TO: Chair and Housing Authority Commissioners
THROUGH: Keith Stahley, Executive Director
FROM: Nicole Utz, Administrator
SUBJECT:
title
Permit the Salem Housing Authority to serve as a special limited partner in NE Salem Apartments Limited Partnership (the “Limited Partnership”)
Ward(s): All Wards
Commissioners(s): All Commissioners
Neighborhood(s): All Neighborhoods
Result Area(s): Welcome and Livable Neighborhood
end
SUMMARY:
summary
The Limited Partnership, which will consist of the Salem Housing Authority (“SHA” and “Housing Authority”), as a special limited partner (“Authority Limited Partner”), PRAY-GLA GP LLC (an affiliate of Green Light Development and Home First Development Partners) (“General Partner”), CREA Salem Apartments, LLC, as the investor limited partner (“Investor Limited Partner”), CREA SLP, LLC, as a special limited partner (“Special Limited Partner” and together with the Investor Limited Partner, the “Limited Partners”), and Evergreen Community Partners, an Oregon nonprofit corporation, as a special limited partner (collectively, the “Partners of the Partnership”), will develop, own, and operate a 120-unit apartment complex, to be known as Gussie Belle Commons, located at 2561 Center Street, Salem, Oregon 97301, to serve low-income households.
Gussie Belle Commons is a new development, with buildings intended to be placed into service in the first half of 2026.
SHA intends to engage in a partnership as authorized under Oregon law, which will provide this development with a full property tax exemption. SHA will be compensated for its role in this partnership through an annual fee to cover the costs for program oversight.
The purpose of the Limited Partnership is to construct and operate the Gussie Belle Commons to serve low-income households. This project, with SHA’s partnership, will provide 119 units at affordable rates, serving clients at or below 60% AMI, and one (1) manager’s unit.
end
ISSUE:
Shall the Salem Housing Authority Commission approve Resolution No. 2314 authorizing the Executive Director or designee to enter into a limited partnership agreement with PRAY-GLA GP LLC, in its capacity as the General Partner, and the other partners of the Partnership?
RECOMMENDATION:
recommendation
Approve Resolution No. 2314 authorizing the Executive Director or designee to enter into a limited partnership agreement with PRAY-GLA GP LLC and other partners of the Partnership.
body
FACTS AND FINDINGS:
Adoption of this resolution will allow the Limited Partnership to claim a property tax exemption through Marion County. This action is recommended to continue adding and expanding affordable and workforce housing options for the City of Salem. State law requires units rents to be at or below 80% adjusted median income (AMI), which provides an incentive to keep operating costs low. This type of partnership adds a minimal capacity burden to SHA. If granted, the exemption will remain in place through the life of the approved agreement so long as the develop maintains affordable units.
SHA program oversight occurs annually upon the one-year anniversary of the site acquisition. This Limited Partnership would further the objective of expanding affordable housing in Salem. The Limited Partnership shall develop, own, and operate a 120-unit apartment complex to be located at 2561 Center Street in Salem to serve low-income households. Although state law only requires rents at 80%, the partnership will covenant with the investor partners to provide a mix of affordable units with adjusted incomes between 30% and 60% AMI.
Additionally, this Limited Partnership will reinforce the opportunity to enter similar partnerships in the future. Partnerships are less burdensome to the Housing Authority with respect to capacity and still provide the community benefit to those they serve in the city of Salem.
The Limited Partnership Agreement contains the following terms:
• The Authority Limited Partner will make an initial capital contribution of $100 to the Partnership (but will not be required to fund additional Capital Contributions thereafter) and will have a passive role in the Partnership.
• The Authority Limited Partner’s liability will be limited to its partnership interests and no officer, director or employee of the Authority Limited Partner shall have any liability under the Partnership Agreement.
• The Authority Limited Partner shall have the right to withdraw from the Partnership upon thirty (30) days prior written notice to upon the occurrence of any of the following events (each a “Withdrawal Trigger”), which is not cured within thirty (30) days thereafter (or such longer period as is reasonably necessary to effectuate the cure): (i) a material breach by the Limited Partnership of the affordability restrictions applicable to the Project; (ii) any act of fraud, intentional misconduct or gross negligence by the General Partner or the Partnership; (iii) the Project is not operated in accordance with applicable requirements under the Housing Authorities Act after written notice from the Authority Limited Partner to the General Partner and Investor Limited Partner; and (iv) the Project is considered unhabitable as defined in ORS 90.320(1).
Development and financing of affordable housing projects are complex and heavily reliant on the cooperation of the developer and financing partners. In order to timely facilitate the financing and construction of the development, the resolution authorizes the Executive Director or designee to execute changes to the Partnership Agreement and execute other documents that are consistent with and further the purposes of the Partnership Agreement that are in the best interest of the Housing Authority.
BACKGROUND:
Affordable and workforce housing in Salem is a community need.
SHA is working on several new affordable housing projects. Approval of the property tax exemption for this limited partnership would continue advancing the Housing Authority’s commitment to finding ways to expand on public/private partnerships and increase the affordable housing supply in Salem. In addition to SHA’s partnership program to incentivize affordable housing, the City and its Urban Renewal Agency also provide housing incentives through other programs. The Low-Income Rental Housing Property Tax Exemption Program provides property tax exemptions for non-profit providers of affordable housing. The Multi-Unit Housing Tax Exemption Program (MUHTIP) targets sustainability through incentivizing infill transit-oriented developments by providing up to ten-years of property tax abatement for new projects within the MUHTIP boundary. The City’s newest tool is the creation of Single Property Urban Renewal Areas, which can provide partial property tax rebates for multi-family developments that meet community goals.
The Gussie Brown Commons is located on property currently owned by the City of Salem. City Council authorized the City to acquire the property to facilitate Green Light/Home-First’s development. The City and GreenLight/Home-First are set to close on this property by the end of 2024. The City is retaining ownership of the adjacent Conversation Area and will transfer ownership of the remaining adjacent property to GreenLight/Home-First once the remaining property has been legally divided and the plat recorded.
Nicole Utz
Administrator
Attachments:
1. Resolution 2314
2. MOU_Gussie Bell and SHA