Form revised: December 6, 2011
FISCAL NOTE FOR NON-CAPITAL PROJECTS
|
Department: |
Contact Person/Phone: |
CBO Analyst/Phone: |
|
Office of Economic Development |
Ken Takahashi/684-8378 |
Jeff Muhm/684-8049 |
|
Legislation Title: AN ORDINANCE relating to economic and community development; authorizing a loan of federal Section 108 loan proceeds to finance development of the 12th Avenue Arts project at 12th Avenue and E. Pine Street; authorizing loan documents, amendments, replacements and related documents and actions; authorizing amendments to the City's 2009-2012 Consolidated Plan to reflect the transactions contemplated by this ordinance; designating the Pike/Pine neighborhood as a local economic zone for New Markets Tax Credit investments; and ratifying and confirming prior acts.
|
Summary of the Legislation:
The legislation authorizes a $1 million HUD Section 108 loan for the development of the 12th Avenue Arts Project. Located at 12th and Pine in the Pike/Pine neighborhood, the project site is currently used as a surface parking lot for the Seattle Police Department. An entity managed by Capitol Hill Housing will acquire the City owned property and redevelop the site into 88 units of affordable housing, 15,000 rentable square feet of office space, 6,000 rentable square feet of retail space, 6,200 rentable square feet of community theater space and a parking garage for the Seattle Police Department. The proposed Section 108 loan will be used to finance nonconstruction soft costs of the commercial portion of the project. The funding will result in the creation of at least 30 permanent jobs.
Background:
This will be the second project under a $10 million Section 108 loan fund established by Council Ordinance 123642 in 2011. In 2011, the City loaned $3,000,000 for the renovation of the former INS Building at 815 Airport Way S into affordable working commercial space for artists and other creative professionals. If the $1 million loan is approved, the City would have $6 million remaining under the $10 million loan fund for additional projects to be approved by Council. The Section 108 loan program is an important source of below-market financing for projects that need low-cost capital to be developed feasibly. The City Loan Committee has determined that the proposed loan meets City priorities in creating permanent jobs and services desired by the Pike/Pine neighborhood. The Committee also confirmed that the Section 108 loan is needed to make the project feasible..
__x__ This legislation has financial implications.
Appropriations:
|
Fund Name and Number |
Department |
Budget Control Level* |
2012 Appropriation |
2013 Anticipated Appropriation |
|
Special Purpose Grants Fund |
Office of Economic Development |
6XD20 |
$20,000 |
|
|
TOTAL |
|
|
$20,000 |
|
*See budget book to obtain the appropriate Budget Control Level for your department.
Appropriations Notes: Following project approval by HUD and City Council, proceeds of the $1 million Section 108 loan will be deposited directly by HUD to the City’s trustee/custodian known as Bank of New York Mellon (“Custodian”). According to an agreement with the Custodian, the City will direct the Custodian to disburse Section 108 funds to the borrower.
Pursuant to Council adopted Section 108 policies and Ordinance 123642 (which established the $10 million Section 108 loan fund), OED is authorized to receive a loan fee of $20,000 (i.e., 2% of the $1 million Section 108 loan for the 12th Avenue Arts project) and to use such loan fee for management of the Section 108 loan program including costs such as placing the loan into the HUD public offering, legal fees and financial analysis of 108 loans in the City’s portfolio. The loan fee will be paid directly by the borrower (rather than from 108 loan proceeds) and, as such, constitutes federal miscellaneous revenue not CDBG program income. The loan fee will be deposited with Bank of New York Mellon, the City’s loan servicing agent.
The borrower will pay an asset management and loan monitoring fee in the annual amount of $3,000, until all amounts owing on the 108 shall have been paid in full. The fee will cover basic, ongoing expenses of the loan including costs such as Custodian costs. The fee will be paid directly by the borrower and deposited with Bank of New York Mellon, the City’s servicing agent.
Anticipated Revenue/Reimbursement Resulting from this Legislation:
|
Fund Name and Number |
Department |
Revenue Source |
2012 Revenue |
2013 Revenue |
|
Special Purpose Grants Fund 17820 |
Office of Economic Development |
6XD20 |
$20,000 |
|
|
TOTAL |
|
|
|
|
Revenue/Reimbursement Notes:
OED will receive a loan fee of $20,000, representing 2% of the $1 million 108 loan.
Other Implications:
a) Does the legislation have indirect financial implications, or long-term implications?
No.
b) What is the financial cost of not implementing the legislation?
There is no financial cost for not implementing the legislation. The cost would be measured in terms of unachieved public benefits.
c) Does this legislation affect any departments besides the originating department?
The Department of Finance and Administrative Services will sell the property and will lease back a portion of the property for Seattle Police Department’s parking use. The Office of Housing has committed financing for the residential portion of the property in the 2011 City Housing Levy Funding Awards for Rental Housing. Both departments are aware of the City Loan Committee’s recommendation to make a Section 108 loan as part of the financing package for this project.
d) What are the possible alternatives to the legislation that could achieve the same or similar objectives? None.
e) Is a public hearing required for this legislation?
Yes, a public hearing will be held on August 15, 2012.
f) Is publication of notice with The Daily Journal of Commerce and/or The Seattle Times required for this legislation?
Publication of notice will be made with the Daily Journal of Commerce regarding the public hearing.
g) Does this legislation affect a piece of property?
Yes
h) Other Issues: None.
List attachments to the fiscal note below: