Item C5
LAND AUTHORITY GOVERNING BOARD
AGENDA ITEM SUMMARY
Meeting Date: February 22, 2001
Bulk Item: Yes No X
Department: Land Authority
Agenda Item Wording: Approval of a resolution authorizing a local contribution in the form of a
mortgage to subsidize Phase 2 of the Tradewinds Hammocks affordable housing development on Key
Largo.
Item Background: The proposed resolution authorizes a zero-interest, 50-year mortgage from the
Land Authority in the amount of $924,000 and authorizes the Chairman to sign the corresponding local
contribution application form to the Florida Housing Finance Corporation (FHFC) as a subsidy for the
56-unit, multi-family rental affordable housing development on Key Largo known as Tradewinds
Hammocks Phase 2. The development site is located next to the Trade Winds Shopping Center.
On April 20, 2000 the Board approved a similar resolution providing a $1,089,000 mortgage for Phase
1, which consists of 66 units. Phase 1 has received all local development approvals and is poised to
receive over $4.2 million in tax credit and HOME loan funding from the FHFC, subject to a favorable
underwriting review.
Using the resolution approved for Phase 1 as a base document, the proposed resolution is presented in
strike-through and underline format to highlight the proposed changes for Phase 2. See the attached
memo for additional information.
Advisory Committee Action: The proposed resolution was approved by the Advisory Committee on
January 11, 2001 by a 5/0 vote.
Previous Governing Board Action: The Board briefly discussed Phase 2 on January 18, 2001 and
agreed to continue the item to January 24, 2001. At the applicant's request, the January 24, 2001
meeting was canceled due to unresolved permitting issues. The Board approved funding for Phase 1
on February 28, 2000 and April 20, 2000.
Staff Recommendation: To be provided at the meeting.
Total Cost: $ 924,000
Budgeted: Yes X
No
Cost to Land Authority: $ 924,000 .
Approved By: Attorney ~
Executive Director Approval:
OMB/Purc~
AI'-Yc)ark J, Rosch
To Follow:
Risk Management
Documentation: Included: X
Not Required:
Disposition:
Agenda Item LA #5
MEMORANDUM
FROM:
Land Authority Governing Board
Mark J. Rosch, Executive Director ~_
DATE: January 19, 2001
TO:
SUBJECT: Phase 2 of Tradewinds Hammocks Affordable Housing Development
Tradewinds Hammocks LLC proposes to construct, own, and manage 56 units of affordable
rental housing for persons of very low and low income for a period of 50 years in participation
with the Florida Housing Finance Corporation's (FHFC) tax credit and HOME loan programs.
Tradewinds Hammocks LLC is a limited liability company consisting of MRT of the Florida Keys
(Peter Rosasco, Pedro Falcon, and David Tuttle) and Heritage Affordable Development, Inc. (a
corporation located in Cocoa Beach specializing in the development of affordable housing). The
FHFC is a public corporation created by the Legislature within the Department of Community
Affairs.
The 14-lot development site in Industrial Acres subdivision consists of 5.57 acres of hammock,
disturbed hammock, disturbed land, and mangroves adjoining the Tradewinds Shopping Center
on Key Largo. The property is zoned Urban Residential (UR) and Native Area (NA) and is
designated Residential High (RH) and Residential Conservation (RC) on the Future Land Use
Map. Ordinarily Comprehensive Plan Policy 601.1.14 would prohibit the Land Authority from
subsidizing development in hammock areas, but Policy 101.2.4 and Growth Management
Administrative Interpretation 99-2 provide an exception for those cases when the development
is affordable housing and the property is designated RH on the Future Land Use Map.
The proposed resolution calls for a zero-interest mortgage in the amount of $924,000 from the
Land Authority for a term of 50 years. The owner proposes that this amount, together with a
$74,536 waiver of County impact fees, serve as the local contribution in an application to FHFC
for State funding in the form of a $909,636 HOME loan and tax credits in the annual amount of
$341,208 for ten years. Although the Land Authority's mortgage exceeds the $250,000
necessary to receive the maximum points for local contribution on the FHFC application for tax
credits, the owner's pro forma indicates a subsidy of this amount is necessary to make the
project financially feasible. The Land Authority has obtained two appraisals of the land and the
proposed $924,000 mortgage does not exceed the property's average appraised value
assuming the property has all necessary development approvals for 56 units. The remainder of
the project funding would come from a $1,705,585 conventional mortgage and $492,287 in
deferred developer's fees, bringing the total project cost to $6,761,854. Prior to funding the
project, the FHFC will conduct an independent financial review as part of the underwriting
process.
Tradewinds Hammocks LLC is a private for-profit developer, which raises the issues of profit
and risk. The developer's fee (inclusive of expenses and overhead) for this project is 16%,
which is consistent with the limit established by the FHFC requirements. With respect to risk,
we have attempted to minimize this issue by releasing the Land Authority's funds in phases, by
working with a developer (Heritage Companies) experienced with using tax credits to develop
1
affordable housing in the Keys, and by bringing the funding, structure, and controls of the FHFC
into the project.
The proposed resolution links disbursement of Land Authority funds to specific milestones in the
application and permitting process. Although the County has issued a conditional use approval
for Phase 2, several conditions of this approval remain outstanding, such as obtaining 56
ROGO allocations and cesspit credits, securing access to the site, and abandoning a road.
Under the proposed resolution, no Land Authority funds will be disbursed until the project is fully
approved. If the project is not fully approved by the County within three years, the Land
Authority's financial commitment will expire. If the project is fully approved, the Land Authority
would disburse $700,000 of the loan, with the $224,000 balance to be disbursed once all other
funding is in place and the developer is ready to begin construction. Until the final
disbursement, the Land Authority's mortgage would be in first position. Once the other funding
sources have been secured, the Land Authority's entire funding would move to third or possibly
fourth position.
FHFC tax credits have funded other affordable housing developments in the Keys. The Monroe
County Housing Authority used tax credits to finance Eastwind Apartments in Marathon.
Additionally, the Heritage Companies used tax credits to develop Mariner's Cove Apartments in
Key West. Both of these projects were built in the past 10 years, so there is no example in the
Keys of tax credit housing that has been in existence for the full 50-year affordability period.
The application process for FHFC funding is extremely competitive. In the event the
Tradewinds application to FHFC is not successful this year, the proposed resolution would allow
the owner one additional funding cycle to secure FHFC funding, failing which title to the property
would be conveyed to the Land Authority to allow alternative affordable housing initiatives on
the site. In the event the Tradewinds application to FHFC is successful and the housing is built,
the FHFC will be responsible for monitoring affordability for the compliance period of 50 years.
In order to make the development more competitive in the FHFC ranking process, the
developers proposed eliminating the preference for persons displaced by the removal of illegal
downstairs enclosures and adding a preference for persons employed in marine-related
activities. The Land Authority Advisory Committee considered but took no action on these
proposals.
Regardless of the success of the FHFC application, the proposed resolution calls for the
property secured by the Land Authority mortgage to be permanently restricted for use as
affordable housing from the time the first Land Authority funds are released. After 50 years the
owner will have no further obligation to FHFC, however the Land Authority's deed restriction will
remain in place indefinitely. The Land Authority's deed restriction would not guarantee the
condition or even the existence of housing after the 50-year FHFC period absent additional
public subsidies at that time, but it would preclude the owner from using the property for
purposes other than affordable housing.
Funding for the proposed $924,000 Land Authority mortgage would come from the Land
Authority's local funds reserved for acquisitions in the Florida Keys Area of Critical State
Concern. This fund has a current unencumbered balance of approximately $3.4 million.
2
RESOLUTION NO.
A RESOLUTION OF THE MONROE COUNTY
COMPREHENSIVE PLAN LAND AUTHORITY APPROVING A
MORTGAGE AGREEMENT AND PROMISSORY NOTE FOR
USE WITH TRADEWINDS HAMMOCKS, LTD. (PHASE 2) TO
PROVIDE AFFORDABLE HOUSING AND AUTHORIZATION
FOR THE CHAIRMAN TO EXECUTE THE ASSOCIATED
FLORIDA HOUSING FINANCE CORPORATION APPLICATION
FORM.
WHEREAS, section 380.0666(3), Florida Statutes (FS) and section 9.3-2, Monroe County Code,
empower the Monroe County Comprehensive Plan Land Authority (hereinafter "Land Authority")
to acquire an interest in real property for the purpose of providing affordable housing to very low,
low, or moderate income persons as defined in section 420.0004, FS, where said acquisitions
are consistent with a comprehensive plan adopted pursuant to Chapter 380, FS; and
WHEREAS, MRT of the Florida Keys, L.L.C., a limited liability company and Heritage~
H9b1iinQ Affordable Development, Inc., a Florida corporation, propose to form Tradewinds
Hammocks, ~ LLC, a limited p~rtFl8r:ihip liability company (hereinafter "Owner") for the
purpose of constructing, owning, and operating GG 56 units of affordable rental housing known
as Phase 2 of Tradewinds Hammocks (hereinafter "housing development") on Key Largo to
provide housing for persons of very low and low incomes for a period of 50 years; and
WHEREAS, in order to finance the $7,55Q,ege $6,761,854 total cost of the housing
development, the Owner proposes to apply on M~r:~R a, 2000 February 26, 2001 for tax credits
and a HOME loan from the Florida Housing Finance Corporation (hereinafter "FHFC"), a public
corporation created within the Florida Department of Community Affairs pursuant to section
420.504, FS; and
WHEREAS, the application process for the FHFC tax credit program is highly competitive and
awards maximum points to those applicants providing a local contribution in the amount of
$5QO,OOO $250,000 or ~ 10% of the total project cost ~$177,ga5 $676,185), whichever is less;
and
WHEREAS, the Owner states that it is necessary to receive subsidies in the form of a
$1 ,Oag,OOO $924,000 mortgage loan from the Land Authority and $a7,a4e $74,536 in impact fee
waivers from Monroe County in order to make this project financially feasible; and
WHEREAS, the Land Authority Advisory Committee considered this proposal at a meeting held
M~r~1:t 22, 2000 January 11, 2001 and voted 5/0 to recommend approval of the loan subject to
the requirements contained in this Resolution; and
WHEREAS, the Governing Board wishes to approve the Advisory Committee's
recommendations; NOW, THEREFORE,
BE IT RESOLVED BY THE MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY:
Page 1 of 3
Section 1. Effective immediately, the Land Authority Chairman is authorized to sign the
applicable FHFC form F'grm /a, P~Q8 7 gf 10, indicating a local government contribution in the
form of a zero-interest, 50-year loan in the amount of $1 ,0aQ,000 $924,000 in support of the
Owner's application to FHFC for a HOME loan in the amount of$2,QOQ,OQO $909,636 and tax
credits in the annual amount of $19Q,212 $341,208 for ten years for the housing development.
Section 2. On gr ~bgblt M~r~h 11, 2000, the Land Authority Executive Director is authorized to
disburse $Q11,000 $700,000 to the Owner provided all of the following conditions have been
satisfied.
a) The Owner has provided to the Land Authority a copy of the completed application for tax
credits and a HOME loan and proof that the Owner submitted said application to FHFC by
the M~r~h a, 2000 February 26,2001 application deadline.
b) The Monroe County Planning Director has provided notice that the99 b1nit 56-unit affordable
housing project on Tr~~t Iii: Lots 1-14 as described in Attachment A has been fully approved
for development, including the granting of 56 ROGO allocation and 56 cesspit credits.
c) The Land Authority's legal counsel has provided notice that the Owner has executed in favor
of the Land Authority a zero-interest, 50-year first mortgage agreement and promissory note
for the amount of $Q11,OOO $700,000 encumbering the property described in Attachment A
(~II gf Tr~ct E Lots 1-14). In the event FHFC has not awarded the tax credit and HOME loan
commitment by the conclusion of two application cycles, beginning with the M~r~h a, 2000
February 26, 2001 cycle, the Owner shall convey the property described in Attachment A to
the Land Authority, free and clear of all encumbrances, together with all development rights
and approvals, including but not limited to ROGO allocations and cesspit credits, necessary
for development of the g9 b1r:lit 56-unit affordable housing project on the property described
in Attachment A.
d) The Land Authority's legal counsel has provided notice that use of the property described in
Attachment A has been permanently restricted by deed restriction as follows:
1. the property is to be used only for housing for very low, low, or moderate income persons
as defined in section 420.0004, FS;
2. said deed restriction shall also reference the affordable housing requirements of the
Monroe County Land Development Regulations and shall impose said requirements
permanently, notwithstanding the normal 20 or 25 year period of said regulations; and
3. in accordance with the Memorandum of Understanding between Monroe County and
Department of Community Affairs dated December 27, 1999, persons currently or
formerly housed in an illegal downstairs enclosure who have or will be displaced as a
result of the removal of said enclosures and who meet all applicable affordability
requirements shall be given first priority when the Tradewinds Hammocks housing
occupants are selected.
Section 3. The Land Authority Executive Director is authorized to disburse$1/a9,000 $224,000
to the Owner provided all of the following conditions have been satisfied.
a) The Land Authority's legal counsel has provided notice that the Owner has secured the tax
credits, HOME loan, and construction loan necessary to build the 99 b1r:lit 56-unit project as
described in Attachment B.
b) The Land Authority's legal counsel has provided notice that the Owner has executed in favor
of the Land Authority a zero-interest, 50-year first mortgage agreement and promissory note
for the amount of $1 ,OaQ,OOO $924,000 encumbering the property described in Attachment A
Page 2 of 3
(~II gf Tr~ct E Lots 1-14) and replacing the mortgage and note described in Section 2(c)
above.
Section 4. The Land Authority will subordinate the mortgage referenced in Section 3(b) above
only to the following loans obtained by the Owner in furtherance of developing the property: a
conventional first mortgage, a second mortgage in favor of FHFC with 20-year term, and a third
mortgage in favor of a member of the Federal Home Loan Bank with a 10-year term or any
other mortgage approved by the Land Authority.
Section 5. Notwithstanding the approvals and conditions contained in Sections 1 through 4
above, if all the conditions in Section 2 are not satisfied within three years from the date of
adoption of this resolution, the Land Authority's commitment to the subject housing development
shall expire.
PASSED AND ADOPTED by the Monroe County Comprehensive Plan Land Authority at a
special meeting on this day of 2001.
(Seal)
ATTEST:
MONROE COUNTY COMPREHENSIVE
PLAN LAND AUTHORITY
Mark J. Rosch
Executive Director
Nora Williams
Chairman
Approved for Legal Sufficiency
Larry R. Erskine
Page 3 of 3
"
ATTACHMENT A
Lots 1 through 14 inclusive, Block 4, Industrial Acres subdivision, according to the Plat thereof
as recorded in Plat Book 5 at Page 15 of the Public Records of Monroe County, Florida.
ATTACHMENT B
Phase 2 Tradewinds Hammock && URit 56-Unit Affordable Housing Development
Financing
Local Contributions
Land Authority Mortgage
County Impact Fees of $a7,a4e $74,536
FL Housing Finance Corporation (State Contributions)
Tax Credit Equity
HOME Loan
Conventional First Mortgage (Private Lender)
Purchase Money Mortgage (Seller Financing)
Deferred Developer's Fees
Total Project Cost
$1,OaQ,OOO
$924,000.00
fees waived
f.&&~ '.Il.':ii'J&d
$1,1eQ,412
$2,QOO,000
$1,1301,02e
$0
$700,25a
$2,730,344.64
$909,636.00
$1,705,585.78
$0.00
$492,287.79
$7,/a/aQ,eQe
$6,761,854.21
Housing Type and Affordability
Income % of Median Net Size Net Rent
Unit Type # of Units Level Income (sq. feet) (per month)
Efficiency-1/1 ~ 2 Very Low 28% 700 $220.QO $221.00
Efficiency-1/1 0 Q Very Low 50% 700 $422.1a $424.00
Efficiency-1/1 i 5 Low 60% 700 $/a14.00 $517.00
Subtotal oW 7
2 BRI 2 Bath e 5 Very Low 28% 890 $2e1.00 $265.00
2 BRI 2 Bath ~ ~ Very Low 50% 890 $/aOe.25 $510.00
2 BRI 2 Bath ~ 24 Low 60% 890 $91e.00 $621.00
Subtotal ~ 31
3 SRI 2 Bath ~ 2 Very Low 28% 1050 $2Qg. 00 $301.00
3 BRI 2 Bath ~ 1 Very Low 50% 1050 $/a7Q.aa $583.00
3 BRI 2 Bath ~ 15 Low 60% 1050 $707.00 $711.00
Subtotal ~ 18
Total Units GG 56
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CONCLUSION:
Outlined herein are two mutually dependent courses of action, laid out over a twenty year plan.
By pursuing these two paths, we can lay to rest endless debate, pointless suffering, and help
craft a future that accomplishes our most loudly declared goals. Waiting for someone else to fix
the problems, or simply waiting in general, has gotten us precisely where we are now: little if
any closer to our genuine goals than we were a decade ago.
Ask any group of people anywhere throughout the Keys if there is a need for affordable hous-
ing. The vast majority will say "Yes." Ask any group of people anywhere throughout the Keys
if they want to see every lot on these islands built on. The vast majority will say "No." These
aren't even hard questions. That we will need to pursue a path to avoid build-out and utilize our
existing and limited resources to concentrate on affordable housing is a given. It has been for a
long time.
Having a long term vision that we can commit to, however, has long eluded us. There's a reason
for that. The reason isn't that creating a long-term vision is impossible. The reason is that it de-
mands some tough political choices that we haven't heretofore been willing to make. The time
for commitment and action must be row. The time for answering the tough questions must be
now.
Pursuing the multi- faceted course of action outlined within this proposal would, I believe, ac-
complish things that should have been accomplished long ago, and address some of the most vi-
tal questions that currently confront us. Although this proposal requires significant refinement
and input, it should ensure, over a twenty year period, that much needed affordable housing is
produced that will be a resource into perpetuity for our working, fixed income, and commercial
population, while also accomplishing our shared goals of community and neighborhood preser-
vation and avoidance of build-out. We can accomplish these goals, but only if we work together
and refuse to settle for easy quick- fix answers. There are no quick fixes to the significant prob-
lems that face us. What is required is a long-term commitment to a sensible path.
END
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