HomeMy WebLinkAbout01-15-2015 Housing and Community Development Commission*REVISED* AGENDA
HOUSING AND COMMUNITY DEVELOPMENT COMMISSION
IOWA CITY PUBLIC LIBRARY
MEETING ROOM A
123 S. LINN ST., IOWA CITY
THURSDAY, JANUARY 15, 2015
6:30 P.M.
1. Call Meeting to Order
2. Approval of the November 20, 2014 Minutes
3. Public Comment of Items Not on the Agenda
4. Staff/Commission Comment
5. Consider the Allocation of $200,000 in Uncommitted FY15 HOME Funds
6. Consider Updates & Amendments to the ICHA's Housing Choice Voucher
(HCV) Administrative Plan
• Recommendation to City Council
7. Review of the FY16 Allocation Process & Housing Proforma
8. Discussion Regarding FY16 Aid to Agencies Funding Requests
• Discuss Aid to Agencies Applications (www.icgov.org/actionplan)
• Develop Aid to Agencies Budget Recommendation to Council
9. Monitoring Reports
• FY15 The Housing Fellowship— CHDO (Zimmermann Smith)
• FY15 Crisis Center —Aid to Agencies (Zimmermann Smith)
• FY15 Shelter House —Aid to Agencies (Staff)
10.Adjournment
MINUTES PRELIMINARY
HOUSING AND COMMUNITY DEVELOPMENT COMMISSION
NOVEMBER 20, 2014 — 7:00 PM
DALE HELLING CONFERNCE ROOM, CITY HALL
MEMBERS PRESENT: Peter Byler, David Hacker, Jim Jacobson, Dorothy Persson,
Christine Ralston, Angel Taylor, Rachel Zimmermann Smith
MEMBERS ABSENT: Michelle Bacon Curry, Andrew Chappell
STAFF PRESENT: Marcia Bollinger, Tracy Hightshoe
OTHERS PRESENT: Kyra Seay
RECOMMENDATIONS TO CITY COUNCIL:
HCDC recommends the City Council approve the 2016-2020 Consolidated Plan with the
following changes: Employment Training and Transportation be included as public service
priorities, the same public service priorities be used for public facilities, and as opposed to a
$50,000 minimum award for public facilities the language be changed to no more than two public
facilities shall be awarded funding per funding round. The Commission also recommends that
the preference under the economic development set -aside shall be for micro -enterprise
assistance.
CALL TO ORDER:
The meeting was called to order at 6:30 PM.
APPROVAL OF SEPTEMBER 18. 2014 MINUTTES:
Ralston moved to approve the minutes of the September 18, 2014 meeting with minor edits.
Persson seconded.
A vote was taken and the motion carried 7-0.
PUBLIC COMMENT OF ITEMS NOT ON THE AGENDA:
There were none.
STAFF/COMMISSION COMMENT:
Hightshoe introduced Marcia Bollinger, staff member in Neighborhood Services who will be the
lead contact for the Aid Agency projects.
REVIEW OF THE DRAFT 2016-2020 CONSOLIDATED PLAN (a.k.a. CITY STEPS):
Zimmermann Smith stated that the review of the draft consolidated plan is something fairly new
to many members of the Commission so Hightshoe will guide the Commission through the
document. It is a HUD mandated document, so there is not a lot of changes the Commission
can make in regards to formatting.
Hightshoe explained that the Consolidated Plan is a five-year plan to guide the City on how to
spend the CDBG and HOME dollars received each year. The Plan includes an estimate of the
funds we anticipate receiving; hcwever the actual amounts are determined by the program
income received during the 5-years and annua! approval of a budget by Congress. Hightshoe
stated they anticipate the allocations will likely go down over the next 5-years given the federal
climate. Therefore, when Hightshoe mentions an amount, it will be estimates, subject to change.
In the five-year plan there is a lot of data. The consultant, per HUD guidance, pulls much of the
data from Community Housing Authority System (CHAS) and the 2010 Census. Hightshoe asked
the Commission to focus on the priorities identified and the set -asides. She distributed two
documents for discussion. The first was the proposed set -aside activities and amounts. In the
last Plan, the Council established set -asides for rehabilitation, economic development, etc. by
Council resolution. In this Plan, the set -asides are directly identified. A separate Council action
will not be needed. Set -asides means funds are directly allocated to that activity, typically
administered by City staff. Set asides include rehabilitation, economic development, public
infrastructure (neighborhood amenities), Aid to Agencies and administration. The Commission
will recommend allocations for the entire Aid to Agencies budget under a different allocation
process in January. The other set -asides will be administered by staff. The CDBG public
service allocation is limited by HUD rules to no more than 15% of the CDBG entitlement plus last
year's program income.
The set -asides also support the Owner -Occupied Housing Rehabilitation program. In the
previous Council resolution, 13% of the CDBG and HOME entitlement plus CDBG rehab
program income was allocated to rehabilitation. With federal entitlements going down, it was not
sufficient to maintain our existing program. In the last few years, the City has applied for and
been awarded additional funds through the competitive process. The rehab. set -aside is now set
so that the City can continue to complete about 20 — 25 homes per year. Economic
development used to be 15% of the CDBG entitlement but in this proposed plan it is lowered as
more businesses have greater access to credit than they did in 2008/09. The amount has been
dropped to $50,000 and the oversight is done by the City Council Economic Development
Committee.
To align with the City's Strategic Plan we have introduced a new set -aside for public
infrastructure for neighborhood improvements in the amount of $75,000. This will grant greater
flexibility in responding to neighborhood needs and efforts to assist with neighborhood
stabilization. Staff will survey neighborhood needs, get feedback from neighborhoods and/or
neighborhood representatives and work with Public Works staff to price and bid projects such as
sidewalk connections, neighborhood parks improvements, increased lighting, and streetscape
improvements in low income census tracts that are not primarily student dominated.
Improvements to the downtown neighborhoods are possible if for a specific low -moderate
income household (must be income certified) such as sidewalk replacements.
Byler asked about the $235,000 in CDBG and $90,000 in HOME for rehab. and how it was
caiculated. Hightshoe clarified that amount is based on number of projects per year that the City
hopes to complete (20-25) and to cover the administrative costs to complete the projects. The
HOME set -aside for $90,000 for owner -occupied housing rehabilitation should be stated with the
CDBG set -asides for clarification, it was omitted by mistake.
Hightshoe stated that once the CDBG set -asides are removed there is approximately $80,000
available each year for public facilities and/or housing activities. There will be approximately
$298,000 available for HOME eligible housing activities. In the application, It states the
minimum award is $50,000. With $80,000 available, staff recommends the wording be changed
to no more than two CDBG projects in each funding round to grant some flexibility on the amount
allocated to one or two projects.
Byler asked who set the $50,000 project minimum amount. Hightshoe stated it was
administration's preference to start making a larger impact with our limited funds and factoring
administrative time to complete the projects.
Hightshoe stated that in total, what will be allocated out in March with CDBG,'HOME funding
awards is about $378,000. There will be $80,000 in CDBG eligible projects and $298,000 for
HOME projects. The Aid to Agency budget includes $100,000 in CDBG funds. HCDC w0l be
recommending the budget for the entire Aid to Agency pool of funds that includes an additional
$278,000 in City general funds in January. In total, the Commission makes a budget
recommendation for approximately $756,000 in federal and local funds to eligible projects
annually.
Jacobson asked if the CDBG/HOME budget for competitive allocations (approx. $378,000) is
consistent with other years, because it seems low. Hightshoe confirmed that it was lower due to
the set -asides.
Hightshoe stated that HCDC can make recommendations to Council about set -asides, both the
activity and the amount of funds allocated to it. Council has final approval, but will consider
HCDC recommendations.
The second item Hightshoe wished to point out to the Commission from the Plan is the priorities.
In 2011 — 2015 all eligible activities were listed and were prioritized as high, medium, low or no
need. Any activity could be funded, except no need, without a Consolidated Plan amendment.
In the 2016-2020 Plan an activity may only be funded if identified as a priority. If not a priority
and Council wishes to fund, a Consolidated Plan amendment must be done. Hightshoe
suggested HCDC review the priorities. The Commission has the ability to edit the list, expand it,
or shorten it.
Hightshoe pointed out the priority changes from the 2011-2015 plan (high priorities) to the new
2016-2020 plan.
Byler commented that the economic development committee reviews the fagade improvements
and small business assistance (including micro -enterprise), but some of these activities such as
fagade improvements don't necessarily assist extremely low, low income or moderate income
households. That seems to be a lot of money spent on an activity that could be better used to
benefit the extremely low or low income community. Hightshoe explained that 70% of the CDBG
activities must benefit low -moderate income (LMI) persons. There are some eligible activities
that don't require a LMI benefit. Fagade improvements are a CDBG eligible activity in an urban
renewal area that doesn't require a LMI benefit. It would be considered as preventing slum and
blight. Iowa City has various urban renewal areas founded on slum and blight in addition to the
City -University, such as the Towncrest Urban Renewal Area.
Persson asked if within the economic development set -aside could it be limited to only loans for
small businesses? Hightshoe confirmed it could. There was discussion regarding the funds
going to downtown businesses. Hightshoe stated that to be eligible the business has to hire
primarily LMI persons without requiring advanced degrees or certifications or be considered a
micro -enterprise (5 or fewer employees and/or employees, 51 % of which are LMI).
The City Council Economic Development Committee reviews the economic development
activities. The consensus of HCDC was to recommend that this set -aside focus on micro -
enterprise assistance and, if necessary, that fagade improvements be limited to areas of town
that really need revitalization.
Hightshoe explained a new partnership with MidWestOne bank regarding loans for business
owners under 80% median income. Applicants will apply to the City, the City will approve or
deny and forward loan approvals to MidWestOne. MidWestOne will enter a loan agreement,
provide the funds and service the loan, including collection if the borrower is delinquent. The
City will guarantee the loan amount. Having MidWestOne service the loan provides better
collection services and also provides the opportunity for the borrower to establish a line of credit
with a commercial lender and provides a lending history that can be used to obtain credit at other
banks.
HCDC discussed the priorities in the draft CITY STEPS Plan. Jacobson commented on the
listed priorities, and questioned the omission of transportation. Hightshoe stated in the 2011-
2015 plan it was a high priority, but in the 2016-2020 plan is was not identified as a priority.
Hightshoe stated the consultants may not have included as the cost for transportation services
often exceeds the amount of CDBG funds available, such as the costs of an additional bus line,
etc. CDBG funds could assist with a 'taxi cab voucher program that requires much less funding.
Ralston stated that it's best to have as much on the priority list as possible since that is the only
way to receive funding. Zimmermann Smith questioned why employment funding is not listed as
a priority, as well as crime prevention.
Jacobson asked if the Commission was limited to the number of priorities. Hightshoe replied that
there is no limit to the number of priorities, but there is only $100,000 of funds in public services
to be allocated and about $80,000 for public facilities/housing with CDBG funds.
Zimmermann Smith requested that employment training be added as a public services priority.
Discussion on crime prevention, financial literacy, transportation and elder services priorities.
Ralston questioned what would be an example of an activity that would fall under the public
facilities realm. Hightshoe stated that the way the draft Plan is worded any activity that benefits
low income households would be eligible.
Hacker recommended keeping the priorities general and allowing the greatest flexibility
The Commission questioned the statement of "large family' as one of the desirable recipient
groups. Hightshoe stated the Plan's definition of a large family is a household of five or more
people where at least one person is related to the household by blood, marriage or adoption.
Members of the Commission discussed having different priorities for Public Services and Public
Facilities and found that to be inconsistent and suggested the same priorities be used for both.
Persson moved to have HCDC recommend that City Council approve the draft 2016-2020
Consolidated Plan with the following changes: Employment Training and Transportation be
included as public service priorities, the same public service priorities be used for public facilities,
and as opposed to a $50,000 minimum award for public facilities the language be changed to no
more than two public facilities shall be awarded funding per funding round. The Commission
also recommends that the preference under the economic development set -aside shall be for
micro -enterprise assistance.
Jacobson seconded the motion.
At vote was taken and the motion carried 7-0
Jacobson questioned if HCDC should review the Affordable Housing Location Model at an
upcoming meeting as it is included in the Consolidated Plan as well. Hightshoe gave a brief
background about how the location model was developed and what reasons prompted the
model. Byler stated certain neighborhoods already have a high concentration of affordable
housing; however it should be noted that many of the newer neighborhoods are too pricy for
affordable housing and a barrier to building affordable housing. The Commission all agreed this
was an important topic to discuss at an upcoming meeting to see if there are any
recommendations the Commission should make to City Council as it relates to disbursing
affordable housing throughout Iowa City and in terms of policies to help create affordable
housing in city assisted residential developments. Will place as an agenda item in late spring or
early summer after the allocation process.
NEW BUSINESS:
Hightshoe discussed the FY16 CDBG/HOME Funding Process Timeline stating it was similar to
previous years. Applications will be due on January 16, the question/answer session will be
February 19, and review and budget recommendations scheduled March 5 and March 12.
Following the March meetings the FY16 Action Plan will be drafted to be presented to Council at
their May 5 meeting.
Persson stated that March 5 might be a problem as that is the Big 10 basketball tournament.
Zimmermann C Smith felt the decisions could be made in one meeting, so possibly the only
meeting needed is March 12. There was a consensus to remove the March 5 date from the
timeline.
Review and Approve FY16 CDBG/HOME Application Materials. Materials reviewed. There were
some changes to the evaluation criteria. Jacobson questioned the statement that "funds are not
available for public service eligible activities such as operations or salaries". Hightshoe stated
that those funding requests are considered under the United Way Joint Funding Process. We no
longer have extra funds for a funding round separate than the United Way Joint Funding Process
that includes about $100,000 of the City's CDBG funds.
Persson moved to approve the funding process timeline, as amended (removal of the
March 5 meeting date), the application materials with the amendment to state as opposed
to a $50,000 minimum award for public facilities the language be changed to no more than
two public facilities shall be awarded funding per funding round.
Taylor seconded the motion.
A vote was taken and motion carried 7-0.
Discuss and Review FY16Aid to Agency Funding Process & Timeline. Hightshoe reviewed the
timeline. Applications were due August 28. Applications from those agencies applying for Iowa
City funds will be distributed in December. The City Council will adopt CITY STEPS at their
December meeting that will outline the priorities for the next five years. Since the applications
were due before the City could adopt priorities, agencies will be allowed to submit an addendum
to state how their application fits into the priorities identified in. CITY STEPS. On January 15
HCDC will formulate a budget recommendation to City Council. Hightshoe reported that
previously the Commission asked for the average score ranked vs. what was allocated. An
analysis was completed and submitted to members. Hightshoe asked if the Commission wanted
to tie the Aid to Agencies awards to CITY STEP priorities. That decision does not have to be
decided on at this time, but the Commission felt CITY STEPS priorities should be used as a
guiding principle.
MONITORING REPORTS:
Zimmermann Smith stated she was unable to complete her reports, FY15the Housing
Fellowship-CHOO & FY15 Crisis Center -Aid to Agencies. Hacker also stated he was
unable to complete his report, FY15Shelter House- AidtoAgencies.
Persson worked with Brian Loring on the FY15 Neighborhood Centers -Aid to Agencies
report. Loring gave her a tour of the facilities on Halloween, showing the playground
HCDC had funded, also the drainage solutions they had been able to correct. It was
also encouraging to hear how they were partnering with other agencies to look for
programs to aid children. Overall it was a good visit and the improvements they have
made are all great.
ADJOURNMENT:
Jacobson moved to adjourn.
Ralston seconded the motion.
A vote was taken and motion carried 7-0.
HOUSING AND COMMUNITY DEVELOPMENT COMMISSION
ATTENDANCE RECORD
2014-2015
NAME
TERM EXP.
9/19
10117
11121
12/19
1/16
2120
316
4117
6/19
9/18
11120
BACON CURRY, MICHELLE
9/l/2014
X
O/E
X
O/E
X
O/E
X
X
X
---
O/E
CHAPPELL, ANDREW
9/l/2015
X
X
X
X
X
X
X
X
X
X
O/E
CHERYLL CLAMON
9/l/2014
O/E
X
X
X
X
X
X
X
X
---
---
DRUM, CHARLIE
9/l/2013
---
---
---
---
---
---
---
---
---
---
----
HACKER, DAVID
9/l/2016
X
X
X
X
X
X
X
X
X
X
X
JACOBSON, JIM
9/l/2017
X
O/E
X
X
X
X
X
X
O/E
X
X
MATTHES, PETER
9/l/2016
O/E
O/E
X
X
O/E
O/E
O/E
X
O/E
—
----
PERSSON, DOTTIE
9/l/2016
X
X
X
X
X
X
X
X
X
X
X
BYLER, PETER
9/l/2017
---
---
---
—
---
---
---
---
---
X
X
RALSTON, CHRISTINE
9/1/2015
X
X
O/E
X
O/E
X
X
X
O/E
X
X
TAYLOR, ANGEL
9/l/2017
---
---
---
---
---
---
---
---
---
X
X
ZIMMERMANN SMITH,
RACHEL
9/l/2015
O/E
X
X
X
X
X
X
X
O/E
X
X
Key;
X
= Present
O =
Absent
O/E =
Absent/Excused
=
Not a Member
12104
POLICY FOR ALLOCATION OF UNCOMMITTED CDBG AND HOME FUNDS
(Funds that become available to the program after initial allocation either through
windfall income, project cancellation or additional funds provided by HUD.)
The Housing and Community Development Commission (HCDC) will determine if:
1. Existing projects that did not receive full funding will be considered.
2. Projects that had submitted applications but did not receive any CDBG or HOME funding
will be considered.
3. New proposals will be considered.
4. Funds will go to the Contingency Fund.
If existing and/or unfunded projects are the only projects that will be considered, the
applicants will be notified of the availability of funds and asked to provide a written request
for funds and how they will be utilized to fund their original request.
If new projects are being considered, HCDC must publish notice of funding availability and
proceed with a formal application process.
If funds are allocated to the Contingency Fund, no formal process is necessary other than
the City Council approval.
In all cases the public must be given the opportunity for comment on the proposed use
of funds, either at a HCDC meeting or a Council meeting.
(See Contingency Fund Use Policy for use of these funds)
CONTINGENCY FUND USE POLICY
The Contingency Fund can be utilized for the following purposes:
a. Cost overruns of existing CDBG and HOME projects. Cost overruns of greater than
$50,000 or 25% of initial project budget must be approved for eligibility by HCDC.
r
�p CITY OF IOWA CITY
-,��
0044
L..,MORANDUM
Date: January 12, 2015
To: Housing and Community Development Commission
From: Steven J. Rackis, Iowa City Housing Authority
Re: Updates and amendments to the Iowa City Housing Authority's Housing Choice Voucher
(HCV) Administrative Plan.
Introduction:
The purpose of the HCV Administrative Plan is to:
Establish policies for issues not covered under Federal regulations for the HCV and Family Self -
Sufficiency programs administered by the Iowa City Housing Authority.
The provisions of this Administrative Plan govern administration of the HCV and Family Self -
Sufficiency programs administered by the Iowa City Housing Authority.
Proposed Amendments to the HCV Plan:
1. Section 6.0: Assignment of Bedroom Sizes (Subsidy Standards) 24 CFR 982.402
In the Johnson County market, there is a greater supply of suitable 2 bedroom units v. 1 bedroom
units. These changes will increase eligible families' ability to more quickly find and lease -up suitable
units; and, decrease the number of voucher expirations.
-urrent 6.0 (D) Pro osed 6.0 D
One -bedroom will be assigned to a single adult with One -bedroom will be assigned to a single
a child under the age of four (4). adult with a child under the age of one (1).
-urrent 6.0 (F) Proposed 6.0 (F)
One -bedroom will be assigned for children of the One -bedroom will be assigned for children
opposite sex who are both under the age of nine (9), of the opposite sex who are both under the
age of six (6).
2. Section 6.4 Term of the voucher CFR 982.303
In the 2013, Iowa City Area Apartment Rental Survey, Cook Appraisals, LLC, reported the average
vacancy rate in the Iowa City Area was less than 1%. In this market, many voucher holders have
experienced great difficulty in securing suitable units. Since 2013, it has been the practice of the Iowa
City Housing Authority to more liberally grant voucher extensions than stated in our Administrative
Plan. In order to align the Administrative Plan and administrative practice, the Iowa City Housing
Authority proposes the following language changes.
The initial term of the voucher will be 120 days and The initial term of the voucher will be 120
will be stated on the Housing Choice Voucher. I days and will be stated on the Housing
Choice Voucher,
The Iowa City Housing Authority may grant up to
two extensions of the term, but the initial term plus The
January 12, 2015
Page 2
any extensions may not exceed 180 calendar days
from the initial date of issuance, unless approved as
a reasonable accommodation. To obtain an
extension, the household must make a request in
writing prior to the expiration date. If the household
documents their efforts and additional time can
reasonably be expected to result in success, the
ICHA will grant the length of request sought by the
household, or 60 days, whichever is less.
extensions of the initial term, but the initial
term plus any extensions may not exceed
365 calendar days from the initial date of
issuance, unless approved as a reasonable
accommodation. T o obtain an extension, the
household must make a request in writing
prior to the expiration date. If the household
documents their efforts and additional time
can reasonably be expected to result in
success, the ICHA will grant the length of
request sought by the household, or in 60
day increments, whichever is less.
Excerpt from:
Bank -Ability, A practical guide to real estate financing for nonprofit developers (1996)
Sources and Uses of Funds
DATE
NAME OF PROJECT
SCHEDULE 1 : SOURCES AND USES OF FUNDS
SOURCES OF FUNDS
NYS Housing Grant $640,000
XYZ Foundation Grant 50,000
Big Dollar Bank 649,296
TOTAL SOURCES $1,339,286
USES OF FUNDS
ACQUISITION $8,000
CONSTRUCTION COSTS
Contractor Price $960,000
Contingency (I 0%) 96 000
TOTAL CONSTRUCTION COST S 1.056,000
DEVELOPMENT SOFT COSTS
Architect and Engineering $57,600
Environmental Survey 2,000
Appraisal
2,500
Consultant Fees
10,000
Survey
Tax Exemption Filing Fee
0
1,1,50500
Title Insurance
Mortgage Recording tax
9,375
Developer Legal
17,855
Developer Fee
10,000
Const, Period R. E. Taxes
28,800
Const. Period Water and Sewer
9,210
Const. Period Insurance
4,800
Permanent Lender Fee
13,393
Permanent Lender Legal
6,493
Construction Lender Fee
Construction Lender Legal
10,000
Bank Engineer
6,493
Construction Loan Interest
10,000
Marketing and Leasing
11,500
Soft Cost Contingency
38,957
13,800
10 000
TOTAL SOFT COSTS $275.286
TOTAL DEVELOPMENT COSTS $1339,286
Exhibit 3: Pro Forma Income and Expenses
DATE
NAME OF PROJECT
SCHEDULE 2 : Pro Forma INCOME AND EXPENSES
RESIDENTIAL INCOME
Unit Type
Rent/Mo.
Units
GrosslYr
One Bedroom
$650
6
$46,800
Two Bedroom
$750
6
$54,000
Three Bedroom
$850
4
$40,800
TOTALS
16
$141,600
COMMERCIAL INCOME
Gross Rentable SF
1,200
Rent per SF/Year
$17.50
TOTAL COMMERCIAL INCOME
$21,000
GROSS ANNUAL INCOME
$162,600
(less) Residential Vacancy
5.00% ($7,080)
(less) Commercial Vacancy
10.00% (2,100)
EFFECTIVE GROSS INCOME
$153,420
EXPENSES
Real Estate Taxes
$o
Insurance
7,348
Payroll
18,000
Elevator Maintenance
4,000
Water and Sewer
7,750
Heating
10,850
Utilities
2,790
Cleaning/Externinating/Supplies
2,604
Repairs and Replacements
3,680
Painting
2,480
Legal and Accounting
3,200
Management Fee (6%)
9,205
Building Reserve (2% of gross)
3,252
TOTAL EXPENSES AND RESERVES $75,159
NET OPERATING INCOME $78,261
Description of Sources of Funds
New York State Housing Grant Program $640,000
The Housing Grant Program provides grants to non-profit organizations
of up to $40,000 per unit for low-income housing projects including
mixed -use projects. All residential units must be rented to families with
incomes at or below 80% of the area median income. Grants can be
used for acquisition, construction, and soft costs. The program requires
that grantees provide a mortgage on the property to assure that grant
funds are used as intended. No repayment is required and the
mortgage evaporates over a fifteen year period. The mortgage is
subordinate to private financing. Preliminary approval of this grant has
been received. Final approval is subject to obtaining a commitment for
private financing.
XYZFoundation Grant $50,000
Grant funds can be used for any pre -development expense. Grant funds
have been used for pre -development professional fees including
preliminary plans, legal fees, and a marketing study.
Big Dollar Federal Savings Bank $649,286
The construction and permanent mortgage financing requested in the
proposal.
Total Financing $1,339,286
Uses of Funds
Uses of funds are usually divided into the following main categories:
Acquisition: The cost of purchasing the land or land and buildings to
be developed.
Construction: The estimated hard construction cost based on a
projected per square foot amount or the actual estimate or bid provided
bythe contractor. The construction cost should include a construction
contingency that is designed to protect the developer and the bank
from construction cost overruns by paying for unforeseen construction
costs. The contingency is usually 10% for rehab projects and from 3%
to 5% in new construction projects.
Soft Costs: As can be seen in the sample spreadsheet, this category
includes a wide variety of costs that are incurred as part of the
development process. Major items include construction period interest,
architectural fees, legal fees, bank fees, mortgage recording tax and
costs that will be incurred during the construction of the project. A list of
rules of thurib for estimating each of these items follows.
Rules of Thumb for Estimating Development Soft Costs
(Note: Soft costs vary according to the size, type and location of the
development project. Most of the guidelines presented below are based on
formulas currently used by the New York City Division of Housing Preservation
and Development (HPD) and the Community Preservation Corporation (CPC).
These ru':es of thumb reflect current (1995) cost estimates which are subject
to change. Whenever possible, obtain information about actual costs for your
project.
Architect and Engineering: The fee charged by the architect for
preparing drawings and monitoring the project during construction. Usually
4% to 10% of the construction cost, not including the contingency
allowance. Government funders frequently set a maximum allovvable
percentage. The architect's fee includes the cost of hiring engineers needed
for structural and major system design.
Environmental Survey: Survey of building and lot for toxic substances
including asbestos. Varies from about $1,700 to $2,500 per building or site.
Appraisal: A determination of the value of the existing property and the
value of the property after completion of construction. The appraised value
determines the maximum loan amount based on the loan to value formula
used by the lender. Varies with the size and complexity of the project. Cost
will be higher for mixed -use and scattered site projects. Allow at least
$2,500 to $5,000.
Consultant Fees: Varies with the size and complexity of the project and
the extent of consultant services to be provided. Allowable oxisultant fees
are usually limited by government funders.
Survey: Determines the boundaries and exact location of the lot and is
required in order to obtain title insurance. Fee varies, allow $1,500 per
building or lot.
Tax Exemption Program Filing Fee: A fee paid to a government agency
for processing an application for real estate tax exemption and/or
abatement. Varies with the program.
Title Insurance: Insurance that protects the owner and lender from
possible future losses caused by defects in the title. Estimated cost is .007 x
the amount of the mortgage or the total development cost.
Mortgage Recording Tax: A State tax charged when a mortgage
recorded In a book of public records. Calculate as 2.75% of the mortgage
recorded. Calculate as 2.5% of mortgages over $500,000 and 2% of
mortgages under $500,000. This fee can be waived for certain types
of nonprofit development corporations.
Developer Legal: Lawyer's fees for reviewing and preparing documents and
managing the legal aspects of the closing. Varies with the complexity of the
project, Allow from $10,000 to $25,000. Developers of projects with multiple
sources of government and private financing may incur higher legal fees.
Developer Fee: Varies. Usually calculated at 3% to 100/c of the total project cost
or as a flat fee based on the number of units. Certain government programs allow
developer fees of up to 15% of the total development cost. The fee is intended to
compensate the developer for project -related administrative costs, salaries, office
rent, transportation, etc. Government funders may limit or disallow this fee.
Construction Period Real Estate Taxes: Real estate taxes on the land and the
building under construction. Calculate by using the present assessed value x tax
rate x length of the construction period. Real estate taxes will be higher if the
project is re -assessed during construction and is not exempt from tax increases.
Construction Period Water and Sewer: Charges for water and sewer service
during construction. Calculated by assessment x length of construction period or as
a flatfee for limited usage during construction.
Construction Period Insurance: Cost of fire and liability insurance during
construction. Insurance is in addition to insurance carried by the general
contractor. Use actual quote from your insurer or estimate at $5 to $8 per $1,000
of replacement value.
Permanent Lender Fee: A fee charged by the lender for underwriting and
processing the loan. Usually 1 % to 2% of the loan.
Permanent Lender Legal: Legal expenses incurred by the lender in connection
with making the loan. Paid by the developer. Estimate at $10,000 to $30,000
depending on the size and complexity of the project.
Construction Lender Fee: A fee charged by the lender for underwriting and
processing the loan. Usually 1 % to 2% of the loan.
Construction Lender Legal: Legal expenses incurred by the lender in
connection with making the loan. Paid by the developer. Estimate at $10,000 to
$30,000 depending on the size and complexity of the project.
Bank Engineer: Usually a consultant selected by the lender to inspect the
construction work and approve the release of funds to the general contractor. Fee
includes the initia! review of construction, drawings ($2,500 to $5,000) plus a
charge for each inspection of the building and review of the cortractor's
requisitions for payment Allow $500 to $750 for each inspection and
assume one inspection per month during construction.
Construction Loan Interest: Interest paid monthly on the portion of the
loan that has been advanced to the borrower. Usually estimated at 50% to
60% of the construction loan x the interest rate x the length of the
construction period.
Marketing and Leasing: Costs incurred during leasing of apartments
and commercial space or the sale of residential units can vary
enormously - estimates should be given careful consideration. For low
and moderate income residential rental projects, HPD allows $9,000
plus $300 per unit.
Soft Cost Contingency: This is an allowance for unforeseen costs
and overruns. Allow a lump sum of $10,000 to $25,000 depending on
the size of the project, or use 5% to 10% of the soft costs.
Income and Expenses
The Schedule of Pro Forma Income and Expenses is used for income
producing property only and is frequently referred to as the pro
forma. The pro forma presents the expected results of the first year
of operation of the project after it has been completed and leased. The
pro forma is simply a detailed presentation of the following formula:
Gross Rents - Vacancy Allowance - Expenses = Net Operating
Income. Each of the components of this formula is discussed below.
(In the case of a sales project, the comparable schedule would show
projected gross income from the sale of the units less the expenses
incurred in selling the units such as legal costs, brokerage fees,
advertising and transfer taxes. The schedule should include a
breakdown of the projected per unit sales price for each unit or type of
unit. For a sales project, the schedule is a detailed presentation of the
following formula: Gross Sales Proceeds - Sales Expenses = Net Sales
Proceeds. The developer's profit equals Net Sales Proceeds less the
total development cost shown in the Sources and Uses schedule.)
Gross Rents: This item includes all sources of income including
residential rents broken out by unit type, number of units; commercial
units with square footage and rent per square foot, and any other
come such as coin operated laundry, parking, and other charges. The
total gross rent is the projected total income from the project if all
units are occupied for the full year and all rents are collected.
Vacancy and Loss Allowance: Gross rents are reduced by this
allowance for vacancies and uncollected rents. The rule of thumb for
determining the vacancy and loss allowance is 5% for residential and
at least 10% for commercial space. Banks may require higher vacancy
and loss allowances depending upon the location of a project and
market conditions. While the demand for affordable rental housing is
usually very strong, demand for commercial space can vary greatly
and the lender may require a vacancy allowance of 20% or more for
commercial space.
Water and Sewer: Based on frontage or metered water, Use
the actual assessment or calculate at $125 per room.
Heat: Varies with the age and type of the building and the type of
fuel used. HPD estimates at $150 to $175 per room per year. Buildings
heated with gas or the best grade of fuel oil are estimated at $175 per
room.
Utilities: Apartment gas and electricity is usually individually metered
and paid by the tenant. For common area utility expense (hallways,
basement, exterior) the City uses $40 per room for walk-up buildings
and $45 per room for elevator buildings.
Supplies, Cleaning and Exterminating: Charge for contract with
exterminating service and for cost of supplies used by superintendent
and porter. Varies. CPC and HPD use $42 per room.
Repairs and Replacements: Estimate at $230 to $390 per unit
depending upon the extent of the work. Includes the cost of repairing
and replacing appliances. Gut rehabs and new construction projects will
have lower repair and replacement expenses, at least during the early
years of operation.
Painting: Annual allowance for painting apartments and hallways.
Estimate at $40 per room.
Legal and Accounting: Covers legal fees for leasing and evictions and
accountant's fees, CPC and HPD estimate this cost at $1,600 plus $100
per unit.
Management Fee: Use 6% to 8% of the net rent (gross income
less vacancy allowance). Note that lenders will require a deduction for
this expense even if your organization intends to manage the project.
Building Reserve: Annual payments into a fund used for future major
expenses such as replacing the roof or the boiler. Usually calculated as
2% to 3% of the gross rent. Total rehabilitation and new construction
projects should use 2%.
FY16 Aid to Agencies Budget Recommendation
Agency
FY13 Actual
FY14 Actual
FY35 Actual
FY16 Request
FY26 Recommendation
Main Priority
4 C's Community Coord_ Child Care
$2,000
$1,850
$5,000
$15,000
Families with Children (Child Care)
Arc of Southeast Iowa
_NA
$2,163
$5,000
$5,000
Persons with Disabilities
Big Brothers / Big Sisters
$32,000
$29,325
$30,000
$33,500
Families with Children (Youth Services
Communqy Corrections Imp. Assoc
NA_
NA
$0
$0
NA
NA
Compeer of Johnson County
$5,000
$3,313
$D
$7,000
Mentally 111
Crisis Center of Johnson County
$40,000
$38,000
$40,000
$52,973
Homeless Services
Domestic Violence Intervention Program
$50,000
$47,500
$45,000
$52,000
Domestic Violence
Elder Services Inc.
$52,000
$48,819
$30,010
$55,000
Elderly
Families INC
_
$5
Mentally III
Four Oaks - Pal Pro ram
$1,000
NA
$0
$0
NA
NA
Free Lunch Program
$2,000
_ $2,000
$5,000
$15,O00
Homeless Services
Goodwill of the Heartland
$60,000
Em loyment Training
HACAP - Food Reservoir BackPack Program
NA
NA
$12,000
$28,000
Families with Children (Youth Services)
Housing Trust Fund ofJC _
$8,000 _
$8,000
$24,000_
$24,000
Rental Housing
ICCSD Family Resource Centers
NA
$10,000
$15,000
$37,500
Families With Children (Child Care
IC Free Medical/Dental Clinic
$7,500
$7,500
$7,500
$15,000
Chronic Substance Abuse/Families with Children
Iowa Jobs for American's Graduates (JAG)
$0
_ $0
$0
$10,000
Families with Children (Youth Services)
IV Habitat for Humanity - Furniture Project
NA
NA
$5,000
$40,000
Homeless Services
Johnson County Social Services
NA
$6,000
NA
$0
NA
NA
Junior Acheivement of Eastern Iowa _
$0
$0
$0
$4,499
Families with Children (Youth Services)
Mayor's Youth Em lu rnent Program
NA
$6,000
NA
$0
NA
NA
MECCA _
$18,950
$16,880
$15,000
$20,000
Chronic SubstanceAbuse
Neighborhood Centers ofJC
$60,000
$51,000
$SQ000
$75,000
Families with Children
Pathways Adult Day Health Center
$4,879
, $4,000
$5,000
$15,000
Elderly/Persons with Disabilities
Rae Victim Advocacy Program
$12,000
$1Q325
$10,000
$15,000
Domestic Violence
Shelter House
$36,500
$32,525
$45,000
$47,500
Homeless Services
o Table
Table la-Tat
$0
$0
$0
$25,000
_
Homeless Services
United Action for Youth
$60,000
$53,500
$49,000
$65,000
Youth Services
Total Request:
$391,829
$378,700
$397,510
$721,972
$0
Minimum Allocation $15,000
FY16 Iowa City Aid to Agencies - Budget $378, 700
($250,000 General fund)
($100,000 CDBG)
($28,700 Utility user fees)