TO: Urban Renewal Agency Board
THROUGH: Steve Powers, Executive Director
FROM: Kristin Retherford, Urban Development Director
SUBJECT:
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North Gateway Urban Renewal Area Toolbox Program Grant Exception to allow $749,000 in FY 16-17 funding for affordable housing development at 3350 Portland Road, NE.
Ward(s): Ward 5
Board Member(s): Dickey
Neighborhood(s): Northgate, Highland
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ISSUE:
Shall the Agency Board approve a North Gateway Urban Renewal Area (URA) Toolbox Grant Program exception to allow up to $749,000 in FY 16-17 funding to support development of 180 units of affordable housing on a portion of the property located at 3350 Portland Road, NE (commonly referred as the “Epping property”) within the North Gateway URA and allocate $749,000 of currently unallocated funds for the grant?
RECOMMENDATION:
recommendation
Approve a North Gateway URA Toolbox Grant Program exception to allow up to $749,000 in FY 16-17 funding to support development of 180 units of affordable housing on a portion of the property located at 3350 Portland Road, NE (commonly referred as the “Epping property”) within the North Gateway URA and allocate $749,000 of currently unallocated funds for the grant.
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SUMMARY AND BACKGROUND:
Mountain West Investments Corporation (Mountain West), a Salem for-profit developer whose principals are Larry and Jason Tokarski, plans to begin construction of 180 units of affordable multi-family housing (Attachment 1) on approximately 9.5 acres of land located at 3350 Portland Road (Attachment 2) in June 2017. The Mountain West development will target individuals and families earning 60 percent or less of Salem’s median income (equivalent to $33,900 or less per year). The 14 acre property, currently owned by the Larry and Jeanette Epping Family Foundation, has been vacant for several years and actively marketed for commercial development. The Epping family plans to retain ownership of the remaining 4.5 acres adjacent to Portland Road for future commercial development.
Mountain West approached the City in June 2016 with a $1.5 million gap for the approximately $22 million housing development. If approved, City and Agency funding commitments will support their application to Oregon Housing and Community Services in October for Low Income Housing Tax Credits (Tax Credits). Without City and Agency assistance, it is unlikely that the development will move forward. Mountain West’s funding request for the Epping property development includes:
• $749,000 in FY 16-17 North Gateway URA funding for construction - tonight’s Agency recommendation requiring a North Gateway URA Grant Program exception;
• $650,000 in FY 17-18 North Gateway URA funding for construction of a new internal street - limited FY 16-17 North Gateway URA funding is available for this request. Staff recommends returning to the Agency for funding consideration in FY 17-18 when additional funding is available. The street must be completed by spring 2018 with building occupancy; and
• $400,000 in City’s Housing and Urban Development (HUD) HOME Investment Partnership funding - this request is on the Council agenda tonight.
An informational report regarding the Mountain West development was provided to the Agency and Council on August 22, 2016. Updated information is included in tonight’s staff report. The North Gateway Redevelopment Advisory Board (NGRAB) received information and made a motion supporting the development and funding request at the September 8, 2016 meeting with one member abstention. The Northgate Neighborhood Association received information on the development at their September 13, 2016 meeting.
FACTS AND FINDINGS:
Several recently adopted City and Urban Renewal Area plans and studies, including the Salem Housing Needs Assessment, identifying the need for a broader range of housing options for Salem residents, including in the North Gateway URA. The adopted Portland Road Corridor Action Plan (Action Plan) recommended the Agency address the need for more affordable housing in the North Gateway URA by providing Toolbox Grant Program funding and/or other incentives to support development. The Action Plan also identified the Epping property, along with several sites along Portland Road, as “opportunity sites” that the Agency should prioritize for possible acquisition and/or development support. On June 27, 2016, the Agency approved amendments to the Toolbox Grant Program and the North Gateway URA Plan to add multi-family housing as eligible activities.
Although construction of affordable housing is now eligible under the North Gateway URA Plan and Grant Program, the funding request exceeds the $300,000 maximum grant amount allowed under the Grant Program.
Exception from Grant Program Policies
The current Program Policy states that the maximum grant amount is $300,000. The Agency must approve of an exception to the Program Policy to allow funding for a larger grant amount.
The current Program Policy states that non-profits are not eligible for grant funding. Although Mountain West is a for profit entity, because of a State policy that allows affordable housing developments an exemption from property tax, it is likely that Mountain West will not pay property taxes. It is also likely that Mountain West will transfer ownership of the development to its non-profit arm, Community Resource Trust, following construction. Non-profit ownership is a requirement of other funding for the development.
Next Steps
If approved, the $749,000 request would come from approximately $2.1 million in currently unallocated FY 16-17 North Gateway URA funding. Similar to other Grant Program exceptions, Mountain West would still be required to submit a Grant Program application and work with staff to finalize their scope and budget. There is a lot of interest in the Grant Program from other property owners in the North Gateway URA. Staff anticipates returning to the Agency later this fall requesting additional funding for the Program.
Annie Gorski
Interim Economic Development Manager
Attachments:
1. Portland Road Site Map
2. Portland Road Area Map
09/08/2016