HomeMy WebLinkAbout2069 2069
RESOLUTION NO.
A RESOLUTION of the City Council of the
City of Kent, Washington, authorizing the
administering agency for the South King Housing
and Homelessness Partners (SKHHP) to execute all
documents necessary to enter into agreements for
the funding of affordable housing projects, as
recommended by the SKHHP Executive Board,
utilizing funds contributed by the City to the SKHHP
Housing Capital Fund.
RECITALS
A. On June 19, 2019, the City of Kent ('City") executed an
interlocal agreement to form the South King Housing and Homelessness
Partners ("SKHHP") to help coordinate the efforts of South King County
cities to provide affordable housing.
B. On February 4, 2021, the City executed an interlocal
agreement for the purposes of pooling sales tax receipts sourced from RCW
82.14.540 with SKHHP to administer funds through the SKHHP Housing
Capital Fund.
C. On September 18, 2023, the City executed another interlocal
agreement for the purposes of pooling sales and use tax receipts sourced
from RCW 82.14.530 with SKHHP to administer funds through the SKHHP
Housing Capital Fund.
1 SKHHP Housing Capital Funds
- Resolution
D. The SKHHP Executive Board has recommended that the City
participate in the funding of certain affordable housing projects and
programs hereinafter described.
E. The SKHHP Executive Board has developed recommended
conditions to ensure that the City's affordable housing funds are used for
their intended purpose and that projects maintain their affordability over
time.
F. Pursuant to the SKHHP formation interlocal agreement, each
legislative body participating in funding a project or program through
SKHHP's Housing Capital Fund must authorize the application of a specific
amount of the City funds contributed to the SKHHP Housing Capital Fund to
a specific project or program.
G. The City Council desires to use $4,720,437 from funds
contributed to the SKHHP Housing Capital Fund as designated below to
finance the projects recommended by the SKHHP Executive Board.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY RESOLVE AS FOLLOWS:
RESOLUTION
SECTION 1. - Authorization. Pursuant to the SKHHP interlocal
agreement, the City Council authorizes the duly-appointed administering
agency of SKHHP to execute all documents and take all necessary actions
to enter into agreements on behalf of the City to fund (1) the construction
of Mercy Housing Northwest's Kent Multicultural Village, LIHI's Skyway
Affordable Housing and Early Learning Center, and TWG's Pandion at Star
Lake; and (2) the rehabilitation of the Multi-Service Center's Victorian Place
II. The source of funding shall come through the combined use of
$4,532,015 of the City's HB 1590 contribution and $188,422 from the City's
SHB 1406 contribution, as proposed in the SKHHP Executive Board's
2 SKHHP Housing Capital Funds
- Resolution
Memorandum dated January 17, 2024, a copy of which is attached and
incorporated as Exhibit A.
SECTION 2. - Terms and Conditions. The agreements entered into
pursuant to Section 1 of this Resolution shall include terms and conditions
to ensure that the City's funds are used for their intended purpose and that
the projects maintain affordability over time. In determining what
conditions should be included in the agreements, the duly-appointed
administering agency of SKHHP shall be guided by the recommendations
set forth in Exhibit A.
SECTION 3. - Severability. If any one or more section, subsection,
or sentence of this resolution is held to be unconstitutional or invalid, such
decision shall not affect the validity of the remaining portion of this
resolution and the same shall remain in full force and effect.
SECTION 4. - Corrections by City Clerk. Upon approval of the city
attorney, the city clerk is authorized to make necessary corrections to this
resolution, including the correction of clerical errors; resolution, section, or
subsection numbering; or references to other local, state, or federal laws,
codes, rules, or regulations.
SECTION 5. - Effective Date. This resolution shall take effect and
be in force immediately upon its passage.
February 20, 2024
DANA RALPH, MAY R Date Approved
3 SKHHP Housing Capital Funds
- Resolution
ATTEST:
February 20, 2024
KIMBERLEY d40MOTO, CITY LERK Date Adopted
APPR V D AS TO FORM:
T M HITE, CITY ATTORNEY
�i e9
4 c 95
4 SKHHP Housing Capital Funds
- Resolution
_! EXHIBIT A— SKHHP Memorandum
SKmn I mm
South King Housing and Homelessness Partners
TO: City of Auburn City Council City of Kent City Council
City of Burien City Council City of Normandy Park City Council
City of Covington City Council City of Renton City Council
City of Des Moines City Council City of Tukwila City Council
City of Federal Way City Council
FROM: SKHHP Executive Board
DATE: January 17, 2024
RE: 2023 SKHHP Housing Capital Fund Recommendation
OVERVIEW
The 2023 SKHHP Housing Capital Fund was the second funding round made possible by pooling
resources among SKHHP member jurisdictions. 2023 was the first year members pooled funds sourced
from HB 1590,which led to quadrupling the amount of funding available over the previous year totaling
$5,899,297. SKHHP received six applications for funding representing over$8.6 million in requests to
develop or preserve 493 units of housing. The SKHHP Executive Board concurred with the majority of
the SKHHP Advisory Board's recommendation and recommends funding four projects totaling
$5,747,306(see Table 1). Of this total,the Executive Board recommends using$777,306 of the total
$928,812 sourced from SHB 1406 revenue contributions for one preservation project; and $4,970,000
sourced from HB 1590 revenue contributions for three new construction projects. This
recommendation leaves a balance of$151,506 in SHB 1406 funds and $485 in HB 1590 funds in the
Housing Capital Fund that will rollover into the next funding round in 2024(see Tables 2 and 3). A
summary of the recommended projects, funding rationale, and the conditions for funding are described
in this memo. Included as an attachment are the economic summaries of the recommended projects.
Table 1: Recommended Projects and Recommended Funding Level
. . . ... ......... . ....... .......
Project Location #of Project type Amount Recommended Recommended
Sponsor Units requested Funding—HB 1590 Funding—SHB 1406
Mercy Kent 199 New Construction $1,000,000 $1,000,000
Housing NW Rental
LIHI Skyway 55 New Construction $2,800,000 $2,800,000 -
Rental
TWG Kent 168 New Construction $2,856,000 $1,170,000 -
Rental
Multi-Service Des 20 Preservation $500,000 - $777,306
Center Moines Rental
TOTAL -- 442 -- -- $4,970,000 $777,306
Page 1 of 22
Table 2: Proposed HB 1590 Allocations by Jurisdiction for Recommended Projects
Jurisdiction 1. Mercy 2. LIHI-Skyway 3.TWG- Total Contributed Unallocated
Housing-KMV Pandion in 2023
Covington $ 88,126 $ 246,752 $ 103,107 $ 438,028 $ 43
Kent $ 911,874 $ 2,553,248 $ 1,066,893 $ 4,532,457 $ 442
Total $ 1,000,000 $ 2,800,000 $ 1,170,000 $ 4,970,485 $ 485
Table 3: Proposed SHB 1406 Allocations by Jurisdiction for Recommended Projects
4. MSC- Total Carry-Over from
Jurisdiction Victorian Place Contributed in 2022 Unallocated
11 2023
Auburn $ 137,595 $ 152,865 $ 11,548 $ 26,819
Burien $ 63,128 $ 69,897 $ 5,535 $ 12,304
Des Moines $ 30,261 $ 34,301 $ 1,858 $ 5,898
Federal Way $ 119,468 $ 133,558 $ 9,196 $ 23,286
Kent $ 188,422 $ 212,655 $ 12,493 $ 36,726
Normandy Park $ 5,942 $ 6,992 $ 108 $ 1,158
Renton $ 217,088 $ 246,643 $ 12,758 $ 42,313
Tukwila $ 15,402 $ 17,233 $ 1,171 $ 3,002
Total $ 777,306 $ 874,145 $ 54,667 $ 151,506
BACKGROUND
The SKHHP Advisory Board met on October 5, 2023 and November 2, 2023 to review project
applications and develop a funding recommendation for the SKHHP Executive Board's consideration.
The SKHHP Executive Board met on October 20, 2023 and November 17, 2023 to review each project
and consider the recommendations of the Advisory Board. The Advisory Board adopted its
recommendation on November 2, 2023 and the Executive Board took final action on November 17,
2023.
PROCESS
Advisory Board Executive Board finalized Member Councils to approve
recommendation recommendation funding recommendation
(November 2,2023) (November 17,2023 (February-April 2024)
ATTACHMENTS
1. Economic summaires for recommended projects
Page 2 of 22
1. Mercy Housing NW- Kent Multicultural Village
Funding request: $1,000,000
Executive Board recommendation:$1,000,000 (forgivable loan)
Address: 23446 Pacific Highway South, Kent, WA 98032
PROJECT SUMMARY
Kent Multicultural Village is a 199-unit multifamily rental project in Kent adjacent to the future Kent Des
Moines Link light rail station. The light rail station is scheduled to open in 2026. The project will support
households earning 30%area median income (AMI)to 80%AMI with a 20%set-aside (39 units)for
households with an intellectual and/or developmental disability(I/DD). The I/DD units will benefit from
on-site supportive services. A 30%set-aside (61 units) will be for families with children. The project
includes studios, 1-bedrooms, 2-bedrooms, and three-bedroom units. The site is comprised of eight
stories and will include a community center, a family resource center, and a licensed early learning
facility with six classrooms to accommodate 96 infants and children with a focus on serving children with
I/DD. The project was awarded the RFP by Sound Transit to be located on surplus land, but the terms of
development are forthcoming, and the final project may be slightly different than described. 39 units
are eligible for SKHHP funds sourced from HB 1590 revenue.
The project is a partnership between Mercy Housing NW and Open Doors for Multicultural Families,
who will provide support to the I/DD households and will relocate their headquarters to the property.
Open Doors for Multicultural Families will also operate the Community Center which will include space
for recreational activities and community-focused programming. Open Doors for Multicultural Families
is a non-profit organization dedicated to meeting the needs of persons of color living with I/DD,
especially immigrants and refugees.
PROJECT SCHEDULE
Activity Date
Site Control 2024—to be coordinated in Sound Transit negotiations
Building Permits Issued 4/2025
Begin Construction 6/2025
Begin Lease Up 2/2027
Certificate of Occupancy Issued 6/2027
First LIHTC Year Start 6/2027
100%Lease Up 2/2028
FUNDING RATIONALE
The Executive Board supports the intent of this application for the following reasons:
• The project has a 20%set-aside for households with an I/DD.
• The project serves a diverse range of incomes from 30%AMI to 80%AMI.
• The project proposal is thorough, well planned, and has funding commitments already
established.
Page 3 of 22
• The project is located adjacent to the future Kent Des Moines Link light rail station and has
convenient access to transit, schools, medical clinics,grocery stores, and services.
• The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including: being
a transit-oriented development(TOD) project, collaboration with local community-based
organizations, addressing the needs of populations most disproportionately impacted by
housing costs, advancing economic opportunity due to its proximity to the future Link light rail
station and other amenities, advancing geographic equity of the Housing Capital Fund, and the
leverage of private and public investment.
• Mercy Housing NW is a well-established nonprofit developer in the region.
• A third-party construction report found the proposed budget to be appropriate.
PROPOSED CONDITIONS
Standard Conditions
1. Contractor shall provide SKHHP with development and operating budgets based upon
actual funding commitments for approval by SKHHP staff. Contractor must notify
SKHHP staff immediately if it is unable to adhere to these budgets, and must submit
new budget(s)to SKHHP staff for approval. SKHHP staff shall not unreasonably withhold
its approval of these budget(s), so long as they do not materially or adversely change
the Project. This shall be a continuing obligation of the Contractor. Contractor's failure
to adhere to budgets(either original or new/amended) may result in SKHHP's
withdrawal of its funding commitment. Contractor must prepare and submit final
budgets to SKHHP at the time it starts project construction and at the project's
completion.
2. Contractor shall submit to SKHHP evidence of funding commitments from all proposed
public and private funding sources. If Contractor cannot secure an identified
commitment within an application's time frame, Contractor shall immediately notify
SKHHP staff and describe its anticipated actions and time frame for securing alternative
funding.
3. Contractor shall use SKHHP provided funds toward specific project costs as included in
the funding agreement and consistent with RCW 82.14.530. Contractor may not use
SKHHP funds for any other purpose unless SKHHP staff authorizes such alternate use in
writing. If budget line items with unexpended balances exist after completion of the
project, SKHHP and other public funders shall approve adjustments to the project
capital sources(including potential reductions in public fund loan balances).
4. Contractor shall evaluate and consider maximizing sustainability features for the Project
(such as an efficient building envelope and heat pumps) and shall propose a plan to
maximize the Project's sustainability.
5. If Contractor uses federal funds toward the Project, it must meet applicable federal
guidelines, including but not limited to:contractor solicitation; bidding and selection;
wage rates; and federal laws and regulations.
Page 4 of 22
6. Contractor shall maintain documentation of any necessary land use approvals, permits,
and licenses required by the jurisdiction in which the project is located.
7. Quarterly Status Reports. Contractor is required to provide SKHHP with quarterly status
reports for projects funded through SKHHP's Housing Capital Fund during the project's
development stage (from the time funds are awarded until the project's completion and
occupancy).These quarterly reports must include at a minimum the status of funds
expended and progress to date. SKHHP will rely on these quarterly reports to determine
whether Contractor is making satisfactory progress on the project. Contractor shall
submit a final budget to SKHHP upon project completion. If applicable, Contractor shall
submit initial tenant information as required by SKHHP.
8. SKHHP will inspect the project site at least once during the project's construction.
9. Ongoing Monitoring.After occupancy, Contractor will submit annual reports to SKHHP
summarizing the number of project beneficiaries, housing expenses for the target
population, and the proportion of those beneficiaries that are low-and/or moderate-
income and that meet other eligibility criteria established in the Contract. In addition,
for projects with loan payments, Contractor must annually report financial information
to SKHHP that it will use to assess contingent loan payments and project health.These
annual reports will be required for the full duration of affordability. SKHHP will also
periodically evaluate all projects for long term sustainability.
10. For rental projects, Contractor shall maintain the project in good and habitable
condition for the duration of its affordability term.
11. SKHHP shall reimburse the Contractor for satisfactory completion of the requirements
specified in the Contract and upon Contractor's submission to SKHHP of invoices and
supporting documentation of eligible expenses.
12. A covenant is recorded ensuring affordability for at least 50 years,with unit size,
number of units, and affordability distribution established prior to executing Contract.
Special Conditions
1. SKHHP will provide project funds to the Contractor in the form of a deferred,
contingent,forgivable loan. Loan terms will account for various factors, including loan
terms from other fund sources and available cash flow. Final loan terms shall be
determined prior to release of funds and must be approved by SKHHP staff. The loan
will be secured by a deed of trust recorded against the development property to ensure
that Contractor maintains the project's affordability and target population. Contractor
shall not be required to repay the loan so long as it maintains these project
requirements.
2. Timeframe for funding commitment.The funding commitment continues for thirty-six
(36) months from the date of Council approval and shall expire thereafter if all
conditions are not satisfied. An extension may be requested to SKHHP staff no later
than sixty(60) days prior to the expiration date. At that time,the Agency will provide a
Page 5 of 22
status report on progress to date and expected schedule for start of construction and
project completion. The SKHHP Executive Board will consider a twelve-month extension
only on the basis of documented, meaningful progress in bringing the project to
readiness or completion. At a minimum,the Contractor will demonstrate that all capital
funding has been secured or is likely to be secured within a reasonable period of time.
3. At least 39 of the housing units shall be set-aside for households with an I/DD who earn
no more than 60%AMI. Use of funds and population eligibility must be in-alignment
with RCW 82.14.530.
4. SKHHP funds shall be used solely for new construction, unless otherwise approved by
SKHHP staff.
5. Receipt of the documentation of remediation results and Department of Ecology
approval of remediation efforts shall be submitted to SKHHP prior to proceeding with
construction.
Page 6 of 22
i
2. Low Income Housing Institute(LIHI) -Skyway Affordable Housing and Early Learning Center
Funding request:$2,800,000
Executive Board recommendation: $2,800,000 (forgivable loan)
Address: 12712-12724& 12742 Renton Ave.South,Seattle, WA 98178
PROJECT SUMMARY
Skyway Affordable Housing and Early Learning Center is a multifamily rental project in Unincorporated
King County.The project will provide 55 housing units for individuals and families, including 12 studios,
19 one-bedroom, 13 two-bedroom, and 11 three-bedroom units for households earning between 30%
and 50%AMI with a 75%set-aside (42 units)for households transitioning out of homelessness. An early
learning center will be located on the ground floor of the building, featuring four classrooms to
accommodate up to 80 children, a parent resource room, and offices. The surrounding community will
be prioritized in the early learning center activities. Additional amenities include a community room,
case manager offices, and a roof deck for resident use. LIHI will provide on-site case management.This
project has been previously awarded predevelopment and acquisition funds from King County.
The project will serve individuals(25 units) and families (17 units) exiting homelessness earning 30%
AMI (42 total units) and will support general population households earning up to 50%AMI (12 units). A
common room will support all residents (1 unit). 42 units are eligible for SKHHP funds sourced from HB
1590 revenue.
Childhaven, a nonprofit dedicated to strengthening families and preventing childhood trauma, plans to
lease the early learning center and relocate their program to the site and will assist in applying for local
funding for this portion of the project. The early learning center will be financed separately from the
residential space,without using tax credits on the commercial space.
PROJECT SCHEDULE
Activity Date
Site Control 1/30/2023
Building Permits Issued 1/23/2025
Begin Construction 6/1/2025
Begin Lease Up 9/15/2026
Certificate of Occupancy Issued 10/15/2026
FUNDING RATIONALE
The Executive Board supports the intent of this application for the following reasons:
• The project has a 75%set-aside for households transitioning out of homelessness.
• The project brings quality,affordable housing to a historically underserved neighborhood.
• The project will house Childhaven on-site to run an early learning center.
• The project is located near schools, a library, and a future community center.
• The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including:
collaboration with local community-based organizations, addressing the needs of populations
Page 7 of 22
most disproportionately impacted by housing costs, advancing geographic equity of the Housing
Capital Fund, leverage of private and public investment, and promoting racial equity by
prioritizing residents with a connection to the neighborhood.
• The project will prioritize residents with a connection to the neighborhood.
• LIHI is an established developer in the region.
• A third-party construction report found the proposed budget to be appropriate.
PROPOSED CONDITIONS
Standard Conditions
1. Contractor shall provide SKHHP with development and operating budgets based upon
actual funding commitments for approval by SKHHP staff. Contractor must notify
SKHHP staff immediately if it is unable to adhere to these budgets, and must submit
new budget(s)to SKHHP staff for approval. SKHHP staff shall not unreasonably withhold
its approval of these budget(s), so long as they do not materially or adversely change
the Project. This shall be a continuing obligation of the Contractor. Contractor's failure
to adhere to budgets(either original or new/amended) may result in SKHHP's
withdrawal of its funding commitment. Contractor must prepare and submit final
budgets to SKHHP at the time it starts project construction and at the project's
completion.
2. Contractor shall submit to SKHHP evidence of funding commitments from all proposed
public and private funding sources. If Contractor cannot secure an identified
commitment within an application's time frame, Contractor shall immediately notify
SKHHP staff and describe its anticipated actions and time frame for securing alternative
funding.
3. Contractor shall use SKHHP provided funds toward specific project costs as included in
the funding agreement and consistent with RCW 82.14.530. Contractor may not use
SKHHP funds for any other purpose unless SKHHP staff authorizes such alternate use in
writing. If budget line items with unexpended balances exist after completion of the
project, SKHHP and other public funders shall approve adjustments to the project
capital sources(including potential reductions in public fund loan balances).
4. Contractor shall evaluate and consider maximizing sustainability features for the Project
(such as an efficient building envelope and heat pumps) and shall propose a plan to
maximize the Project's sustainability.
5. If Contractor uses federal funds toward the Project, it must meet applicable federal
guidelines, including but not limited to: contractor solicitation; bidding and selection;
wage rates; and federal laws and regulations.
6. Contractor shall maintain documentation of any necessary land use approvals, permits,
and licenses required by the jurisdiction in which the project is located.
7. Quarterly Status Reports. Contractor is required to provide SKHHP with quarterly status
reports for projects funded through SKHHP's Housing Capital Fund during the project's
Page 8 of 22
development stage (from the time funds are awarded until the project's completion and
occupancy).These quarterly reports must include at a minimum the status of funds
expended and progress to date. SKHHP will rely on these quarterly reports to determine
whether Contractor is making satisfactory progress on the project.Contractor shall
submit a final budget to SKHHP upon project completion. If applicable, Contractor shall
submit initial tenant information as required by SKHHP.
8. SKHHP will inspect the project site at least once during the project's construction.
9. Ongoing Monitoring.After occupancy, Contractor will submit annual reports to SKHHP
summarizing the number of project beneficiaries, housing expenses for the target
population, and the proportion of those beneficiaries that are low-and/or moderate-
income and that meet other eligibility criteria established in the Contract. In addition,
for projects with loan payments, Contractor must annually report financial information
to SKHHP that it will use to assess contingent loan payments and project health.These
annual reports will be required for the full duration of affordability. SKHHP will also
periodically evaluate all projects for long term sustainability.
10. For rental projects, Contractor shall maintain the project in good and habitable
condition for the duration of its affordability term.
11. SKHHP shall reimburse the Contractor for satisfactory completion of the requirements
specified in the Contract and upon Contractor's submission to SKHHP of invoices and
supporting documentation of eligible expenses.
12. A covenant is recorded ensuring affordability for at least 50 years, with unit size,
number of units, and affordability distribution established prior to executing Contract.
Special Conditions
1. SKHHP will provide project funds to the Contractor in the form of a deferred,
contingent,forgivable loan. Loan terms will account for various factors, including loan
terms from other fund sources and available cash flow. Final loan terms shall be
determined prior to release of funds and must be approved by SKHHP staff. The loan
will be secured by a deed of trust recorded against the development property to ensure
that Contractor maintains the project's affordability and target population. Contractor
shall not be required to repay the loan so long as it maintains these project
requirements.
2. Timeframe for funding commitment.The funding commitment continues for thirty-six
(36) months from the date of Council approval and shall expire thereafter if all
conditions are not satisfied. An extension may be requested to SKHHP staff no later
than sixty(60) days prior to the expiration date. At that time,the Agency will provide a
status report on progress to date and expected schedule for start of construction and
project completion. The SKHHP Executive Board will consider a twelve-month extension
only on the basis of documented, meaningful progress in bringing the project to
readiness or completion. At a minimum,the Contractor will demonstrate that all capital
funding has been secured or is likely to be secured within a reasonable period of time.
Page 9 of 22
3. At least 75%of the housing units shall be set-aside for households transitioning out of
homelessness and be for an eligible population defined in RCW 82.14.530 and who earn
no more than 60%AMI.
4. SKHHP funds shall be used solely for new construction, unless otherwise approved by
SKHHP staff.
5. LIHI shall reexamine the guest policy allowing only one guest at a time to determine if it
is necessary.
Page 10 of 22
3. TWG—Pandion at Star Lake
Funding request:$2,856,000
Executive Board recommendation: $1,170,000 (loan)
Address: 2526 S 272nd Street, Kent, WA 98059
PROJECT SUMMARY
The South Building (building one of two) of Pandion at Star Lake is a multifamily rental, mixed use
project consisting of 168 affordable housing units for households earning between 30%and 60%AIVII in
Kent. The project is located adjacent to the Kent/Star Lake Link light rail station. This transit-oriented
development (TOD) project will provide a mix of studio, one,two and three-bedroom units. The project
will include ground floor commercial space consisting of an early learning center for low-income children
and other non-profit tenants. The property was purchased by the developer in December 2022. The
project is a seven-story building with six stories of affordable housing over one story of commercial
space, plus basement level parking.
The 168 units includes 109 units for the general population, 30 units for families with children, 25 units
for families with children that require permanent supportive services and who are transitioning out of
homelessness or are at-risk of homelessness,and 4 units supporting households with an intellectual
and/or developmental disability (I/DD) requiring supportive services.
Pandion at Star Lake is a partnership between TWG Development and Vision House, with Vision House
providing on-site supportive serves for 140 units or those receiving 4% LIHTC support. In collaboration
with the City of Kent, an additional service provider will be selected to serve residents of the remaining
28 units or those receiving 9% LIHTC support.
29 units of the project are eligible for HB 1590 funds which includes 25 units for families with children
transitioning out of homelessness or are at-risk of homelessness and require permanent supportive
services and the four units set-aside for I/DD households.
PROJECT SCHEDULE
Activity Date
Site Control 12/6/2022
Building Permits Issued 10/1/2025
Begin Construction 12/31/2025
Certificate of Occupancy Issued 12/31/2027
Placed in service 1/1/2028
First LIHTC Year 2028
FUNDING RATIONALE
The Executive Board supports the intent of this application for the following reasons:
• The project is located adjacent to the future Kent/Star Lake Link light rail station and has
convenient access to transit, schools,grocery stores, and services.
Page 11 of 22
• The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including: being
a transit-oriented development(TOD) project, collaboration with local community-based
organizations,addressing the needs of populations most disproportionately impacted by
housing costs, advancing economic opportunity due to its proximity to the future Link light rail
station and other amenities, advancing geographic equity of the Housing Capital Fund, and the
leverage of private and public investment.
• The project construction start date is anticipated by early 2026, six months later than other
recommended projects. The sponsor may have more time to secure the additional funds than
other projects prior to beginning construction.
• The project has a strong partnership with Vision House who will provide on-site supportive
services for 140 households.
• A second building supporting 173 units for seniors earning 80%to 100%AMI is part of the
overall project, but is not part of the application to public funders. The overall project supports
mixed-income housing from 30%AMI-100%AMI.
• The project sponsor has been in close communication with the City of Kent on project feasibility
and zoning requirements since the property was purchased in December 2022.
• The project sponsor has agreed to voluntarily meet the design standards for properties zoned as
'Midway Transit Community/ which is a higher degree of development than what is required
under general mixed-use commercial standards for the City of Kent.
• A third-party construction report found the proposed budget to be appropriate.
PROPOSED CONDITIONS
Standard Conditions
1. Contractor shall provide SKHHP with development and operating budgets based upon
actual funding commitments for approval by SKHHP staff. Contractor must notify
SKHHP staff immediately if it is unable to adhere to these budgets, and must submit
new budget(s) to SKHHP staff for approval. SKHHP staff shall not unreasonably withhold
its approval of these budget(s), so long as they do not materially or adversely change
the Project. This shall be a continuing obligation of the Contractor. Contractor's failure
to adhere to budgets (either original or new/amended) may result in SKHHP's
withdrawal of its funding commitment. Contractor must prepare and submit final
budgets to SKHHP at the time it starts project construction and at the project's
completion.
2. Contractor shall submit to SKHHP evidence of funding commitments from all proposed
public and private funding sources. If Contractor cannot secure an identified
commitment within an application's time frame, Contractor shall immediately notify
SKHHP staff and describe its anticipated actions and time frame for securing alternative
funding.
3. Contractor shall use SKHHP provided funds toward specific project costs as included in
the funding agreement and consistent with RCW 82.14.530.Contractor may not use
SKHHP funds for any other purpose unless SKHHP staff authorizes such alternate use in
writing. If budget line items with unexpended balances exist after completion of the
Page 12 of 22
project, SKHHP and other public funders shall approve adjustments to the project
capital sources (including potential reductions in public fund loan balances).
4. Contractor shall evaluate and consider maximizing sustainability features for the Project
(such as an efficient building envelope and heat pumps) and shall propose a plan to
maximize the Project's sustainability.
5. If Contractor uses federal funds toward the Project, it must meet applicable federal
guidelines, including but not limited to:contractor solicitation; bidding and selection;
wage rates; and federal laws and regulations.
6. Contractor shall maintain documentation of any necessary land use approvals, permits,
and licenses required by the jurisdiction in which the project is located.
7. Quarterly Status Reports. Contractor is required to provide SKHHP with quarterly status
reports for projects funded through SKHHP's Housing Capital Fund during the project's
development stage (from the time funds are awarded until the project's completion and
occupancy).These quarterly reports must include at a minimum the status of funds
expended and progress to date.SKHHP will rely on these quarterly reports to determine
whether Contractor is making satisfactory progress on the project. Contractor shall
submit a final budget to SKHHP upon project completion. If applicable, Contractor shall
submit initial tenant information as required by SKHHP.
8. SKHHP will inspect the project site at least once during the project's construction.
9. Ongoing Monitoring. After occupancy, Contractor will submit annual reports to SKHHP
summarizing the number of project beneficiaries, housing expenses for the target
population, and the proportion of those beneficiaries that are low-and/or moderate-
income and that meet other eligibility criteria established in the Contract. In addition,
for projects with loan payments,Contractor must annually report financial information
to SKHHP that it will use to assess contingent loan payments and project health.These
annual reports will be required for the full duration of affordability. SKHHP will also
periodically evaluate all projects for long term sustainability.
10. For rental projects, Contractor shall maintain the project in good and habitable
condition for the duration of its affordability term.
11. SKHHP shall reimburse the Contractor for satisfactory completion of the requirements
specified in the Contract and upon Contractor's submission to SKHHP of invoices and
supporting documentation of eligible expenses.
12. A covenant is recorded ensuring affordability for at least 50 years,with unit size,
number of units, and affordability distribution established prior to executing Contract.
Special Conditions
1. SKHHP will provide project funds to the Contractor in the form of a deferred, 1%
interest, non-forgivable loan to the LIHTC partnership. The form of the funds are
subject to change, but shall be agreed upon prior to contract execution. Loan terms will
Page 13 of 22
account for various factors, including loan terms from other fund sources and available
cash flow. Final loan terms shall be determined prior to release of funds and must be
approved by SKHHP staff. The loan will be secured by a deed of trust recorded against
the development property to ensure that Contractor maintains the project's
affordability and target population.
2. Timeframe for funding commitment.The funding commitment continues for thirty-six
(36) months from the date of Council approval and shall expire thereafter if all
conditions are not satisfied. An extension may be requested to SKHHP staff no later
than sixty (60) days prior to the expiration date.At that time,the Agency will provide a
status report on progress to date and expected schedule for start of construction and
project completion. The SKHHP Executive Board will consider a twelve-month extension
only on the basis of documented, meaningful progress in bringing the project to
readiness or completion. At a minimum,the Contractor will demonstrate that all capital
funding has been secured or is likely to be secured within a reasonable period of time.
3. At least 29 housing units of the total shall be for an eligible population defined in RCW
82.14.530 including households transitioning out of homelessness or are at-risk of
homelessness or households with an I/DD and who also earn no more than 60%AMI.
4. SKHHP funds shall be used solely for new construction of the South Building, unless
otherwise approved by SKHHP staff.
Page 14 of 22
4. Multi-Service Center-Victorian Place II
Funding request:$500,000
Executive Board recommendation: $777,306(grant)
Address: 24517 26th Place South, Des Moines,WA 98198
PROJECT SUMMARY
Victorian Place II is a multifamily, preservation 20-unit rental project in Des Moines. Since 1996,the
nonprofit Multi-Service Center has owned the two adjacent buildings that comprise the project which
includes five units for households earning up to 35%AMI,ten units for households up to 40%AMI, and
five units for households up to 50%AMI. The 20 three bedroom/two bath affordable rental units are in
active use and the target population is families with children.
The original request was for$500,000 in the form of a grant. Initial estimates were based on a 2018
construction estimate. An updated cost estimate of the project received on October 25, 2023 totaled
$675,918. The Advisory Board recommended fully funding the project at the revised amount, however,
after the recommendation was made, it was discovered that the revised estimate did not include
contingency funding. The Executive Board recommend funding the project with a 15%contingency
which totals$777,306.
SKHHP funds are requested to support the rehabilitation of the two buildings including: landscape
improvements, staircase repairs, installation of new railings, seal coating the parking lot, upgrading
external lighting, recoating tenant decks, installation of new siding, replacing gutters and downspouts,
replacing windows, replacing sliding glass doors, replacing unit entry doors, and replacing baseboard
heating with energy-efficient heating systems.
PROJECT SCHEDULE
Activity Date
Site Control 1/1/2000
Building Permit Issued Mid-2024
Begin Rehabilitation and Renovation Mid-late 2024
End Rehabilitation and Renovation Mid-late 2025
FUNDING RATIONALE
The Advisory Board supports the intent of this application for the following reasons:
• There are limited funding sources available for preservation and rehabilitation. The focus for
larger public funders has historically been on creating new units of affordable housing. Smaller
preservation projects like this one are not as competitive against larger preservation projects
competing for the same funds.
• The property is in need of rehabilitation to support the health and safety of residents which are
families with children.
• Preservation of affordable housing is a high-priority for SKHHP.
• 75%of the households earn no more than 40%AMI.
Page 15 of 22
• The project's proximity to the future Kent Des Moines Link light rail station an asset (1.3 miles).
• Multi-Service Center is a well-established South King County-based nonprofit that owns and
operates over 650 units of affordable housing.
• Multi-Service Center's housing programs have a history of serving BIPOC community members
with 72%of clients self-identifying as BIPOC.
• The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including:the
project sponsor's community connection and engagement with the populations they intend to
serve, advancing racial equity, addressing the needs of populations most disproportionately
impacted by housing costs, advancing geographic equity of the Housing Capital Fund, and
preservation.
• Of the two applications submitted by the project sponsor,this project is the higher of the two
priorities as the larger housing units are more difficult for families in need to access, and the
current safety concerns at the project site are more immediate.
PROPOSED CONDITIONS
Standard Conditions
1. Contractor shall provide SKHHP with development and operating budgets based upon
actual funding commitments for approval by SKHHP staff. Contractor must notify
SKHHP staff immediately if it is unable to adhere to these budgets, and must submit
new budget(s)to SKHHP staff for approval. SKHHP staff shall not unreasonably withhold
its approval of these budget(s), so long as they do not materially or adversely change
the Project. This shall be a continuing obligation of the Contractor. Contractor's failure
to adhere to budgets(either original or new/amended) may result in SKHHP's
withdrawal of its funding commitment. Contractor must prepare and submit final
budgets to SKHHP at the time it starts project rehabilitation and at the project's
completion.
2. Contractor shall submit to SKHHP evidence of funding commitments from all proposed
public and private funding sources. If Contractor cannot secure an identified
commitment within an application's time frame, Contractor shall immediately notify
SKHHP staff and describe its anticipated actions and time frame for securing alternative
funding.
3. Contractor shall use SKHHP provided funds toward specific project costs as included in
the funding agreement and consistent with RCW 82.14.540. Contractor may not use
SKHHP funds for any other purpose unless SKHHP staff authorizes such alternate use in
writing. If budget line items with unexpended balances exist after completion of the
project, SKHHP shall approve adjustments to the project capital sources (including
potential reductions in public fund loan balances).
4. Contractor shall evaluate and consider maximizing sustainability features for the Project
(such as an efficient building envelope and heat pumps) and shall propose a plan to
maximize the Project's sustainability.
Page 16 of 22
5. If Contractor uses federal funds toward the Project, it must meet applicable federal
guidelines, including but not limited to: contractor solicitation; bidding and selection;
wage rates; and federal laws and regulations.
6. Contractor shall maintain documentation of any necessary land use approvals, permits,
and licenses required by the jurisdiction in which the project is located.
7. Quarterly Status Reports. Contractor is required to provide SKHHP with quarterly status
reports for projects funded through SKHHP's Housing Capital Fund during the project's
development stage (from the time funds are awarded until the project's completion).
These quarterly reports must include at a minimum the status of funds expended and
progress to date.SKHHP will rely on these quarterly reports to determine whether
Contractor is making satisfactory progress on the project. Contractor shall submit a final
budget to SKHHP upon project completion. If applicable, Contractor shall submit initial
tenant information as required by SKHHP.
8. SKHHP will inspect the project site at least once during the project's rehabilitation.
9. Ongoing Monitoring.After occupancy, Contractor will submit annual reports to SKHHP
summarizing the number of project beneficiaries, housing expenses for the target
population, and the proportion of those beneficiaries that are low-and/or moderate-
income and that meet other eligibility criteria established in the Contract. In addition,
for projects with loan payments, Contractor must annually report financial information
to SKHHP that it will use to assess contingent loan payments and project health.These
annual reports will be required for the full duration of affordability. SKHHP will also
periodically evaluate all projects for long term sustainability.
10. For rental projects, Contractor shall maintain the project in good and habitable
condition for the duration of its affordability term.
11. SKHHP shall reimburse the Contractor for satisfactory completion of the requirements
specified in the Contract and upon Contractor's submission to SKHHP of invoices and
supporting documentation of eligible expenses.
12. A covenant is recorded ensuring affordability for at least 50 years,with unit size,
number of units, and affordability distribution established prior to executing Contract.
Special Conditions
1. SKHHP will provide project funds to the Contractor in the form of a secured grant with
no repayment. Final Contract terms shall be determined prior to release of funds and
must be approved by SKHHP staff. The grant will be secured by a deed of trust recorded
against the property to ensure that Contractor maintains the project's affordability and
target population. Contractor shall not be required to repay the grant so long as it
maintains these project requirements.
2. Timeframe for funding commitment.The funding commitment continues for thirty-six
(36) months from the date of Council approval and shall expire thereafter if all
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conditions are not satisfied. An extension may be requested to SKHHP staff no later
than sixty (60) days prior to the expiration date. At that time,the Agency will provide a
status report on progress to date and expected schedule for start of construction and
project completion. The SKHHP Executive Board will consider a twelve-month extension
only on the basis of documented, meaningful progress in bringing the project to
readiness or completion. At a minimum,the Contractor will demonstrate that all capital
funding has been secured or is likely to be secured within a reasonable period of time.
3. SKHHP funds shall be used solely for the rehabilitation of the property to include, but
not be limited to,the following, unless otherwise approved by SKHHP staff:
a. landscape improvements
b. staircase repairs
c. installation of new railings
d. seal coating the parking lot
e. upgrading external lighting
f. recoating tenant decks
g. installation of new siding
h. applying exterior paint
i. replacing gutters and downspouts
j. replacing windows
k. replacing sliding glass doors
I. replacing unit entry doors
m. replacing baseboard heating with energy-efficient heating systems
4. SKHHP and Contractor shall agree to the specifics on what will be funded prior to
executing a contract to ensure eligibility of expenses in alignment with RCW 82.14.540
and to mitigate cost-overruns.
5. Five housing units shall serve households earning up to 35%AMI,ten units for
households up to 40%AMI, and five units for households up to 50%AMI for the
duration of the term of affordability.
6. Should cost overruns occur that require funds above SKHHP's contribution, sponsor will
work towards filling the funding need through their capital budget process or seeking
funds through other sources.
Page 18 of 22
ATTACHMENT 1: Economic Summaries of Recommended Projects
Project: Mercy Housing NW—Kent Multicultural Village
Proposed Funding Sources by Amounts and Status
Funding source Proposed Amount Status
SKHHP $1,000,000 Applied
4%LIHTC Equity $48,849,278 Applied
King County(2022)' $5,000,000 Committed
GP Equity $1,000 Self-funded
Permanent Loan $23,500,000 Applied
State HTF $8,000,000 Awarded
Deferred Fee $4,850,000 Self-funded
Amazon Grant $2,000,000 Applied
Amazon Loan $11,369,574 Applied
Private: Non-Residential $7,841,869 Will Apply
State: Non-Residential $10,735,000 Will Apply
Federal: Non-Residential $2,552,000 Will Apply
County: Non-Residential $3,150,000 Will Apply
Debt: Non-Residential $5,474,735 Will Apply
TOTAL $134,323,456
Proposed Use of Funds and Total Residential Cost Per Unit
Proposed use Amount Per Unit
Land acquisition $384,504 --
Construction costs $98,698,553 --
Soft costs $12,761,870 --
Development costs $8,372,636 --
Other development costs $4,002,261 -
Community facility $9,402,356 --
4%bond issuance $701,276 -
TOTAL $134,323,456 --
TOTAL NON-RESIDENTIAL $29,753,604 --
TOTAL RESIDENTIAL(Includes common areas) $104,569,852 $525,476
Residential Cost Per Square Foot
Item Amount
Residential square footage 246,019
Residential development cost $104,569,852
Cost per square foot $425.05
Residential Cost Per Unit Based on Unit Size
Unit Size Number of Units Unit Square Footage Cost per Unit
Average Studio 54 392 $166,619
Average 1-bedroom 40 484 $205,724
Average 2-bedroom 65 710 $301,785
Average 3-bedroom 40 982 $417,399
Common area and other residential 85,700 $36,426,785
spaces, including parking
Page 19 of 22
Project: LIHI—Skyway Affordable Housing and Early Learning Center
Proposed Funding Sources by Amounts and Status
Funding source Proposed Amount Status
SKHHP $2,800,000 Applied
State HTF $7,465,748 Will apply in fall 2024
King County 2023 $2,500,000 Awarded$2.1M
9%LIHTC $13,080,144 Will apply in fall 2024
King County 2022(pre-development funds) $2,500,000 Received
Direct Appropriations-Federal $700,000 Received
Direct Appropriations-State $3,000,000 Received
Wyncote Foundation $1,000,000 Received
PSTAA $300,000 Received
TOTAL $36,295,892
Proposed Use of Funds and Total Residential Cost Per Unit
Proposed use Amount Cost per Unit
Land acquisition $2,041,000
Construction costs $26,761,254
Soft costs $4,624,073 -
Development costs $1,737,565
Other development costs $1,132,000 -
TOTAL $36,295,892 --
TOTAL NON-RESIDENTIAL $3,250,000 --
TOTAL RESIDENTIAL(Includes common areas) $33,045,892 $600,834
Residential Cost Per Square Foot
Item Amount
Residential square footage 50,608
Residential development cost $33,045,892
Cost per square foot $652.97
Residential Cost Per Unit Based on Unit Size
Unit Size Number of Units Unit Square Cost per Unit
Footage
Average studio square footage 12 400 $261,188
Average 1-bedroom square footage 19 516 $336,932
Average 2-bedroom square footage 13 816 $532,823
Average 3-bedroom square footage 11 900 587,673
Common area and other residential spaces, -- 12,121 $7,914,649
including parking
Page 20 of 22
Project:TWG—Pandion at Star Lake
Proposed Funding Sources by Amounts and Status
Funding source Proposed Amount Status
SKHHP $2,856,000 Applied
LIHTC&Energy Credits $31,023,163 Applied
Amazon $22,000,000 Applied
Permanent Loan $15,340,000 Applied
State HTF $4,218,915 Applied-Not
awarded in 2023
King County $4,500,000 Applied-Not
awarded in 2023
Deferred Development Fee $2,355,370 Self-funded
Non-Residential Commercial $4,856,260
TOTAL $87,149,708
Proposed Use of Funds and Total Residential Cost Per Unit
Proposed use Amount Per Unit
Land acquisition $3,435,523 -
Construction costs $63,626,629
Soft costs $9,689,519
Development costs $6,902,268
Other Development costs $3,154,594
4%Bond Issuance $341,175
TOTAL $87,149,708 -
TOTAL NON-RESIDENTIAL $4,856,260 -
TOTAL RESIDENTIAL(Includes common areas) $82,293,448 $489,841
Residential Cost Per Square Foot
Item Amount
Residential square footage 180,197
Residential development cost $82,293,448
Cost per square foot $456.68
Residential Cost Per Unit Based on Unit Size
Unit Size Number of Units Unit Square Cost per Unit
Footage
Average Studio 30 381 $173,995
Average 1-bedroom 78 615 $280,858
Average 2-bedroom 24 950 $433,846
Average 3-bedroom 36 1,095 $500,064
Common area and other residential spaces, - 59,772 $27,296,676
including parking
Page 21 of 22
Project: Multi-Service Center-Victorian Place II
Proposed Funding Sources by Amounts and Status
Funding source Proposed Amount Status
SKHHP $777,306 Applied
Multi-Service Center $7,819 Self-Funded
TOTAL $785,125
Proposed Use of Funds and Total Residential Cost Per Unit
Proposed use Amount Per Unit
Title document recording fees $5,000 $250
Rehabilitation costs $780,125 $39,006
TOTAL $785,125 $39,256
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