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Home My WebLink About05/17/1999 BAKERSFIELD Patricia J. DeMond, Chair Mike Maggard Mark Salvaggio Staff: Darnell Haynes AGENDA BUDGET AND FINANCE COMMITTEE of the City Council- City of Bakersfield Monday, May 17, 1999 1:30 p.m. or shortly thereafter - (upon conclusion of the Department Budget Presentations to City Council) City Manager's Conference Room Second Floor - City Hall, Suite 201 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL 2. ADOPT MARCH 29, 1999 AGENDA SUMMARY REPORT 3. PRESENTATIONS 4. PUBLIC STATEMENTS 5. DEFERRED BUSINESS A. BAKERSFIELD MUSEUM OF ART--UPDATE - Christensen 6. NEW BUSINESS A. HOUSING AUTHORITY OF KERN COUNTY FINANCIAL ASSISTANCE REQUEST - SENIOR HOUSING PROJECT - Wager B. TRANSIENT OUTDOOR BUSINESS PERMITS - Klimko 7. ADJOURNMENT DWH:jp FILE: COP DRAFT B A K E R S F I E L .D Alan Tandy, City' I~nager Mike Maggard Staff: Damell Haynes Mark Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, March 29, 1999 12:00 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order at 12:10 p.m. Present: Councilmembers: Patricia J. DeMond, Chair; Mike Maggard; and Mark Salvaggio 2. ADOPT FEBRUARY 8, 1999 AGENDA SUMMARY REPORT Adopted as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS A. BAKERSFIELD MUSEUM OF ART FUNDING REQUEST Assistant City Manager Alan Christensen stated that at the last Committee meeting, 'the Committee directed staff to work on requests from the museum relating to their plans to expand their facility. DRAFT BUDGET AND FINANCE OOMMITTEE Monday, March 29, 1999 Page -2- Staff researched the request for the City to continue maintenance of the property. The sales agreement that the City entered into stated that the maintenance would end in January 1999. However, the City has continued the maintenance while the issue is being resolved. The cost of maintaining the grounds and building is approximately $19,250 annually. Staff is recommending that due to the financial constraints of the budget, the City not make a financial contribution at this time. The Committee asked about the current, status of discussions with the Museum regarding Alternative #5 that was outlined by City Attorney Bart Thiltgen at the last meeting. This option proposed to restructure the deed of trust to eliminate the reversionary clause and replace it with a second deed of trust and a right of first refusal in the event of default or proposed sale. This alternative provides, in the City's opinion, a way in which outside financing could still be obtained. Committee member Salvaggio stated he would not want the City to enter into any agreement that could be used as a vehicle to relocate the museum elsewhere. The Committee tabled the item as requested and gave staff clear direction to meet with Museum representatives to develop an acceptable agreement preferably based on Alternative ~5. The item will return to the committee when a tentative agreement has been reached. 6. NEW BUSINESS A. BAKERSFIELD SYMPHONY FUNDING'REQUEST (Heard before Item 5A) Assistant City Manager John Stinson commented that we are in the process of revieWing the City's budget and as part of that, the Symphony's request is being reviewed. The Symphony will be making a presentation, but action will be taken during the budget process. Don Lindsay, a member of the Symphony Board of Directors, thanked the City for their $40,000 contribution to the Symphony in 1998-99. For the 1999-00 year, the Symphony is requesting $75,000 for expanding children's concerts and events, operating costs and rental of the Convention Center. The Committee directed staff to place the request through the regular budget process with the Council. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE DRAFT Monday, March 29, 1999 . Page -3- B. PROPOSED SOUTHEAST BAKERSFIELD PROJECT AREA COMMUNITY OFFICE Jake Wager stated that a request was received from the Southeast Bakersfield Project Area Committee (PCA) to establish a community office within the proposed Southeast Bakersfield Project Area and they referenced Section 33388 of the California Health and Safety Code. Under this section, staff's position is that wehave made equivalent resources available, both in the form of staff from Economic Development along with clerical support and needed materials such as copying, documents, and legal counsel through the City Attorney's Office. As sufficient resources have been made available to the PAC and establishing an office would unnecessarily stretch limited staff and budgetary resources, staff recommended denial of the request for an office..The Committee agreed that if a short-term, temporary office need adses for the PAC in the future, the Committee could revisit the matter. The Committee voted to support staff's recommendation and denied the request. C. AMBULANCE MEDICAL SUPPLY COSTS REIMBURSEMENT Assistant City Manager John Stinson said the City has received a request from Golden Empire Ambulance and Hall Ambulance to add a new rate category to the list of rates for ambulance service to allow for recovery of costs for disposable items which were formerly restocked by hospitals. Charges are to be itemized and the maximum charge for medical supplies will be $100 and the maximum charge for those drugs and medications included within the Kern County EMS scope of practice and within the Medicare reimbursement list shall not exceed $275.00. The total amount charged under this category shall not exceed $375.00. Staff recommended creating the new rate category and going forward with a public hearing and a resolution for Council adoption. The Committee unanimously approved staff's recommendation. D. COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) ACTION PLAN FOR FY 1999-00 Economic Development Director Jake Wager gave an overview of the plan and staff's methodology of funding recommendations. The approved Annual Plan must be submitted to HUD by May 16, 1999. The HUD funds will be released on July 1, 1999. The Annual Action Plan identifies $4,389,000 of entitlement and program income with projected use of funds for FY 99/00. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE ~RAFT Monday, March 29, 1999 Page -4- Mary Walker spoke on behaff of New Directions Group Home for Girls, which was not on the recommended list for funding. Jake Wager explained the obstacle to funding is the facility is located in the County and federal grant state that the County must first approve funding the project before City funds can be committed. Edward Velasquez spoke and answered Committee questions on behalf of the Kern County Economic Opportunity Corporation's request for funding for acquisition of an eight-acre parcel to construct a central kitchen and administrative offices at 251 South Union Avenue. Helen Robison of Baker Street Church of Christ spoke on behalf of.their request for funding for construction of a day care and after-school center. Rosanna Westmoreland spoke and answered Committee questions on behalf of the Friendship House. Committee member Maggard stated he would like to see additional funding for the Friendship House due to the need for additional children's programs in that area. As the leadership of the Friendship House is changing with a new executive director coming in June, the Committee directed staff to revisit additional funding during mid-year adjustments. The Committee directed staff to assure that ;Jefferson Park is included on the list for ADA funding for improvements in City parks. Committee Chair DeMond spoke regarding the request from Living Connections, Inc. for funding for a rehabilitation project at Cedar House, which is a much needed women's residential facility for mentally disabled in the downtown and is not on the recommended list for funding. After discussion, staff was requested to revisit the request during mid-year adjustments and consider funding half of the requested amount, which would be approximately $14,000. Staff recommended going forward with the public notice on April 4~, forwarding the Community Development Block Grant FY 99/00 Annual Action Plan to the Council for approval on April 14"', and sending to HUD as soon as the 30-day public review requirement has been met. The Committee unanimously approved staff's recommendation and directed staff during mid-year adjustments to look at additional funding for Friendship House and as discussed, revisit funding half of the Living Connections request for Cedar House. 7. ADJOURNMENT The meeting was adjourned at 1:30 p.m. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMI'I-I'EE Monday, March 29, 1999 DR:AFT Page -5- Staff present: City Manager Alan Tandy; Assistant City Manager John Stinson; Assistant City Manager Alan Christensen; City Attorney Bart Thiltgen; Assistant to the City Manager Damell Haynes; Economic Development Director Jake Wager; Community Development Coordinator George Gonzales; Deputy City Attorney Ginny Gennaro; Deputy City Attorney Janice Scanlan; Anthony Mosley, Bakersfield Police Department (PAL); Development Associate Charles Webb; Steve Hamblet, Bakersfield Fire Department, B-Flag; David Chesney, Economic Development; and Assistant Fire Chief Kirk Blair. Others present: David Strong, Supervisor Parra's Office; Mary Walker, New Directions Group Home for Girls; Gene Tackett, Hall Ambulance/Golden Empire Ambulance; Jacqueline Att and Darlene Denison, Hall Ambulance; Charles Meyer and Millie Albin, Bakersfield Museum of Art; John Penrose, Golden Empire Ambulance; Jerry Randall, Old Town Kern Pioneer (PAC); Donald Lindsay, Bakersfield Symphony Orchestra; Michelle Terwilleger and Richard Chang, The Bakersfield Californian; Barry Hibbard, (PAL); Dennis Wallace, Habitat for Humanity\Golden Empire; Jeffrey Krausse, Jeffrey Krausse Architect; Barbara Long, Elder Life (KMC); Edward B. Velasquez and Ralph Martinez, KCEOC; Richard L. Temple, Bethany Services; Barbara Fowler; Bill Drakos, Kern County Mental Health; Gil Anthony Restoration Community Project, Inc.(RCPI); C. Helen Robinson, Lisa Norwood, and Mildred Sandifer, Baker Street Church of Christ; and Rosanna Westmoreland, Friendship House. cc: Honorable Mayor and City Council S~Damell/BF99mar29sum BAKERSFIELD Economic and Community Development Department MEMORANDUM May 14, 1999 TO: Alan Tandy, City Manager FROM: Jake Wager, Economic Development Director~________~ SUBJECT: Park Place Apartments - Affordable Senior Housing In a letter dated February 18, 1999 the Housing Authority of the County of Kern (HACK) initially requested assistance from the City and the Central District Development Agency (CDDA) in the development of an 80-unit senior citizen housing project to be located on 3.0 acres of land on 21st Street at "R" Street. The assistance requested was in the form of a $550,000 grant of HOME funds and a $1.25 million loan from the CDDA. An analysis of the request was completed by the City's housing consultant, GRC Associates which was reviewed by staff. A meeting was held on March 24 with HACK, staff and consultants. Based on the discussions that occurred at that meeting, HACK has revised its request for assistance to a $550,000 HOME grant and a $800,000 CDDA loan. Attached is a copy of the April 28,1999 letter outlining HACK's proposal along'with GRC's May 13, 1999 analysis. The form and amount of assistance will be discussed at the Budget and Finance Committee on Monday, May 17, 1999. Enclosures P:\ReDe\Park Place AT mem.wpd HOUSING AUTHORITY OF THE COUNTY OF KERN Will.lAM L CARTER 525 ROBERTS LANE - Ka. KERSFIIRD, CA 933084799 FAX (805)393-3255 Executive Directo~ PHONE (805) 393-2150 TDD (805) 393-8209 Revision of 4/28/99 to April 23, 1999 Letter Mr. Alan Tandy, City Manager City of Bakersfield 1501 Tmxtun Avenue Bakersfield, California 93301 Re: Park Place Apartments - Affordable Senior Housing Dear Mr. Tandy: On behalf of Golden Empire Affordable Housing, Inc., the Housing Authority of the County of Kern would like to request financial assistance from the City of Bakersfield for the development of the Park Place Apartments, an 80-unit apartment complex for low and very Iow income seniors with incomes no more than 60% of the County's median income. The housing will include 65 one-bedroom units and 15 two-bedroom units, with a community room, laundry rooms, and landscaped, passive recreation area for the residents. The apartments are being developed by Golden Empire Affordable Housing, Inc., a non-profit 501(c)3 Corporation, on a 3-acre site to be purchased from the Kern County Superintendent of Schools. The housing will be located on 'R' Street, between 21st and 25th Streets, in Bakersfield and only one block from Central Park and the Bakersfield Senior Center. The future development cost of the project will be $5,031,366. Proposed funding for the development will be provided through the following: · 4% Low-Income Housing Tax Credits · Tax exempt financing through the issuance of Mortgage Revenue Bonds · City of Bakersfield Redevelopment Housing Set-Aside Funds · City of Bakersfield HOME Funds · Developer equity The attached Development and Operating Pro Formas, including Sources & Uses of Funds, delineate the respective financing plan for the development. Specifically, we are requesting the following financial assistance from the City: 1. A $550,000 HOME Grant to assist with the land purchase for the development of the 80-unit complex. This Grant would be accompanied by a subordinated lien against the property, including a Regulatory Agreement. 2. An $800,000 low interest, deferred loan to be paid at the termination of the Regulatory Agreement - 55 years from inception. In that manner, the Agency/City would receive repayment, without having to be concerned with annual calculations and sometimes sporadic repayments. We spoke with the City's Planning and Engineering Departments to confirm our off-street parking and infrastructure requirements. Off-street parking requirements, as defined for the 'Central District' in the Zoning Ordinance (Chapter 10.08) would be 1 space per 4 units, plus 1/2 space per employee. That parking requirement carries with it a requirement for a 'recorded covenant' that 'at least 1 resident per unit, aged 62 years or over or physically handicapped' will occupy each unit. Under this Ordinance, our requirement we would be approximately 25 spaces, with 20 spaces for residents and no more than 5 spaces for employees. We designed the project for 60 spaces, which conforms to the Ordinance. Regarding infrastructure, our architects have been in contact with the City's Engineering Department, and we are aware of both the off-site and the on-site infrastructure improvements which must be completed. Be assured that the Park Place Apartments development will not pay for costs unrelated to the development of the housing, i.e, the school, retail/commercial, and/or market-rate housing proposed for the balance of the downtown Bakersfield site. In addition to the parking requirements, you are aware that the Planning Commission recommended to the City Council a General Plan Amendment, which would allow for the development of our project, as well as the proposed redevelopment of the site by the Kern County Superintendent of Public Education. Hopefully, the Council will approve the Planning Commission's recommendation at its April 28th meeting. With our upcoming (May 1, 1999) application to the California Debt Limit Allocation Committee (CDLAC) for bond financing and the tax credit application to parallel that process, we hope that the City Redevelopment Agency can process our requests for the Redevelopment Agency loan and HOME Grant as soon as possible. If approved by CDLAC at its Jtme meeting, we would issue bonds in late September 1999 and be breaking ground in October 1999. In summary, this project will create 80 attractive, high-quality housing units in the downtown Redevelopment area, with 100% of the units to be permanently affordable. The City's total commitment of $1.35M (including the loan proceeds) works out to $16,875 per affordable unit. Please feel free to contact Danny Fred or me if you have any questions or need additional information. Sincerely, THE HOUSING AUTHORITY OF THE COUNTY OF KERN Executive Director WLC/Ic Encl. cc: Randy Coats, Executive Director - Golden Empire Affordable Housing, Inc. Danny Fred, Fred Consulting Associates Jake Wager, Economic & Community Development Director, City of Bakersfield C:~MyFiles\42299tandyltrreparkpla¢¢.wpd Golden Empire Affordable Housing Inc,I Kern County Houelng Authoflty Park Plaoa Apartment~ - Affordable Housing for 8enlor~ (md~,".. CA) A. Project Sources and U~e~ TOTAL PROJECT RESIDENTIAL COUMERCIAL T~ Credit 1. ge~:ersfleld 3. T~x Exempt t.oefl 4. A~ancy Loan COST COST COST Equi~ I*.IO~E Gra~ 2. Developer Fee ~Senim Bond~: (Suboldinate-Resld.~ , 70% I:%'C Rate 30%~:. ~::..':<i~*~:..PVG ..Rate,.~.,.. Total Land Costs o~ Value Legal/Stoker Fees ~ ~ ~ ~ $0 ~ZO 000 ~ $0 SO XXXXXXXXXXX 00(XXXXXXXX Off-Site Improvements $80,000 f/,80t000 ~0, S0 $80,000 SO ~0 ~0 XXXXXXXXXXX (XXX)OOO(XXX 0emelition ~20,000 $20,000 $01 $0 $20r000 SO $0 ~0 XXXXXXXXXXX (XXXX)OO(X)O( Existing Improvements Value $0 SO SO $0 $0 $0 SO SO XXXXXXXXXXX $0 Total Aoquleltlon C~st ~450,620 $450~820 SO SO -~4-5_n,620 $0 $O $0 $0 SO Site Wo~ S=uctures SO ~ ~ SO $0 SO ~0 SO ~ S0 General Requirement~' $0 Con~ractor Overhaul' Contractor Profit' $0 ~0 SO ' Sa ' ~0 ~ ~ SO $0 $8 Site Wo~ $150,000 ~150,000 $O ~..~,,IO0 $0 $20~000 $0 $76,600 SO S150~000 Sl~uctums * $2~520~0OO ~2~520,0OO $O $sg?,llg $0 $85~000 ~745,690 ~;792~251 SO $~.520,000~ General Requirements* $~88~g00 $~86,g00 $8 $~6~536 $0 $30,000! $0 $go~364 ~O SlgS,g00 Contracto~ Overhead' $80,100 $80,100 SO $28,5_16 ~} $10,529 $0 $41,05S ~ $80.100 Contractor Profit* - $108~276 $108~276 $0 $38~546 .~. . ~20,000 $0 $49,730 SO S108.276. SO $1,054.117 $81 $165.529 $7457~0 $1.050,000 SO $3,045,278 Total New Caner. CootI $3,045~276 $~i,045,276 Design $121.811 $121.811 $0 $43.385 SO $80.000 $18.446 $0 SO: $121.811 SupervisiOn ~30,453 $30,453 ! ~0 $10,841 $0 $15,000 ~4,612 SO ~rO S30,453 Tolal Archlt~-tural Coet~ $152,205 $152;264 I SO $~4r206 SO $76~00D $23:068 ~ ~ ~152~2M SURVEY& ENGINEERING ~ ~,000 Const. Loan Intere,~li $80~$63 $80~583 $0 $28,681 ~ ,~10,000 ~11 ~883 $0 SO Origination Fee $47,500 $47r500 $0 $16,910 $48,300 ~ (~17,710) $0 $0 $47r500 Credit Enl'mnce. & App. Fee S15,000 $15,000 $0 $5,340 $0 $0 .$9,660 ~0I ~0 $16.000 nond P~emlum SO Taxea Insurance ~,000 ~S,O00 so S1~780 $0 , F) ~,220 $0 $0 $5.000 Tree ,nd Raco~ng ~;lS,O00, $15_,000 ~ r,S,340 $0 ~ $9,6e0 . .fo ~R St5,o00 Golden Empire Affordable Houtlng In;.I Kern County Houelng Authority Park Plao$ Apartments - Affordsble Housing for Senior,, (Bd~.fl~d. ~ect Sources and Uses TOTAL (,~ontd.) PROJECT COMMERCIAL Tax Credit 1. IbXerst~eicl 3. Tax Ex*emp~ Lo~n 4. Agenoy Loan CO~T COST COST PERMANENT FtNANGING $0 Loan Originatk~n Fee Credtt Enhance. & App. Fee $0 $0 TItle and Recording $t5,000 $15,000 $0 $0 $15,000 $0 O~.r S0 Total Penn. Flnenoing Coda LEGAL FEES $0 Lender Le $45,760 $0 $0 $40,000 O~her {Spealy). $60,000 $80,000 $14,240 $0 $0 ~0,000 Total Al'tom · ~0,000 RESERVES Rent Reserves $0 Initial Operal~ng Reserve ~$0 $0 Total TOTAL APPRAISAL COSTS $0 TOT. CONSTR. CONTINGENCY COSTS $0 0 THER TCAC App./A~c./Monitor Fee~ $0 Environmental Audi1 $0 $o Markelir 50 ~$O Fumiehings: $80 000 $80 000 $0 $0 ~ O~er ($pecify)- Soil Boring/ Survey; $10000 $10000 0 560 $0 $43 ~ ~$0 ~ ~ $0 $25 760 ~$O $40 000 O~er (specify)- UtilityConnec'fion Fees ~ $40 000 ~ ~ ~ ................................... ....... ..... i:i::~:i:~:i~.~.~i~!i!i!~i~!~i~i:.~:~::: ii':::i!i?:!i~i!!!ii::iiii~::!i~::i::~.::~i?:!i! ~.....,..,..~ ......... < .......... ~.......~. :: ::: :~:::: ~:::i :J:'.:".:~ ::~: ::: " :::.x.., .....~:..:::.:::::::!:!.!:::i:i:i: Cosl ReNdantlel :~;.:, DEVELOPERCOSTS ~ ~ ....... ~ ............ '~'~': Developer Overhead/PIofit ~ $266 201 ~ $171 433 $0 ~ S266 201 ConsultanV proce~aing Agenl ~ $35 000 ~ $22 540 ,~0 $0 $35 000 ProjectAdmir~sVa~on~ $249229 ~ $0 $160504 $0 ~ $249229 Other (specify): Consultant Syndcation ~ ~ $O $0 $8 ~ ~ $0 ~ Total D~aloper Co,ts' ~ $570 430 ... · Regulation Secdon 10327(c} ~ ~ $800,000 $0 ~ TOTAL pRCjECT COS; ~ ~ ~ ~ "~ O.S . Golden Empire Affordable Housing ~ Kern County Housing Authority Park Place Apartmeots- Alfo~dable Housing for Seniors (,.~.,~L CA) Operating Proforma Note: Tax exempt boncLs will be issued with Ih, 4% iow I 2 3 4 :u~,~:.: ;.~:., ~ ~ ~:~::~ ? :$~.~.~..~ ~.~:.~ :.~;~ ~,,~:,~'..~ ~.~,~.~ K. VALUE $3,785,424 $3,861,132 $2,988~ $4,017,122 Land $410,620 $418,833 $427,209 $435,754 improvements $3,374,804 $3,442,3(X) ~G,511,146 $3,581,369 B. REVENUES Potential Gross Rental Income (See Table above) $394,680 $404,547 $414,661 $425,027 Potential Gross Miac,. Income $4,800 $4,920 $5,043 $5,169 Potential Gross Income (PGI). $399,480 $409,467 $419,704 $430,196 Le.~: Vacancy and Ceilecti¢~l L~_~_~e_s (5% of PGI) ($19,974) ($20,473) ($20,985) ($21,510) P.. DFRT SERVICE · DebtSewicew/COI ($1,888,086 (e 625%Sr. Bonds)' $139,503 $139,503 $139,503 $139,503 · Agency Re=~idual Receipts Loan ($800,000)*' $5 $8 $3 $8 · Tax Credit Equity ($1,549,772) $0 $8 $0 $8 · ~/2 Developer Fee ($25~S2g) S0 $0 $8 $8 · HOME Grant ($550,000) $0 $8 $0 $0 ~it~ 1-Yr Construct. Bond & COl (¢~ 5.0%)= $812,000 · *Redeveio~ment Agency nol~ payable TotaI Debt Service $139~03 $139,503 $139~503 D. ANN. OPERATING COSTS 1. Management fee ($25/uniVmonth) $24,000 $24,840 $25,709 $26,609 2. Administration a. Renting Expense (~.3%/yr.) $500 $518 $536 $554 b. Audit (includes TCAC/IRS Compliance) $10,000 $10.350 $10,712 $11,087 ¢. Compliance Audit (MRB) $2,000 $2,070 $2,142 $2,217 d. Legal (~%/yr.) $4,a00 $4.998 $5,142 $5~22 e. Annual Trustee Fee and Expenses $2,500 $2,588 $2,678 $2,772 Total AdmlnlsiraEon $19J300 $20,493 $21 2.10 $21,983 3. Salades and Benelits Total ~a/ades & Bene,'/ta $26,500 $27,428 $28,387 . $29,381 4. Operating and Maintenance a. Salaries (+3.5%/yr.) $31,500 $32,603 $~3.744 $34,925 b. Mate rials (+3.5%/yr.) $10,000 $10,350 $10,712 $11,087 c. OU~r Costs (+3.5%/yr.)- Contracts $15,500 $16,043 $16,604 $17,185 d. Olher $2,500 $2,588 $2,678 $2,772 e. O,~er $0 $o $8 $8 Total Maintenance $59,500 $61,583 $63,738 $65,969 Golden Empire Affoidsble Housing IncJ Kern County Housing Authority Park Place Apartments - Affordable Housing for Seniors Proforma ;'contd.) I 2 3 4 5. Utilities ;~. Tr~,h Removal (-~.$%/yr.)inc~. ~ 'Kc) $10,400 ~0,764 $11,141 $11,531 b. I~)~t~ity-H¥^C and Co.~mon Arees (+3.SIVyr.) $30,000 $31,0SO $32,137' $33,262 c. Water (+3.~IVyr.~ $5,0(~ $5,175 M~ $5,544 cl. Sewer (+,.3.5('/(~yr.) $2,700 $2,795 $2A92 $2,994 e. Gas- NYAC and Common Areas (+3.5%/yr.) $15,000 $15,525 $16,(~63 $16,631 f. Elevator M~ntEnance ((-~.5°/~yr.) $5,400 $5,589 $5,785 $5,987 g. Telephone (+3.5%/yT.) $840 $869 $800 $931 To~d UNlltMs $69,340 $71,767 $74279 $76,878 6. insurance a. Property and Iiat). InsursnGe ~6,000 $8,280 $8,5-/0 $8,870 b. Worker's Co~p (',Y.I. in SeJa~e$) $0 $0 $0 $0 Total Insurance $8,000 $8,280 $8,570 $8,870 7. Taxes a.'Re.J E~ate T~(..~ (tax exempt 501 [¢][3]) $5,5O:) $5',5~ $5,611 $5,M7 b. Payrc~l "axes (Incl. in SeJ~des) $0 $0 $0 $0 Total Taxes $5~0 $5,555 $5,611 $5,667 OPERATING EXPENSES $212,640 $219,94S $227,504 $235,326 RESERVE DEPOSITS )~n. Oper. ReMn~e Deposit~. $~ $0 ~ Ann. Replace. Res. Deposits~ $17,600 $17,600 $17,600 $17,600 Tota/Reeen~e Depoa/t~ $17,6~0 $17,600 $17,600 $17,600 v25% of Annual Debt Service capitalized (see Dev. Proforma) X # of units per year CASH FLOW E~fecfive Gross Income $379,506 $388,994 $398,718 To~ O~rat~g F_.=q~n.~s ($212,~0) ($2m~-) ($227,5O4) Net Operal~ng Income $166,866 $169,049 $171,214 $173,360 Less: Replacement Resen~e Deposits ($17,600) ($17,600) ($17,600) ($17,6301 Service.(lese const, inter paid frem development) ($139,503) ($139.503) ($139.503) ($139,503)~ Fee ($7,50O) (~,72S) ($7,~'7) 120% 121% 123% 124%~ Golden Empire Affordable Housing IncJ Kern County Housing AuthOrity Park Place Apartments - Affordable Housing for Seniors (..~m.~. cA) Dperating Pr~o~~.~~~ 7 $363 $30 $333 $2,331 57 $435 $30 $4O5 $23,0~ 2 2 $435 $44 $3g~ $782 2 13 ,~522 $44 $478 $6,214 2 I Idgr Unit $522 $44 $478 $478 Golden Empire Affordable Housing Inc./Kem County Housing Authority Park Place Apartments - Affordable Housing for Seniors (Bakersfield. CA) A. Project Sources and Uses TOTAL PROJECT RESIDENTIAL COMMERCIAL Tax Credit 1. Bakersfield 3. Tax Exempt Loani 4. Agency Loan COST COST COST Equity HOME Grant 2. Developer Fee (Senior Bond) (Subordinate-Resid.) 70% PVC Rate 30% PVC Rate ACQUISITION Total Land Costs or VaGue $330~620 $330~620 $0 $0 $330~620 $0 $0 I $0 ~XXXXXXXXXX ~,XXXXXXXXX Legal/Broker Fees $20,000 $20,000 $0 $0 $20,000 $0 $0 $0 (XXXXXXXXXX ~XXXXXXXXXX Off-Sit~ Improvements $80T000 $80,000 $0 $0 $80~000 $0 $0 I $0 ~XX,~(XXXXXX ~(XXXXXXXXX Demolition $20,000 $20,000 $0 $0 $20~000 $0 $0 ! $0 ~XXXXXXXXXX ~XXXXXXXXXX Existing Improvements Value $0 $0 $0 $0 $0 $0 $0 $0 (XXXXXXXXXX $0 Total Acquisition Cost $450,620 $450,620 $0 $0 $450,620 $0 $0 $8 $0, $0 REHABILITATION Site Work $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Structures $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 General Requirements* $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contractor Overhead' $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contractor Profit' $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Rshab. Cost $8 $0 $0 $O $8 $0 $O $0 $O $8 NEW CONSTRUCTION :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: Bite Work $150~000 $150~000 $0 $53~400 $0 $20T000 $0 $76~600 $0 $150~000 Structures $2,520~000 $2~520~000 $0 $897t119 $0 $85~000 $745~630 $792,251 $0 $2~520~000 General Requirements* $186~900 $186~900 $0 $66~536 $0 $30~000 $0 $90~364 $0 $186~900 Contractor Overhead* $80~100 $80~100 $0 $28~516 $0 $10t529 $0 $41~055 $0 $80~100 Contractor Profit* $108~276 $108~276 $0 $38~546 $0 $20~000 $0 $49~730 $0 $108~276 Total New Const. Cost $3,045,276 $3,045,276 $8 $1,084,117 $0 $165,529 $745,630 $1,050,000 $0 $3,045,276 Design $121,811 $121,811 $0 $43,365 $0 $80,000 $18,446 $0 $0 $121,811 Supervision $30~453 $30~453 $0 $10~841 $0 $15~000 $4~612 $0 $0 $30~453 Total Architectural Costs $152~264 $152~264 $0 $54,206 $8 $75~000 $23~058 $8 $0 $152~264 SURVEY & ENGINEERING $25~000 $25~0OO $0 $8~900 $8 $0 $16~100 $3 $0 $25~000 Const. Loan Interesl $80,563 $80~563 $0 $'28,681 $0 $40,000 $11 ~883 $0 $0 $80~563 Origination Fee $47~500 $47,500 $0 $16,910 $48~300 $0 ($17~710) $0 $0 $47,500 Credit Enhance. & App. Fee $15~000 $15T000 $0 $5~340 $0 $0 $9~660 $0 $0 $15~000 Bond Premium $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Taxes $8 $0 $0 $0 $0 $0 $0 $0 ~ $0 Insurance $5~000 $5~000 $0 $1 ~780 $0 $0 $3~220 $0 ~ $5~000 Title and Recording $15~000 $15~000 $0 $5~340 $0 $8 $8~660 $0 $0 $15~000 Total Const. Intamst & Fees $163~063 $163,063 $8 $58,051 $48,300 $40,000 $16~713 $8 $0 $163,683 FCA 4/27/99 Page 1 of 5 Golden Empire Affordable Housing Inc./Kem County Housing Authority Park Place Apartments - Affordable Housing for Seniors (Bakersfield. CA) A. Project Sources and Uses TOTAL (contd.) PROJECT RESIDENTIAL COMMERCIAL Tax Credit 1. Bakersfield 3. Tax Exempt Loan 4. Agency Loan COST COST COST Equity HOME Grant 2. Developer Fee {Senior Bond) {Subordinate. Resid.} 70% PVC Rate 30% PVC Rate PERMANENT FINANCING ::i::!::i::iiii!ii?:!::!::!::ii!!!ii!!iii!::iiiiiiiiiiii ::::?:::::?::::::::::::::::::::::::::::::::::::::::?:::?:::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::?:?::?:?:::::?:?:?:?::: ?:?::::::::::?:::?:::::?:::::::?:?:?:::::::?::::?:?:?:?::: :???:?:??:?:?:?:??:?:??:?:?:::??:?:?:??: ::::?:::?:?:::?:?:::?:?:::?:?::::?::::::::::?:::?::::::?::: :::::::?:::::::::?:::':::::::::?:?:?:?:?:?:??:::?:??:???:?:: ??:::?????::?:::????:??:::::::?::::::?::::??:::?:::?:?::: :i::i?:::iiiiiiiii::iii?:ii!ii::ii::ii::iiii::iiiii::i?:?:i ::i::?:::i!iiiii::iiii::iiii::i?:ii::i!ii::ii?:?:ii!iii?:ii Loan Origination Fee $47~500 $47~500 $0 $0 $20~059 $0 $27~441 $0 ~,XXXY00(XXX XXXXXXXXXXX Credit Enhance. & App. Fee $20~000 $20,000 $0 $0 $10~166 $0 ' $9~834 $0 )(XXXXXXXXXX )O(XXXXXXXXX 'l'itJe and Recording $15,000 $15.000 $0 $0 $0 $0 $15,000 $0 )(XXXXXXXXXX XXXXXXXXXXX Other $0 $0 $0 $0 $0 $0 $0 $0 ~XXXXXXXXXX XXXXXXXXXXX Total Perm. Financing Costs $82,500 $82,500 SO SO $30,225 $0 $52~275 SO I(XXXXXXXXXX XXXXXXXXXXX Lender Legal Pd. by Applicant $20~000 $20~000 $0 $7,120 $0 $0 ' $12~880 $0 $(3 $20,000 Other (Specify). $60,000 $60,000 $0 $14,240 $0 $0 $45,760 $0 $0 $40,000 Total Attorney Costs $80,000 $80,000 SO $21,360 $0 SO $58,640 SO SO $60,000 RESERVES ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: iii?;::i::i::i::?;iiiiiiiii?:?:?::;:::;?;:::;:::;i:?iii??;:: :;:::;::?;::iii::!:::;i!i!ii:::;iii!::??:iliiiiiii::i::i::i::iii :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ;:::!::!::;:!!:;::!!!!!!::i!i::i!!iiii::iiii!!i!?i::i::i::ili ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::i::i::i::iii::iiiiiii::iii::iii::iii::iii[iii::i::i::i::iiiiiii::i::ii:: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::ili::i::iiii!ii::i::!!i!i!i::iiiii::iii::!ii::!iiiiiii?;i :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: Rent Reserves $20,000 $20~000 $0 $0 $0 $0 $20~000 $0 (XXXXXXXXXX (XXXXXXXXX~ Initial Operating Reserve $37,500 $37,500 $0 SO $0 $0 $37,500 $0 (XXXXXXXXXX ~XXXXXXXXXX Total Reserve Costs $57 500 $57~500 $0 $0 $0 $0 $57 500 $0 O000CXXXX~ (XXXXXXXXXX TOTAL APPRAISAL COSTS $10,000 $10f000 $6 $3~560 SO $0 $6~440 SO $0 $10~000 TOT. CONSTR. CONTINGENCY COSTS $152,264 $152~264 $0 $54~206 $0 SO $98~058 ' $O SO $152,264 OTHER ?:::?:::?:::?:?::::?::::?:?:?:?:?::::::::?:?: ii?:i::i::i::i::iiiii::i!?:iiii?:??:i!?:i::i::?:i::ii?:ii?:i::i :::?::::?:?:?:?:::?:?:?:?:?:?:?:?:?:?:::?::::::?:?:?:?:?: ::::?:?:?::::?:?:?:?::::::::::?:::::::?:::?:?:?:::??::: ?:::::?:?:???::::::::::?:?:?:?:::??:::?:??:::::: ::?:::?:?:::?:::?:?:?:::::::::::::::::?:::?:[::?:?:?: ?:::::::::?:?:?:?:???:?:?:::???:::?:?::::?:::??:::??:?: i!ii[ii:.??::.i!ii?.::i[!?.??.i:.iii!ii??::.i:.i:.iiiii:?:i:/:!?.?:::! !:/:!::ii!i!ii::i::i::iiii!i?:!::!iiii::i::!::!::!::?:ii!::!i! ::?:::???:::::?:???:::??:::?:::::?:???:?::::: TCAC AppJAIIoc./Monitor Fees $42~449 $42~449 $0 $0 $20~855: $0 $21~594 $t3 XXXXXXXX)O0( O(XXXXXXXXX Environmental Audit $5~000 $5~000 $0 $1 ~780 $0 ,fO $3,220 $0 $0 $5~000 Permit Processing Fees $60~000 $60,000 $0 $21 ~360 $0 $0 $38,640 $0 $0 $60~000 Capital Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 MarkelJng $5,000 $5~000 $0 $0 $0 SO $3,000 $3 XXXXXXXXXXX O(XXXXXXXXX Relocation Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Furnishings $80~000 $60,000 $0 $28,480 $0 $0 $51,520 .fO $0 $80~000 Other (specify)- Soil Boring/Survey $10~000 $10,000 $0 $3~560 $0 $0 $6,440 $0 $0 $10~000 Other (specify)- Utility Connection Fees $40,000 $40,000 $0 $14,240 $0 $0 $25,760 $0 $0 $40,000 Total Other Costs $242,449 $242~449 Si) $69~420 $20~855 SO $152~174 $0 SO $196 000 Oe"~/.OP£R costs ............................................................................................................................................................. :i::::: ::: :: ~: ::::: : ::::::::::::::::::::::::::::::::::::::::::::::::::::::: :.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:~:!:~:!:~:!:!:!:!:i:!:i:i:!:!:!:i:i:i:i:i:i:i:i:i :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :i:i:!:~:i:i:i:i:i:i:~:~:i:i:!:!:!:!:i:~:!:~:~:~:~ ................................................... :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: Developer Overhead/Profit $266~201 $266,201 $0 $94~767 $0 $0 $171,433 $6 SO $266~201 Consultant/Processing Agent $35,000 ~,35,000 $0 $12,460 $0 $0 ~;22,540 $0 $0 $35,000 Project Administration $249~229 $249~229 $0 $68,726 $0 so $160~504 $0 so $249,229 Other (specify): Consultant Syndication $20,000 $20,000 $0 so $0 so $20,000 $0 $0 so Total Developer Cost~° $5704,10 $570~430 ................... ...~...... $195~953 so SO ~i;374~477 SO ............... ~ ......... ~..0..t~3~ *Regulabon Section 10327(c) iiiiiiiiiiiiiiiiiiiiiiii ::i!i[iiiiiii::iiiii::iiiii::::i::::i!iiii~ii::::::i::iiiiii:::: ::::i?:iii?:i::::iii::ii::iiiiii:.i:~i::i:.i:.i:.i:.iiii:::::::.::i::i:: iiiiiii!::i::iii::ii?:iii!iiiiiii!i::i!i!i!!!i!!!i!i!i ::i!i!i!!i!!?:!!!!i!i!i!iii!i!!i?:i::iii!i!i!iii!i!i iiii!i!iii!i!i!i!i!!!ii!ii!?:iii!!!i!!iii?:iii!iii !!iii!i!i!iiiiiii!iii!iiiiii?:iiiiiiiiiiiiii!iiiiiiiiiiiiii ii!!iiii!!?:ili!iii!!ii!ili!i!iiii!!?:i!iiiiiiii!!i!!!i!!!i!i!i!i! ~!!!~!!!!~!!~!~!!~!~!!:~i~ ::ili ii:~i :~:.iiii:~i:~i~i:~iiiii TOTAL PROJECT COST $5r031~366 $5~031~366 SO $1rlN9t772 $550,000 $280~529 $1~851~065 $800~000 SO $4~353r297 FCA 4/27/99 Page 2 of 5 Golden Empire Affordable Housing Inc./Kern County Housing Authority Park Place Apartments - Affordable Housing for Seniors (Bakersfield. CA) Operating Proforma Note: Tax exempt bonds will be issued with the 4% Iow I 2 3 4 A. VALUE $3,785,424 $3,861,132 $3,938,355 $4,017,122 Land $410,620 $418,833 $427,209 $435,754 Improvements $3,374,804 $3,442,300 $3,511,146 $3,581,369 B. REVENUES Potential Gross Rental Income (See Table above) $394,680 $404,547 $414,661 $425,027 Potential Gross Misc. Income $4,800 $4,920 $5,043 $5,169 Potential Gross Income (PGI) $399,480 $409,467 $419,704 $430,196 Less: Vacancy and Collection Losses (5% of PGI) . ($19,974) ($20,473) ($20,985) ($21,510) Effective Gross Income $379,506 $388,994 $398,718 $408,686 C. DEBT SERVICE · Debt Service w/COl ($1,888,086 (@ 6.25% Sr. Bonds)* $139,503 $139,503 $139,503 $139,503 · Agency Residual Receipts Loan ($800,000)** $0 $0 $0 $0 · Tax Credit Equity ($1,549,772) $O $0 $0 $0 · 1/2 Developer Fee ($280,529) $0 $0 $0 $0 · HOME Grant ($550,000) $0 $0 $0 $0 · With 1-Yr Construct. Bond & COl (@ 5.0%)= $612,000 · *Redevelopment Agency note payable Total Debt Service $139,503 $139,503 $139,503 $139,503 D. ANN. OPERATING COSTS 1. Management fee ($25/unitJmonth) $24,000 $24,840 $25,709 $26,609 2. Administration a. Renting Expense (+3%/yr.) $500 $518 $536 $554 b. Audit (includes TCAC/I RS Compliance) $10,000 $10,350 $10,712 $11,087 c. Compliance Audit (MRB) $2,000 $2,070 $2,142 $2,217 d. Legal (+3%/yr.) $4,800 $4,968 $5,142 $5,322 e. Annual Trustee Fee and Expenses $2,500 $2,588 $2,678 $2,772 Total A dmlnlstratlon $19,800 $20,493 $21,210 $21,953 3. Salaries and Benefits Total Salaries & Benefits $26,500 $27,428 $28,387 $29,381 4. Operating and Maintenance a. Salaries (+3.5%/yr.) $31,500 $32,603 $33,744 $34,925 b. Materials (+3.5°/~yr.) $10,0(X) $10,350 $10,712 $11,087 c. Other Costs (+3.5°/dyr.)- Contracts $15,500 $16,043 $16,604 $17,185 d. Other $2,500 $2,588 $2,678 $2,772 e. Other $0 $0 $0 $0 Total Maintenance $59,500 $61,583 $63,738 $65,969 FCA 4/27/99 Page 3 of 5 Golden Empire Affordable Housing Inc./Kern County Housing Authority Park Place Apartments - Affordable Housing for Seniors (Bakersfield. CA) Operating Proforma (contd.) 1 2 3 4 5. Utilities a. Trash Removal (+3.5%/yr.) incl. in 4(c) $10,400 $10,764 $11,141 $11,531 b. Electricity-HVAC and Common Areas (+3.5%/yr.) $30,000 $31,050 $32,137 ,$33,262 c. Water (+3.5°/~yr.)-Landscape $5,000 $5,175 $5,356 $5,544 d. Sewer (+3.5°/~yr.) $2,700 $2,795 $2,892 $2,994 e. Gas - HVAC and Common Areas (+3.5%/yr.) $15,000 $15,525 $16,068 $16,631 f, Elevator Maintenance ((-,A.'3.5%/yr.) $5,400 $5,589 $5,785 $5,987 g. Telephone (+3.5%/yr.) $840 $569 $900 $931 Total Utilities $69,340 $71,767 $74,279 $76,878 6. Insurance a. Property and Liab. Insurance $8,000 $8,280 $8,570 $8,870 b. WorkeCs Comp (incl. in Salaries) $0 $0 $0 $0 Total Insurance $8,030 $8,280 $8,570 $6,870 7. Taxes a. Real Estate Taxes (tax exempt 501 [c][3]) $5,500 $5,555 $5,611 $5,667 b. Payroll Taxes (Incl. in Salaries) $0 $0 $0 $0 Total Taxes $5,500 $5,555 $5,611 $5,667 OPERATING EXPENSES $212,640 $219,945 $227,504 $235,326 E. RESERVE DEPOSITS Ann. Oper. Reserve Deposits. $0 $0 $0 $0 Ann. Replace. Res. Deposits* $17,600 $17,600 $17,600 $17,600 Total Reserve Deposits $17,600 $17,600 $17,600 $17,600 °25% of Annual Debt Service capitalized (see Dev. Proforma) -,$220 X # of units per year CASH FLOW Total Effective Gross Income $379,506 $388,994 $398,718 $408,686 Less: Total Operating Expenses ($212,640) ($219,945) ($227,504) ($235,326) Net Operating Income $166,866 $169,049 $171,214 $173,360 Less: Replacement Reserve Deposits ($17,600) ($17,600) ($17,600) ($17,600)~ Less: Total Debt Service (less const, inter paid from development) ($139,503) ($139,503) ($139,503) ($139,503)1 Less Partnership Management Fee ($7,500) ($7,725) ($7,957) . ($8,195)~ Net Cash Balance $2,263 $4,220 $6,154 $8,0610 ~ Debt Service Covera~le Ratio ISenior BondsI 120% 121% 123% 124 '/o~ FCA 4/27/99 Page 4 of 5 Golden Empire Affordable Housing IncJ Kern County Housing Authority Park Place Apartments - Affordable Housing for Seniors (Bakersfield. CA) IOperating Proforma - Rent Schedule ! I 7 $363 $30 $333 $2,331 I 57 $435 $30 $405 $23,085 2 2 $435 $44 $391 $782 2 13 $522 $44 $478 $6,214 2 I Mgr Unit $522 $44 $478 $478 Totals 80 $32,890 FCA 4/27/99 Page 5 of 5 Memorandum To: John F. Wager, Jr., Economic Development Director From: Stephen Copenhaver, GRC Associates Date: May 13, 1999 Subject: Senior Housing Project Analysis Pursuant to your direction, GRC has reviewed the proposal prepared by the Housing Authority of Kern County and Golden Empire Affordable Housing, Inc. to develop low and moderate income senior citizen apartment units in the downtown area of Bakersfield. This memorandum summarizes our review of the project and analysis of the need for assistance and consolidates our prior communications that were prepared as the project evolved. The site for the proposed project is a portion of a larger 14.5-acre property controlled by the County Superintendent of Schools in downtown Bakersfield. The property has been master planned by an urban design firm and specific parcels have been designated for school, senior housing, and market rate housing and commercial uses. The master plan for the overall property is very general and it only broadly defines the character of proposed future development. Senior citizen apartment use was designated for development on the central portion of the site on a parcel of approximately 3 acres located between the parcel designated for commercial development and the parcels devoted to school and M.O.V.E. Following the master planning effort by the Superintendent's office, the Kern County Housing Authority and Golden Empire Affordable Housing (hereinafter jointly referred to as the "Developer") contracted with a Bakersfield architectural firm, the KSA Group, to prepare development plans for the proposed 80 unit senior apartment project. The site plan, elevations and landscape plans remain a work-in-progress but are in a state of sufficient development to define the primary project parameters summarized with our comments below. Proposed Project Parameters Project Densi _ty. The project is designed at a relatively low density of approximately 26 units per acre. We have encountered only one senior apartment project constructed at this density with the majority of projects at over 35 units per acre. The proposed lower density should provide a strong opportunity to develop a quality project, keep the scale of the project in proportion to the surrounding development and allow for greater open space and landscaping. Land Value. The land value has been established at approximately $330,000 or $2.53 per square foot. GRC believes this to be a reasonable value for the site, based on the John F. Wager Bakersfield Senior Housing Analysis Page 2 negotiations and values arrived at for another multi-family project proposed in the downtown area. Rental Rate Structure. As with all projects structured to benefit from the capture and sale of tax credits under the 4% tax credit program, rents are structured to be affordable to households of 60% of medium income or less. Specifically, the proposal is to designate 10% of the units for households at 50% of medium income and 90% for households at 60% of the medium income. The units affordable to households at 60% of the medium income are essentially at full fair market rent due to the modest level of rents found in the downtown area. Table 1 summarizes the units by the number of bedrooms, square footage, utility allowance and proposed net rental rates. Table 1 Summary of Proposed Project Number of Number Net Bedrms of Square Utility Monthly Units Footage Allowance Rent 1 13 578 $30 $333 1 51 578 $30 $405 2 3 768 $44 $391 2 12 768 $44 $478 2 1 Mgr. Unit 768 $44 $478 Total 80 Project Type. The Developer has decided to proceed with an interior hallway design for the project. This approach is somewhat more expensive than a two-story walk-up design because of the additional square footage within the building and because elevators are required. However, the designers believe that the benefits of an interior hallway project include: a) increased security because the entryway points into the building can be easily controlled; b) a more aesthetically pleasing exterior without exposed stairways and exterior corridors; and c) protection from extreme summer and winter temperatures when walking to the community rooms or meeting rooms within the project. The Developer believes that these benefits outweigh the cost penalty of the design and will contribute to the quality of the project. Parking. Provided parking is approximately .75 space per unit, which exceeds typical senior- parking ratios for a project of the nature, proposed. It is not anticipated that a high percentage of tenants will own or could afford to own a vehicle. Project Amenities. The project concept includes approximately 8,000 square feet of community and management space within the project including sitting areas located on each floor, a reading room, laundry rooms, a large multipurpose room, lobby and administrative space for the project managers. The public spaces within the proposed project are relatively large in comparison to other projects we have reviewed and will accommodate a wide range of senior programs. h:\proj ects\bakerfieldLfinal .doc John F. Wager Bakersfield Senior Housing Analysis Page 3 Additional Project Features. One interesting feature of the proposed design is the avoidance of packaged air conditioning units. The Developer is proposing a 4-pipe central plant for heating and air conditioning, which eliminates unsightly air conditioners on the exterior of each unit, allows for operating efficiencies and cost savings in the future, but the design is initially more expensive to construct. Other interesting features not yet illustrated on plans include a desire by the Housing Authority to provide carports and the desire to have the exterior of the project benefit from a special facade treatment to reflect the design elements commonly found within downtown Bakersfield. The architect believes the exterior treatments will involve significant architectural detailing, masonry and stucco, columns and special window treatments. During the conceptual design phase, the project improved significantly. The site area has been increased and the density reduced, the interior hallway design has been established and the Developer has added several features. Generally, when faced with the choice of pursuing higher quality or cost savings the Developer has chosen to incorporate features that reflect quality. This is particularly true with respect to density, community space, security and exterior treatment. Requested Agency and City Assistance The Developer is requesting a total of $1.35 million in assistance from the City and Agency in federal housing funds and redevelopment housing set-aside funds. $550,000 is in HOME funds in the form of a grant with a subordinated lien against the project to ensure compliance with a regulatory agreement ensuring compliance with HOME requirements. It is anticipated that the HOME funds will be used for qualified activities including acquisition of the site and to cover certain financing fees such as origination fees and tax credit application fees. The Developers are additionally requesting a pledge Of housing set-aside from the Bakersfield Redevelopment Agency. Initially, the Developer sought to have the Agency pledge funds over a 5-year period to support a tax increment bond issue that would net $1,052,000 in assistance. In return, the Developer offered the Agency a share in the future cash flow of the project to the extent funds were available after debt service and operating cost. This structure was amended and simplified to request a reduced amount of assistance without Agency participation in the project cash flow to save bond issuance costs, audit requirements and the uncertainties of making extremely long range projections. The Developer is now requesting a $800,000 loan secured by a straight note with all interest and principal due in a single payment 55 years in the future. The aforementioned structure for receiving housing set-aside funds allows the Developer to capture the tax credit program benefits of a "loan" and allows the Agency to make a single payment and not be involved in controlling or reviewing operating costs and project profitability in the future. The revised request also saves the Agency over $200,000 in net present value in comparison with the original request. The Developer also anticipates that mortgage revenue bonds would be issued. The Housing h:\projects\bakerfield~final.doc John F. Wager Bakersfield Senior Housing Analysis Page 4 Authority would be the sponsoring entity unless it decides to participate in a mortgage revenue bond pooled funding. The Housing Authority is not requesting that the City or Agency be the issuing authority on any bond financing and the Housing Authority would be selecting the financing team for any issue. Project Proforma GRC reviewed each category of cost within the proforma and compared it against our experience in other projects and questioned the Developer, the financial consultant and architect on the assumptions behind the costs. In projects of this type, the most important factors in determining cost are the type and quality of the project. Once the character of the project has been determined, the areas of greatest concem are direct construction costs, financing costs, developer fees and profit. Other categories of cost such as land value, permit fees, off-site costs and interest charges are generally set by third parties and the Developer has minimal opportunity to influence the cost. Direct Construction. The project proforma is based on a direct construction cost of $50 per square foot plus contractor general conditions, overhead and profit for a total of $57 per square foot. This compares favorably with other senior projects GRC has reviewed. GRC also interviewed the Housing Authority on their past experience with construction costs and they shared that they have not constructed a similar project but the proposed project is more expensive than prior projects due to the design and quality of the project. Overall, GRC believes that the construction and development costs outlined in the proposal are reasonably accurate based on the conceptual plans and comparisons with other projects. Financing Assumptions. GRC reviewed the application fees, legal fees, commitment fees, reserves during lease up, and interest rate assumptions (5.75%) and feel comfortable that the costs listed within the proforma are reasonable without adjustment. The financing plan relies on a number of financial resources in addition to the City and Agency assistance. First, the Developer projects that $1.55 million in equity can be raised through the sale of tax credits and an additional $280,000 will be contributed by the Developer in the form of deferred developer fees. Debt financing consists of tax exempt bond financing issued by the Authority in the amount of $1.88 million supported by the cash flow of the project. Developer Fees. The state tax credit program is structured to permit developer fees not to eXceed 15%. Senior projects generally cannot affordably accommodate this level of developer fees. Typically, fees are deferred and paid back out of future cash flow of the project after operating costs and debt service on a residual cash basis. This technique increases the basis of the project for the purpose of calculating tax credits, and thus, allows the developer to raise additional equity for the project. This technique ignores the fact that the developer most likely would receive any residual cash flow even if it was not characterized as a deferred developer fee. The subject project incorporates the above- described technique by including in the proforma developer fees in excess of $560,000. However, the cash flow analysis illustrates that one-half of these fees are deferred many years into the future. h:\projects\bakerfieldXfinal.doc John F. Wager Bakersfield Senior Housing Analysis Page 5 Operating Costs. In our initial analysis of the project, GRC pointed out that the operating budget for the project was approximately 5% to 10% higher than we normally encountered for senior housing at approximately $2880 per unit per year. In the revised proforma these costs have been slightly reduced to $2658 in annual operating costs per unit. The component of the reserves devoted to reserves for replacement is at a market rate of $250 per unit per year. GRC believes the operating budget fairly illustrates the costs the project will incur. Need For City and Agency Assistance GRC researched apartment development in Bakersfield and specifically in the greater downtown area and determined that there has been no apartments developed in the downtown area in over 15 years. We believe this situation reflects the gap between costs and feasible rents in the downtown. The highest apartment rents in the community are found in the northwest portion of the community where a rental rate survey prepared by the Kern Appraisal Company indicated that rents for 1-bedroom units are between $525 and $720 per month and $725 and $905 for 2- bedroom units. Similarly, rents in the northeast and southwest are also much higher than in other older parts of the community. Not surprisingly, these areas are where the newer apartment complexes are located. In an apartment survey conducted in 1998, these areas are also where the vacancy rates are the lowest in the City at between 2.1% and 5.5%. The survey determined that vacancy rates in central Bakersfield are 6.6% which is moderate but rental rates are only 50% of those found in the stronger sub-markets within the City with a range of $250 to $395 for 1-bedroom and $350 to $575 for 2-bedroom units. The above data is very important because it indicates that the marketplace has not developed new apartment units downtown because of extremely low rental rates not sufficient to support new development. The data also indicates that rents would have to increase between 150% and 200% to support new construction as experienced in the stronger outlying areas of the community. A more detailed review of the data indicates the difficulty of developing apartments in the downtown area without governmental assistance. Operating costs for apartments generally are between $2,500 and $2,800 per unit per year and, within a particularly geographical area like the City of Bakersfield, do not very substantially. Insurance rates, project management, utilities, trash etc. are similar project to project (maintenance is the one area that will vary with amenities, density and landscaping). Therefore, a market rate project in the northwest has the advantage of much higher rents but also proportionately lower operating costs which allows greater debt carrying capacity. For example, the subject low income senior project has operating costs before reserves for replacement that exceed 50% of net project revenue and a market rate project in the northwest would be at approximately 30% of net revenues. Thus, the subject project can afford debt service payments (gross rent less vacancy, reserves and operating costs) which support only $23,600 per unit - less than one-half the actual cost to develop the unit. Thus, the proposed development requires assistance to compensate for this shortfall. Assistance provided through the state tax credit program and the City and Agency h:\projects\bakerfield\final.doc John F. Wager Bakersfield Senior Housing Analysis Page 6 assistance. By the nature of the subject project, rents are restricted to 60% of the median income or less. Thus there is no flexibility to increase the restricted rents above the projected $411 per month average. The market in Bakersfield over many years has demonstrated that rental rates at this level do not attract private development without assistance. SIYMIVIARY GRC believes that the proforma submitted by the Housing Authority and affiliated non-profit accurately reflects development costs for the type of project proposed and the level of assistance required to implement the project. The budget provides for a very high quality, low- density project. HOME and redevelopment funds in the amount outlined in the proforma will be required to implement the project. The only significant cost savings would require a redesign of the project and the elimination of project elements such as the central heating and cooling plant, less community room space within the project, perhaps a walk-up design rather than interior hallways, less site area and fewer architectural enhancements; however, the elimination of these elements would reduce quality and change the Developer's concept. The Agency should monitor the plans closely as they are completed to make sure the design elements described by the Developers are included in the final plans. In addition, GRC would suggest the following steps be taken by the Agency during the planning and implementation stages of the project: · Require that low-income housing covenants consistent with redevelopment law be recorded against the property in addition to the bond and tax credit covenants. · Require the Developer to review the construction bids with the Agency for consistency with the submitted proforma. · Require the Developer to offer documentation on the value and sale of tax credits. · Require the Developer to submit a financing plan and indicate the ability to complete the project before City and Agency Funds are invested. · Work with the Developer to ~generate a marketing plan to ensure that priority is provided to residents. · Authorize the Agency to require replacement of project management if sustained management problems persist in the future. · Include in the project contracts, a strong maintenance clause. h:\projects\bakerfield\final.doc ADMINISTRATIVE REPORT I MEETING DATE: April 28, 1999 I AGENDA SECTION: Consent Calendar I ITEM: 8.ee. TO: Honorable Mayor and City Council APPROVED FROM: Gregory J. Klimko, Finance Director DEPARTMENT HEAD DATE: April 13, 1999 CiTY ATTORNEY CITY MANAGER SUBJECT: Transient Outdoor Business Permits RECOMMENDATION: Referral to Budget and Finance Committee BACKGROUND: Transient outdoor businesses are regulated by Bakersfield municipal Code Chapter 5.56. Once the applicant has complied with application requirements, a ninety day permit to operate the business is issued by the City Manager or his designee. Sno-Shack is a seasonal business that generally operates May through September which means permits must be issued twice during the season. Bruce Dolgin has complained to staff and the City Manager that it is a hardship to repeat the application process during the season. He is requesting Sno-Shack be issued a 180 day permit. As background information, application requirements include property owner permission to locate a transient business at a particular location and that it is the site of an operating business to which the transient business would be secondary and that adequate paved parking is available. (Prevents transients from operating on vacant lots). The code also requires a' police background check of all owners of the transient business, C-2 zoning or less restrictive and that the transient business will not present a substantial hazard to vehicular or pedestrian traffic. Since any change in the term of the transient outdoor business permit might have city-wide application, staff recommends this matter be referred to the Budget and Finance Committee. It is felt the committee could review the ordinance and develop some guidelines before any ordinance amendments are 'drafted. Suggested altematives to the current 90 day limitation include a tiered permit system for 30, 90 or 180 days. The cost of each permit would reflect staff time expended for approval, inspection and monitoring of the WC D /Idt April 15, 1999, 11:53AM S:\Secretary\GREG\1999~,DMIN - Transient Outdoor Business Permits ADMINISTRATIVE REPORT Page 2 business. Attached is a letter from Bruce Dolgin of Sno-Shack in support of his request. WC D/Idt April 15, 1999, 11:55AM S:\Secretary\GREG\1999~ADMIN - Transient Outdoor Business Permits April ~ 1, 1999 Alan Tandy City Manager and City Council City of Bakersfield 1501 Truxton Avenue Bakersfield, CA 93301 Dear Mr. Tandy; This letter is in response to our meeting last September with Mr. Klimko where there was a unanimous recommendation to extend the itinerant permits for Sno-Shack of Bakersfield from 90 to 180 days. This letter shall give notice for this matter to move forward to a committee of the City of Bakersfield, City Council. To recap our reasons from the meeting and subsequent discussions since then: Sno-Shack Of Bakersfield was started in Bakersfield 18 years'ago. In 1993 Elaine Dolgin purchased it as one unit, 1994 brought the total to 4 stores with 20 employees and in 1995, Sno- Shack of Bakersfield expanded to its present size of 9 stores and approximately 50 employees. During that time, as well as under the previous owner (a total of 18 years) Sno-Shack of Bakersfield has always made timely application and payment of all licenses and permits. In April of 1998, a city employee named Cheryl sent us a letter stating that the itinerant permits that had always been taken care.at the ' same time as with our business licenses would not be valid for the same time period. We were told our business must shutdown immediately. As we discussed in our meeting, this was inappropriate customer service for a legitimate, 18-year-old business that historically had never had one licensing problem. After many phone calls back and forth it was decided that an immediate shutdown of 9 stores and the subsequent unemployment of 50 employees was overzealous on the part of one employee and we agreed to fill out the appropriate applications. The stores would then not be shutdown, 50 employees would not be put out of work and this matter would be discussed in a more appropriate situation at an appropriate time. This led to the meeting in September with Mr. Tandy and Mr. Klimko. Sno-Shack of Bakersfield has never asked for any upfront favors before delivering jobs in the City of Bakersfield. Being one of the largest employers of teen and college age summer help in the county; our employees earn an average of seven to nine dollars per hour and the annual retention percentage is between 60 to 70 percent. In addition to general spending money, approximately 20 Sno-Shack employees become first time car buyers every year! Thank you for your consideration with this matter and I look forward to the City Council meeting on April 28. MEMORANDUM April 14, i 999 TO: Gregory J. Klimko, Finance Director FROM: William C. Descary, City Treasurer ~ SUBJECT: Transient Outdoor Business Permits Bruce Dolgin of Sno-Shack has submitted a letter dated April 1 !, 1999 (copy attached) supporting his request to change the term of transient outdoor business permits from 90 to i 80 days. The letter contains information that needs to be clarified. At the end of the second paragraph the letter states that Sno-Shack has always made timely application and payment of all licenses and permits. This is not the case. Last May Sno-Shack was operating without the requisite transient outdoor business permits. To correct this situation, Treasury Division staff contacted Mr. Dolgin: We requested that Sno-Shack file applications for the required permits. Incomplete applications were filed on May 6, 1998. Application requirements were subsequently completed piecemeal and the permits were approved on July 22, 1998. Sno-Shack's business licenses were renewed on July 27, 1998 at which time the transient outdoor business permits were released to Mr. Dolgin. The issue at the beginning of the third paragraph of Mr. Dolgin's letter concerns a code requirement that a valid business tax certificate be in effect during the entire effective period of the transient outdoor business permit. In other words, a business license cannot expire during the ninety day term of a transient permit. Sno-Shack's business tax certificates expired on June 30, 1998. Therefore, business licenses should have been renewed on May 6 when the permit applications were filed in order for the tax certificates to be current during the permit period as required by code. MEMORANDUM April 15, 1999 TO: Alan Tandy, City Manager FROM: Gregory J. Klimko, Finance Director~~_ SUBJECT: Transient Outdoor Business Permits (Sno-Shack) Bruce Doigin has sent a letter to yourself and the City Council dated April 11, 1999, (copy attached). The letter requests the extension of our current 90 day itinerant merchant (transient outdoor business) permit to 180 days to accommodate the Sno-Shack seasonal business which runs from 5 - 6 months. If you recall you, I and he met last September to discuss his concerns. My recollection was that you and I agreed that we were neither for or against his proposal since the time period defining itinerant (temporary)is a City Council prerogative. Subsequently, staff suggested Mr. Dolgin put his concerns in writing in order to get this issue before the City Council. Mr. Dolgin currently is not a city resident hence his letter to yourself and the City Council and not a specific Council- member. Mr. Dolgin has submitted applications for six (6) locations within the city in his wife's name for the upcoming season. April ! 5, ! 999 S.,SecretarS...GREG, 999'Memo - Transient Outdoor Business Pervnils (Sno-Shack)