Title
Ordinance No. 22-31 by the City of Colorado Springs, Colorado, authorizing the issuance and delivery of its Multifamily Housing Revenue Note (Copper Rose Apartments Project) Series 2022, in an aggregate amount not to exceed $24,000,000, for the purpose of financing the acquisition, construction, improvement and equipping of a multifamily housing facility in the City of Colorado Springs, Colorado and to pay certain issuance expenses of such Note; approving and authorizing execution of a loan agreement with the funding lender, a loan agreement with the borrower, and a tax regulatory agreement with respect to the Note; making findings and determinations with respect to the Project and the Note; authorizing the execution and delivery of related documents; and repealing all action heretofore taken in conflict herewith
Presenter:
Katie Sunderlin, Senior Affordable Housing Coordinator
Steve Posey, Community Development Division Manager
John Bales, Fred Marienthal, Kutak Rock LLP
Peter Wysocki, Director of Planning and Community Development
Body
Summary:
The Copper Rose Apartments Project is an affordable housing project that proposes to construct 183 apartment units.
The ordinance will authorize the issuance and delivery of an amount not to exceed $24M in Private Activity Bonds (PAB) for the purpose of financing the acquisition, construction, improvement, and equipping of an affordable multi-family property. The project is 100% affordable with all units renting to households at 60% Area Median Income (AMI) or below.
The City previously passed a resolution reserving $18.5M in Colorado Springs PAB cap with a not to exceed amount of $21.5M. The $3M gap in PAB was to be assigned to the City by another issuer. Due to significant demand for private activity bond financing and a volatile construction cost market, the developer has requested an increase in the not to exceed amount of PAB to $24M. It is advantageous to the City to use its own PAB to finance the full amount of $24M without relying on an assignment from another issuer in order to maintain timely use of PAB resources.
All expenses related to bond issuance are paid by the developer. These include legal fees and servicing costs of other third parties involved in the bond transaction. Administrative Regulation 2021-04 establishes issuer fees totaling 0.4% of par value of the bond issue. Community Development intends to use the City’s issuer fees to assist non-profits with eligible pre-development costs related to affordable multi-family rental projects.
Previous Council Action:
88-18, 72-19, 63-20, 114-21: Resolutions adopted to carry forward the City’s annual PAB allocations for the financing of affordable multi-family rental projects.
96-21: Resolution declaring the intent of the City of Colorado Springs to issue an amount not to exceed $21.5M in multi-family housing revenue bonds to Copper Rose. Expiration Date: January 31, 2022
08-22: Resolution extending the effective date of Resolution No. 96-21 to June 30, 2022 to issue PAB in an amount not to exceed $21.5M.
Background:
In 2018, 2019, 2020, and 2021, City Council voted to carry forward its PAB allocations for the purpose of financing qualified residential rental projects, an eligible use of PAB under the Internal Revenue Code. Carrying forward PAB for multi-family affordable housing is a means for City Council to address the need for additional housing for lower-income populations in the community. The City is a conduit issuer of PAB. As a result, the City assumes no liability for repayment of the bonds. The developer accessing PAB financing agrees to carry all costs related to the bond issuance, marketing and servicing, including attorney’s fees, document preparation, and public notifications.
This item supports the Mayor’s goal of building or preserving on average 1,000 units of affordable housing each year established in HomeCOS, the City’s affordable and attainable housing plan.
Furthermore, this item is supported by and implements PlanCOS Vibrant Neighborhoods Policy VN-2-A pertaining to affordable and attainable housing and providing a variety of housing types for households at all income levels.
Financial Implications:
The Copper Rose Apartments Project will draw up to $24,000,000 of available PAB from the City’s annual allocation. The issuance of $24,000,000 of PAB will generate $96,000 in issuance fees which will be used to rebate development fees (exclusive of utility fees) through the Community Development Division’s Affordable and Attainable Multi-Family Rental Fee Rebate Program.
Board/Commission Recommendation:
N/A
Stakeholder Process:
N/A
Alternatives:
City Council could choose to postpone the bond ordinance, however, this would substantially delay construction of the project, likely resulting in increased construction costs and increased PAB volume ask, and fail to address a shortage of affordable rentals for lower-income households in the community.
Recommended Action
Proposed Motion:
Approve an ordinance by the City of Colorado Springs, Colorado, authorizing the issuance and delivery of its Multifamily Housing Revenue Note (Copper Rose Apartments Project) Series 2022, in an aggregate amount not to exceed $24,000,000, for the purpose of financing the acquisition, construction, improvement and equipping of a multifamily housing facility in the City of Colorado Springs, Colorado and to pay certain issuance expenses of such Note; approving and authorizing execution of a loan agreement with the funding lender, a loan agreement with the borrower, and a tax regulatory agreement with respect to the Note; making findings and determinations with respect to the Project and the Note; authorizing the execution and delivery of related documents; and repealing all action heretofore taken in conflict herewith
Summary of Ordinance Language
An ordinance authorizing the issuance and delivery of the City’s Multifamily Housing Revenue Note (Copper Rose Apartments Project) Series 2022, to finance the acquisition, construction, improvement and equipping of a 182-unit affordable housing project, located on Tutt Boulevard, between Stetson Hills Boulevard and Dublin Boulevard.
