Public Hearing/Study Session For (September 23, 2014)
Agenda Item: #
Board Summary Report
Date:
September 11, 2014
To:
Board of County Commissioners
Through:
Linda Haley, Division Manager, Housing and Community Development Services
Don Klemme, Director, Community Resources Department
From:
Liana J. Escott, Community Development Administrator
Subject:
Request for operating support for Community Housing Development Association
Request and Recommendation
We are seeking direction from the Board of County Commissioners regarding Community
Housing Development Association’s (CHDA) request for $25,000 from Arapahoe County to
support its general operating budget. A request to the State of Colorado, Division of Housing is
pending for a match of $25,000. If awarded, funds will be provided from the County’s federal
allocation of HOME Investment and Partnerships Program funds (HOME). We recommend
approving the use of $25,000 in HOME funds to support CHDA in the development of affordable
housing for Arapahoe County citizens. CHDA has recently indicated that they are looking to
increase their marketing materials and update their website to be more competitive in the field of
Housing Development.
Background
Arapahoe County receives an annual allocation of HOME funds to be used for affordable
housing development, which may include acquisition of land or residential buildings,
rehabilitation of housing, and/or new construction of housing. Fifteen-percent of each year’s
allocation must be set aside for the specific use by Community Housing Development
Organizations (CHDO). To be a CHDO, an organization must meet certain eligibility
requirements, including having among its purposes the development of affordable housing.
Affordable housing has the meaning of housing that is affordable to households with incomes at
or below 60% of the area median income (rental) or 80% of the area median income
(homeownership).
CHDA is one of two CHDOs that develop affordable housing in Arapahoe County. Archway
Housing Services is the other Arapahoe County CHDO.
Discussion
CHDA was formed in 1995 to address the affordable housing needs in south metro Denver,
including Arapahoe County. Three partner agencies came together to form CHDA –
Arapahoe/Douglas Mental Health Network, Arapahoe House and Developmental Pathways.
Each of the three member agencies make appointments to CHDA’s board of directors. As
CHDA develops housing, it sets aside a portion of the units for those with special needs who are
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Public Hearing/Study Session For (September 23, 2014)
Agenda Item: #
referred by the three partner agencies. The partner agencies provide the necessary support
services to those tenants to enable them to live independently.
To date, CHDA has developed the following housing projects in Arapahoe County:
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Willow Street Residences; new construction in 2000; 80 units, of which16 are set aside
for tenants with incomes at or below 30% of the area median income (AMI) with the
remainder for 60% AMI; located in unincorporated Arapahoe County
Lara Lea; acquisition and rehab in 2006; 36 units, of which 3 units are set aside for 30%
AMI, with the remainder for 60% AMI; located in Littleton
Presidential Arms Apartment; acquisition and rehab in 2008; 33 units, of which 7 units are
set aside for 30% AMI with the remainder for 60% AMI; located in Englewood
Regal Apartments; acquisition and rehab in 2011; 12 units, of which 6 units are set aside
for 30% AMI and 6 for 50% AMI; located in Littleton
Canterbury East and South Apartments; Acquisition/renovation in 2012; 43 units total, of
which 34 are set aside at 50%AMI and 9 are set aside for 60% AMI; located in
Englewood.
CHDA is governed by a twelve member board and employs one staff member - the executive
director - who serves as the organization’s housing developer, asset manager and overall chief
executive. CHDA contracts with the Monroe Group for property management and maintenance.
CHDA has an operating budget of $167,119.
CHDA’s income sources for operating support are derived from developer fees, asset
management fees and rental income. Developer fees are earned at the completion of a housing
project and may be deferred and paid over time. Developer fees are needed to pay for the predevelopment costs of the next housing project (appraisals and market studies, environmental
assessments, architectural, engineering, legal fees, etc.); therefore, a limited amount is available
for general operating support. Also, since housing development is time consuming (typically 2 or
more years from conception to completion), developer fees are not predictable and timely.
Likewise, rental income may be limited due to the lower rents charged to keep the units
affordable to low-income residents. Most of the rental income is needed for capital
improvements and the amount available for general operating expenses varies from year to year.
Finally, CHDA earns income from management fees, which are insufficient to carry the operating
expenses of the organization. Private foundations typically fund services and programs vs. the
operating expenses for property development organizations. Funding a portion of CHDA’s
operating budget will help assure that income derived from fees may be retained for use to
preserve its properties and develop additional affordable housing.
The federal HOME program permits up to 5% of a jurisdiction’s allocation to be used for the
general operating support of CHDOs. The amount is capped at the lesser of 50% of a CHDO’s
operating budget, or $50,000. CHDA’s request of $25,000 falls well below these limits.
CHDA is currently the County’s only developer of affordable rental housing in Arapahoe County
that is eligible for the HOME set-aside funds. The County must commit HOME funds within two
years and expend them within five years of the allocation date. CHDA serves an important role
to Arapahoe County to meet these requirements. While we recognize that CHDA may come to
us in future years for operating support, we feel it is important to maintain the viability of this
organization in developing affordable housing.
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Public Hearing/Study Session For (September 23, 2014)
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Alternatives
The County may choose not to fund the operating expenses of CHDA and CHDA may seek
funding elsewhere. The risk to the County could include the necessity of CHDA to use
development reserves for operating support leaving less for pre-development activities. The
solvency of CHDA is important to the County as CHDA is its primary development entity that
utilizes its allocation of HOME funds. CHDA currently is working to identify its next housing
development project for 2015.
Fiscal Impact
There is no fiscal impact to the County as funds for this request will come from federal HOME
funds.
Reviewed by
This request has been reviewed by Housing and Community Development staff, Community
Resources Director, County Attorney and the Finance Department.
Attorney Comments
Signature lines
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Staff Originator
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Division Manager
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Department Director/
Elected Official
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County Attorney (required)
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Finance Department
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Other Signatures, if needed
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