steve Goodhue, City Council Herman C. Quirmbach, City Council Judie Hoffman, City Council Russ Cross, City Council Steve Schainker, City Manager Bob kindred, Assistant City Manager Sheila Lundt, Assistant to the City Manager Brian P. O'Connell, Director, Planning &Zoning Vanessa Baker-Latimer, Director, Ames PHA Carla Berg-Pope, Director, Affordable Assisted Living Program, IFA (EPA) and Occupational Safety and Health Act (OSHA) provisions shall apply when applicable. 5.6.10 The minimum development characteristics as outlined in an attachment to the Application that includes both minimum construction and scoring requirements. 5.7 Market Study. All Projects requesting Tax Credits, regardless of the number of units, must have a Market Study submitted with the Application. The Market Study must document the housing needs of the community. If the Market Study or IFA's analysis of the Market Study and/or analysis of independent information obtained by IFA does not demonstrate, at the sole discretion of IFA, that the locality needs the low-income housing as proposed by the Project, the Project will be rejected at threshold and will not be scored. The Market Study requirements will be provided as an attachment to the Application and will include, but not be limited to, the housing needs of low-income and /or special needs population in the area served by the Project, proposed project description, market area analysis, supply analysis, demand analysis, and conclusions and recommendations. The study must be conducted at the Sponsor's expense by a disinterested party approved by IFA. 5.8 Capital Needs Assessment for Rehabilitation, Preservation and Adaptive Reuse Projects. The Application will require the Sponsor to acknowledge the Capital Needs Assessment requirement and that IFA will use it in the Carryover evaluation. The Capital Needs Assessment must be prepared by a competent third party, such as a licensed architect or engineer. The third party may be a member of the Development Team with prior approval by IFA after the allocation of Tax Credits, but may not be the Sponsor. The assessment must include a site visit and physical inspection of the interior and exterior of units and structures, as well as an interview with available on-site property management and maintenance personnel to inquire about past repairs/improvements, pending repairs, and existing or chronic physical deficiencies. The assessment must also consider the presence of hazardous materials on the site. The assessment must include an opinion as to the proposed budget for recommended improvements and should identify critical building systems or components that have reached or exceeded their expected useful lives. The Application will fully describe the Capital Needs Assessment requirements. 5.9 Local Contributing Effort. The Application will require the Sponsor to document a Local Contributing Effort by a public or private agency with a value of at least one percent of the Hard Construction Costs. The IFA provided exhibit in the Apn!ication must be used in documenting the Local Contributing Effort. A Local Contributing Effort will not be considered as qualifying for this Section if the Local Contributing Effort was made more than one year before the effective date of the QAP unless it is a contribution in the form of land or buildings. The agency making the Local Contributing Effort must indicate the value of its contribution including a description of land value and how it was determined. The value of the Local Contributing Effort is the value of the contribution made by the agency minus the value of any consideration or accommodation received by the agency in return for the contribution. The Local Contributing Effort may be contingent upon the receipt of a Tax Credit Reservation. 5.10 Commitment to Notify Public Housing Authority (PHA) of Vacancies. The Application will require the Sponsor to notify the local PHA having jurisdiction in the political subdivision where the Project is located. The letter shall state the Sponsor's desire to be placed on the PHA's list. The Sponsor must provide a copy of this letter with their Application. 8/22/02 14 ' T ArlinVion Place, —9nc. 1257 2nd sireel /TIor141 Suite #201 Sauk Kapich /i'/in.n.e3ola 56379 320-252-2528 Fax: 320-252-0992 Mayor Ted Tedesco City of Ames 515 Clark Ave. Ames, Iowa 50010 Re: The ROSE of Ames "an affordable assisted living facility" Dear Mayor Tedesco: Arlington Place, Inc. is a corporation consisting of Ralph Schmitz and Richard Helgeson. During the past five years we have constructed 236 units of assisted living for the frail elderly with the most recent our 35-unit facility in Oelwein, Iowa which opened for business on Oct. 1, 2002. All our facilities are owned by separate partnerships with Arlington Place, Inc., as the General Partner. In Ames, only Richard Helgeson will be involved as there is a state cap on the number of housing credits any entity is eligible to receive in any one year. Ralph Schmitz is submitting tax credit application in Harlan, Iowa and Independence, Iowa, which will utilize his annual potential credit use making him ineligible to participate in the Ames project. Richard Helgeson will serve as the General Partner through a new corporation, The Affordable Assisted Living Corporation of America and the ownership will be vested in a yet-to-be-created limited partnership, The ROSE of Ames, LP. Enclosed are a few pictures of our typical assisted living facility. Both the Grundy Center and Oelwein facilities are reasonably close to Ames. I invite all members of the staff and council to visit one, or both, of these facilities in the next few weeks. As a matter of fact, it would be my honor to host a tour for the council any day soon. Please call me if you would like to arrange for a special tour. However, please understand that the proposed Ames facility, yet to be designed, will differ substantially from our other buildings. The Ames facility will be a three-story building while all our other facilities are single story buildings. There are two major reasons for utilizing a three story building in Ames. The reasons are: 1) A single story building works fine for a smaller facility(24 to 35-units) but in larger facilities a two or three story building works better as the hallway distance can be reduced making access to the kitchen and other common areas more comfortable for the residents. 2) The price of land. In larger cities, land cost is usually higher resulting in the need to maximize the units per acre. In small cities land cost is often of less concern. In spite of this, I think a visit to our nearby facility(s) would be beneficial as the quality, service plan, space design and decor of the proposed Ames facility will match that of our other Arlington Place facilities. 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M « a 3 • -, €� ttgaF § City Clerk's Office 515 Clark AvenueA,P,,. 0.Box 811 Coring People Am I es, A 50010 Quality Programs Exceptional Service Phone: 515-239-5105 Fax: 515-239-5142 October 25, 2002 Mr. Richard Helgeson The ROSE of Ames, LP 1257 Second Street North, Suite#201 Sauk Rapids, Minnesota 56379 Dear Mr. Helgeson: At their meeting of October 22, 2002, the Ames City Council referred to staff your letter requesting real estate tax abatement for a proposed affordable assisted-living facility in Ames. Copies of your letter have been forwarded to Duane Pitcher, Finance Director, and Brian O'Connell, Director of Planning and Housing, for their response. You will be notified when this issue is to be heard by the City Council. If you have questions in the interim, please contact Mr. O'Connell or Mr. Pitcher at 239-5400 or 239-5113,respectively. Sincerely, CAG�Lujzl Diane Voss City Clerk /dry