Original affordable housing fees go toward new ‘Reserves’ apartment project at April 15 closing
April 5, 2016
Steamboat Springs — The community will have skin in the game when the development entity building the new 48-unit, income-restricted affordable apartment complex, The Reserves at Steamboat Springs, goes to the closing table April 15.
The city of Steamboat Springs and Routt County have pledged $400,000, along with another $400,000 in the form of a grant from the Colorado State Housing Board to the project.
The $400,000 in local funds represent monies the local governments collected last decade from developers to help offset the need for workforce housing their projects created. Now, they are being used as originally intended, Yampa Valley Housing Authority Executive Director Jason Peasley said Tuesday.
"Kudos to the city and the county for being the first to commit hard funds to the project," Peasley said after meeting with the Routt County Board of Commissioners Tuesday. "We leveraged that money into (nearly) $13 million," in federal tax credits being purchased by American Express.
The $400,000 from the two local governments includes $300,000 originating from a fee charged to developers "in lieu" of building affordable housing units in the boom of the mid 2000's. Another $100,000 is coming from the city and county's jointly held West of Steamboat Housing Fund, Peasley said.
He told the BOC that, when the construction financing for the apartment project closes next week, it will bind together the housing authority, the real estate development firm Overland Property Group, which will build the apartment buildings, and Enterprise Community Investment in a new entity that will develop and own the apartment project.
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Enterprise acted as the agent for American Express in the purchase of federal tax credits that represent the large majority of the construction funds.
Enterprise will be a 99.8-percent owner in the development group for the first 15 years of its existence so it can receive all the benefits from the tax credit and any depreciable losses, Peasley explained.
In a letter to the city and county dated March 30, he said that, at closing, the $800,000 represented by the state housing grant and the city and county contributions will be committed to the development as a loan, which would be carried by the development entity as a "related party debt."
"This related party debt will convert into project equity for YVHA when the investment partner (Enterprise) dissolves its ownership interest in the project at the end of 15 years," Peasley wrote. "At that time, YVHA will have an option to leverage this equity to purchase a 100 percent ownership stake in the property via a right of first refusal."
Should Enterprise retain ownership of the project, the local monies would be returned.
Peasley said the developers would like to begin construction on the apartment buildings as soon as possible and have them fully leased sometime in 2017. However, the dates are uncertain, and YVHA anticipates working with Ross Management Group, of Denver, to create an equitable application process for prospective renters.