Full Text
Office of Planning & Grants - 1 - June 10, 2009 Neighborhood Stabilization Program (NSP) Application Applicant: City of Missoula Project: Silvertip Apartments, 1311 E. Broadway 115 units of multifamily rental housing for low- and moderate-income households (to 80% of area median income) Developer/Owner: Rocky Mountain Development Group NSP Sought: $5,000,000 Total Project Cost: $10,050,000 Activities: Purchase of property; demolition of existing commercial buildings; construction of rental housing Project description: The proposed Silvertip Apartments consists of 115 multifamily rental units for low- and moderate-income households on the site of the now-closed Missoula Athletic Club on East Broadway. The property, a 3.38-acre site, was foreclosed several years ago, has been for sale for over 12 months, and is vacant and blighted. It is adjacent to rental housing owned by the Missoula Housing Authority to the east, and Riverside Health Care Center to the west. The Clark Fork River borders the property on the south, and directly north of the property are Broadway Street, Montana Rail Link, and Interstate 90. The property is on the bus line and near to medical facilities, shopping and schools. Need: Last November, City Council passed Resolution 7376, a Community Housing Policy, encouraging the development of affordable housing for households earning up to 120% of area median income (AMI). The Department of Housing and Urban Development (HUD) estimates that 52% of Missoula’s renters are “cost burdened,” or pay more than 30% of their income for housing costs. An estimated 4,000 rental households making up to 80% of AMI in Missoula are cost burdened. These are the households that will be eligible to live in the Silvertip Apartments. Missoula’s rental vacancy rate is usually below 5% and is estimated to be about 2% now. The City’s primary federal housing funds come from the Community Development Block Grant and Home Investment Partnerships programs, which combined bring about $1 million to the City, not all of which is dedicated to housing,. The private and nonprofit sectors also rely on low income tax credits to develop affordable housing. These programs combined are limited and insufficient to meet the need for affordable rental or homeownership housing. The NSP funds represent an unprecedented opportunity to receive additional funding for housing in Missoula. Sources of funds: The sources of the funds for this project are a HUD multifamily loan for $4.45 million, and assistance from the Federal Home Loan Bank in the form of $300,000 loan and $300,000 grant. The $5 million balance is being sought from HUD’s Neighborhood Stabilization Program, administered by the Montana Department of Commerce. The NSP funds are expected to be in the form of a grant. No City funds are being used in this project; the NSP funds are a pass-through grant. ---PAGE BREAK--- Office of Planning & Grants - 2 - June 10, 2009 Uses of funds: If NSP funding is granted, the property will be purchased for $1.9 million, which is 16% below the appraised value. Demolition of the two structures, architectural and engineering costs, and construction of the new apartments will cost about $8.3 million. Financing, legal, developer and purchase fees and other costs, including administration, will comprise the balance. Administration of the grant, which represents 3% of the NSP request, will be by the Office of Planning and Grants. OPG’s role will be reviewing draw requests from the developer for eligibility, submitting requests to the State, dispensing funds, and monitoring the project for compliance with state and federal laws and regulations. Eligible activity: This project meets Uses D and E in the Neighborhood Stabilization Program as administered by the State. Use D authorizes the demolition of “blighted structures.”* Use E allows the acquisition of vacated residential or commercial property and the construction of affordable housing. *As provided by MCA 7-15-4206(a), a “blighted” structure is one that is conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, and crime, that substantially impairs or arrests the sound growth of the city or its environs, that retards the provision of housing accommodations, or that constitutes an economic or social liability or is detrimental or constitutes a menace to the public health, safety, welfare and morals in its present conditions and use by reason of substantial physical dilapidation, deterioration, age, obsolescence, or defective construction, material, and arrangement of buildings or improvements, whether residential or non-residential. The 115 apartments being constructed will be available to low- and moderate-income households that earn up to 80% of Missoula’s area median income ($38,000/year for a two- person household in 2009). The NSP limit for these uses is 120% of AMI. Contingencies: Development of this project is contingent upon receiving NSP funding. If NSP funds are awarded at a lower level than requested, the project could be modified to allow fewer units to be constructed. The site is currently zoned P-2, and would need to be rezoned to allow residential construction. While RMDG has had preliminary discussions with OPG planning staff about zoning, a rezoning request will wait until NSP funding is confirmed. Timeline and process: All applications for NSP funds must be submitted to the Montana Department of Commerce no later than September 18, 2010. Projects that involve the acquisition of foreclosed residential properties AND that will assist households at no more than 50% of area median income (AMI) or no more than 120% of AMI are in the two highest priority categories—Uses A and B. The State will need to approve projects totaling almost $1.7 million in Uses A and B before a project like the proposed Silvertip Apartments could be funded with the $5 million in NSP requested. It is possible that the State could commit NSP funding incrementally, for example, granting funds for the purchase and demolition, and later for construction. As of last week the State has received two requests for NSP funds, but the Uses and amounts requested are not known at this time. The Montana Department of Commerce has been unable to estimate how long it might take after application before this project could be awarded NSP funds. However, the program is essentially “first-come, first-served,” so an early application is advantageous.