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<br />ECC <br />UGENE ITY OUNCIL <br />AIS <br />GENDA TEM UMMARY <br /> <br /> <br /> <br /> <br />Action: Supplemental Funding for WestTown on 8th <br /> <br /> <br />Meeting Date: October 9, 2006 Agenda Item Number: 4 <br />Department: Planning and Development Staff Contact: Stephanie Jennings <br />www.eugene-or.gov Contact Telephone Number: 682-5529 <br /> <br /> <br /> <br /> <br />ISSUE STATEMENT <br /> <br />The City Council is asked by the Housing Policy Board, staff, and the Metropolitan Affordable Housing <br />Corporation to approve the use of local funding for a short-term loan to Metropolitan Affordable <br />th <br />Housing Corporation (Metro) that will allow the development of the WestTown on 8 affordable <br />th <br />housing project to proceed. WestTown on 8 will contain 102 affordable housing units affordable to <br />low-income households and nine market-rate, live-work units. <br /> <br /> <br />BACKGROUND <br /> <br />th <br />In 2004, the City issued a Request for Proposals for the Housing Landbank site located at 265 West 8 <br />Avenue. Metro’s development proposal was recommended by the Housing Policy Board and approved <br />by the City Council on March 7, 2005. At that time, the City Council awarded the following subsidies <br />for the project: the Landbank Site (valued at $570,000 and purchased with federal CDBG funds); a <br />$1,025,000 federal HOME grant; and $210,000 in Eugene systems development charge waivers. On <br />th <br />August 8, 2005, the City Council approved a 20-year tax exemption for WestTown on 8 under the <br />Low-Income Housing Tax Exemption Program. <br /> <br />th <br />As originally conceived and presented to the City Council, WestTown on 8 was to include 86 units of <br />affordable housing, eight live-work units and one commercial space. In May 2005, the City Council <br />received a staff memo summarizing proposed changes to the project including: 1) an increase in the size <br />of the building to 102 affordable housing units and nine market-rate live-work units; and 2) a change in <br />the financing structure from 9% Low Income Housing Tax Credits to use of 4% Low Income Housing <br />Tax Credits and State bond financing. <br /> <br />Since that time, Metro has completed development of the design and construction specifications and <br />issued construction bids through its General Contractor, Gale Roberts Company, in August. The <br />resulting bids were much higher than estimated, resulting in a significant gap between the project budget <br />and actual costs. Metro has utilized a variety of cost savings and financing measures that have closed <br />the gap to approximately $750,000. It is currently negotiating a loan for $300,000 with a local bank, <br />leaving a $450,000 gap. Metro has asked the City to consider providing a loan to cover the remainder. <br />Metro has asked the City to make a decision about possible support by October 15. Without gap <br />financing in place by this date, Metro asserts the project will face additional delays and costs for several <br />reasons. First, construction costs are expected to continue to increase at a rate of at least 1% per month. <br />th <br />Second, Metro must have all necessary financing in place by October 15 in order for the State bond <br />sale to proceed in December. If Metro has to delay the bond sale until 2007, the interest rate lock on a <br /> L:\CMO\2006 Council Agendas\M061009\S0610094.doc <br />