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HomeMy WebLinkAbout043 07 c.c~ 1)GJ) 1 1reo.S. e,po tJ7 A~. <:,1\ STATE OF WASHINGTON Jefferson County ill the Matter of: A Forgiveness of Loan Payable to Jefferson County by the H~using Authority of Jefferson County } } } RESOLUTION NO. 43-07 WHEREAS, the Board of County Commissioners for Jefferson County, "Board," found (1) that unsanitary or unsafe inhabited dwelling accommodations exist in the Jefferson County; (2) that there is a shortage of safe or sanitary dwelling accommodations in Jefferson County available to persons of low income and senior citizens with rents or mortgages they can afford; and (3) that there is a shortage of safe or sanitary dwellings, apartments, mobile home parks, or other living accommodations available for low-income persons and to senior citizens in Jefferson County. WHEREAS, the Board has determined that a scarcity of full-time and well- paying jobs within the County has limited the economic opportunities for its residents and has exacerbated the foregoing housing problem. WHEREAS, it is written in the Jefferson County Comprehensive Plan, GOAL HSG 1.0, that the County shall "Encourage and Support efforts to provide an adequate supply of housing for County residents of all income groups; GOAL HSG 3.0 adds a goal to "Cooperate with the appropriate agencies to create programs aimed at conserving and improving the County's existing housing", and policyHSP 3.3 encourages the County to cooperate with the Jefferson County Housing Authority, WHEREAS, ARTICLE VII, SECTION 7 of the Constitution of the State of Washington expressly states that, "No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation" WHEREAS, the Board, with the assistance of the City of Port Townsend, co- established a steering committee consisting of elected and appointed members of government and the private sector, including the representatives and/or employees of School Boards, Economic Development Organizations, Non-Profit Organizations with expertise in housing, Western Washington University, Jefferson County's homebuilders, realtors and lenders, as well as any and all members ofthe general public who wished to participate~ WHEREAS, this steering committee approved a Final Housing Action Plan, completed in October 2006, and adopted by the City of Port Townsend at a regularly scheduled and properly noticed meeting on October 2, 2006. WHEREAS, the Housing Action Plan was unanimously adopted by the Planning Commission of Jefferson County on Wednesday, October 4, 2006 at a properly noticed and regularly scheduled Planning Commission meeting and unanimously adopted by the Board of County Commissioners after a regularly scheduled and properly noticed public hearing on October 9,2007. Resolution No. 43-07re: Forgiveness of Loan to Housing Authority Page: 2 WHEREAS, the Housing Authority of Jefferson County (HAJC), which was established in 1970 to meet the need for safe, sanitary, and affordable housing in Jefferson County, has expressly stated that this forgiveness shall help them acquire a specific building for the assistance of the poor and the infirm. WHEREAS, an Interagency loan for $60,000, approved by the Board of County Commissioners on December 18,2000, is the subject of this forgiveness, NOW THEREFORE BE IT RESOLVED by the Board of County Commissioners of J efferson,W ashington, that: 1. There is a need for concerted action to meet the housing and economic development needs of County residents, 2. The Interagency Loan approved on December 11, 2000 by the Jefferson County Board of County Commissioners for payment to the Housing Authority of Jefferson County, expressly written in an Interlocal Agreement dated December 18, 2000, is hereby forgiven for now and for ever, and 3. This forgiveness stipulates that the Housing Authority make ALL efforts to RESERVE certain rights, including (1) the right to future development upon the real property where the Garden Court Apartments is located, (2) the-right to maintain a covenant of permanent affordability, further defined as a minimum 99 year covenant with the right of renewal reserved into perpetuity for County residents earning less than the regional median income. This resolution shall be in full force and effect upon adoption. APPROVED AND ADOPTED this ~ day of MAy ,2007. JEFFERSON COUNTY BOARD OF COMMISSIONERS QJ^-~GtrLL Uklie Matthes, CMC Deputy Clerk of the Board ~ ,/ ~~. JEFFERSON COUNTY BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST TO: Board of County Commissioners John Fischbach, County Administrator FROM: Brent Butler, Long-Range Planning M6Z Al Scalf, Department of Communi:;,c6e~~pmen DATE: May 23, 2007 SUBJECT: Forgiveness of debt payable to Jefferson County by the Housing Authority of Jefferson County, a quasi- governmental agency. STATEMENT OF ISSUE: The United States Department of Agriculture (USDA) Rural Community Development Initiative provides low-interest subsidized mortgages to qualified property owners in exchange for the provisioning of affordable housing. Many of these rural development mortgages, known as 515 Mortgages, require units to remain affordable for twenty or thirty years. Since the vast majority of these properties in Jefferson County were constructed in the 1970s and 1980s, the requirement that the units remain affordable is expiring. As a first step, to convert subsidized units to market rate rents a property owner may elect to prepay the mortgage by notifYing the mortgagor- the USDA, the tenants and the local community in writing oftheir intent to do so. The owner of the Garden Court Apartments, a 40 unit affordable apartment dwelling, wrote a letter dated January 2, 2007 with this intent of initiating this process; the letter is attached hereto and incorporated by reference. In 2006 the governments of Jefferson County and the City of Port Townsend published a request for qualifications to conduct a Housing Needs Assessment. After interviewing five consultants, Beckwith Consulting of La Conner, W A was selected to lead the comprehensive review of the City and County's workforce housing needs. Their findings, available on the County's website, depict a grave picture. They found that between 17 and 23 percent of all County residents are in need of some form of rental assistance. Moreover, a 2006 study by the Washington Real Estate Institute illustrates an even grimmer picture. They ranked Jefferson County the second least affordable County of all 39 counties in the State of Washington. Collectively, these two studies suggest the need to actively implement the Housing Element of the Jefferson County's Comprehensive Plan by supporting the organizations within the County that furnish clean, safe and affordable housing units for the residents in need. As a step in this direction, the Jefferson County Board of Commissioner and the Port Townsend City Council/Mayor adopted resolutions formally establishing a steering committee, known as the Housing Action Plan Network (HAPN), to steward the recommendations ofthe Housing Action Plan, prepared by Tom Beckwith, FAICP, of Beckwith Consulting in cooperation with the Community. The Housing Authority of Jefferson County was created in 1970 for the purpose of providing and ~. preserving low cost rental units for residents of Jefferson County. Typically, the development and/or preservation of housing requires that an organization demonstrate sound financial accounting, positive cash flow and capacity on the board. BACKGROUND FACTS: Relevant background facts include: I) In January, 2001 Jefferson County made two transfers from the General Fund to the JCHA totaling $60,000, 2) The Housing Authority of Jefferson County, HAJC, reconstituted itself in 2004 after going through significant changes in the Board and the administration ofthe authority, 3) HAJC currently shows a negative balance ($8,903.91) on their balance sheet due to the loan still outstanding to the county, 4) Total Assets of the HAJC are currently $111,986.83 while total Liabilities are $120,890.74, including the unpaid loan balance of$48,037.25. 5) HAJC has made regular payments of $500 per month since the last revision which was made effective April 2004, 6) If this loan were forgiven the implications to the HAJC's Balance Sheet is to show a positive balance of almost $40,000. 7) The County's Housing Action Plan (HAP) indicates that there is a serious shortage of housing for persons earning less than the County's median income; more specifically, HAP states that between 18 and 23 percent of all County residents are in need of some form of rental assistance. (See page 8 of plan, adopted by Resolution No. 69-06) 8) The Housing Element of the County's Comprehensive Plan goals HSG 1.0 and HSG 2.0 respectively "encourage and support efforts to provide an adequate supply of housing for County residents of all income groups" and "promote a variety of affordable housing choices throughout the County through the use of nnovative land use practice, development standards, design techniques and building permits. 9) The owners of the Garden Court Apartment initiated the process by the sending of a prepayment notice to the tenants, initiating a process that may lead to the building's affordable units becoming market rate. 10) The Board of County Commissioners drafted a letter indicating that there is a shortage of affordable housing in the area on January 2, 2007 loan in recognition of this concern, 11) The Housing Authority of Jefferson County is actively engaged in negotiations to acquire the Garden Court Apartments through a partnership with a Shelter Resources, Inc. a Bellevue, Washington based affordable housing provider whose references include the Community Action Counsel's of Lewis, Mason and Thurston counties, as well as the Housing Authorities of Longview and Spokane, W A; according to their company profile they have developed or renovated 4,000 apartment units in the western states. 12) The HAJC's financials are unduly burdened by the monies owed, 13) The HAJC indicates that the reason for the request is to put them into a financial position where they are able to purchase the Garden Court Apartments in Port Hadlock, ANAL YSIS/STRA TEGIC GOALS/PROS and CONS: PROS - If the loans to the housing authority are forgiven by the County, the forgiveness would be interpreted as a 'good faith' gesture by the County that might further enable HAJC to proceed with a partnership to acquire and preserve 40 units of affordable housing. Given the high cost of developing housing and the shortage of reasonably priced housing, most recently highlighted by the County's ranking as the second least affordable County in Washington State by the Washington Real Estate Institute, forgiveness of the loan would help alleviate a worsening situation. Furthermore, it meets the community's vision as outlined by the Comprehensive Plan. A failure to act may mean that the housing shortage will worsen, and that outside lenders, tax financing agencies, as well as the general public, may interpret this action as a lack of local concern about the housing dilemma. CONS- If there is no rigorous debate about the use of public funds for such a purpose, the public may interpret this as a fiscally irresponsible action. Alternatively, by having this listed in the regular agenda and allowing public comment with regard to this, open governance action may be rewarded. FISCAL IMPACT/COST-BENEFIT ANALYSIS: The forgiveness of this loan may position the County's Housing provider, HAJC, to become a property owner, building critical local capacity for the development and management of housing in the future. RECOMMENDATION: Staff recommends that the Board adopt the ordinance as drafted. REVIEWED BY: ~D John Fischbach, County Administrator /)-~1-()'f Date