Memorandum
TO: Diane Stoddard, Interim City Manager
Mayor and City Commissioners
FROM: Shannon Oury, Executive Director, Lawrence-Douglas County Housing Authority
Date: November 10, 2015
RE: LDCHA Acquisition of 1725 New Hampshire - Updated
Property Description
Address: 1725 New Hampshire, Lawrence, KS
Building Type: Multi-unit walkup
Units: 5 - One bedroom
1 - Studio
Purchase Cost: $ 485,000
Minor Renovations: $ 12,000 - $ 18,000
Appraisal: $ 290,000 based on residential use
Narrative
The Lawrence-Douglas County Housing Authority (LDCHA) is an agency of the City of Lawrence and Douglas County. Pursuant to County Resolution 00-26, and City Resolution No 6240, the LDCHA does not have the authority to acquire real estate. All real property owned by LDCHA must be titled to the City of Lawrence, Kansas. See attached Exhibit 1.
The LDCHA has the opportunity to acquire a 6 unit development located at 1725 New Hampshire St., "the Property". The proposed purchase will be funded out of LDCHA reserves. The Property is located adjacent to Babcock Place, a high rise elderly public housing development already owned by LDCHA. The location next to Dillon's and near other services that are highly beneficial for low income residents. There is also benefit to the LDCHA in the location of this Property for convenience in staffing for maintenance and storage. There is a detached building with five garages.
Appraisal: At the request of the City Commission an appraisal was procured by the LDCHA and the summary sheet is attached as Exhibit 2. The appraisal estimates the value of the property at $290,000 based on residential zoning.
The purchase price is based on a competitive offer that reflects that this property went through the rezoning process for commercial zoning and was pulled just prior to the final reading. The appraisal does not reflect the ability for this to be rezoned commercial but the purchase price does.
Minor Renovations: The physical inspection of the Property revealed electrical panel breakers with double taps present in each unit that require replacement. The Property also requires the installation of GFCI circuits in all unit bathrooms and kitchens.
A Phase I Environmental Site Assessment was prepared and submitted to the City staff. The City staff issued an Environmental Review of the project attached as Exhibit 3. If LDCHA makes any alterations that would involve hazardous materials identified by the Phase I Assessment all work will be done in compliance with the mitigation requirement identified in the City's Environmental Review.
This Property will not receive subsidy from HUD or any other source. It will be managed with a sliding scale rent schedule based on the income of the tenant.
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Draft 1725 New Hampshire Below Market Sliding Rent Schedule |
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Monthly Rent |
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Tier 1 |
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Household of 1 with income at or below 30% |
$300 |
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Annual Area Median Income (AMI) |
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Tier 2 |
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Household of 1 with income between 31-34% AMI |
$350 |
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Tier 3 |
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Household of 1 with income between 35-40% AMI |
$400 |
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Tier 4 |
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Household of 1 with income between 41-50% AMI |
$450 |
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Tier 5 |
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Household of 1 with income between 51-60% AMI |
$500 |
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Tier 6 |
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Household of 1 or 2 with income between 61-80% AMI |
$600 |
Area Median Income (AMI) is established yearly by HUD for Lawrence and Douglas County, and the 1725 New Hampshire Sliding Rent Schedule will be applicable to the current AMI adopted by LDCHA at the time of certification or recertification of a participant.
There will be a 30-year deed restriction placed on the Property at closing, limiting occupancy to very low- and/or low-income households. Sale of the Property will be expressly subject to this Deed Restriction, deeds of conveyance must have this Deed Restriction appended thereto.
Approvals Required: The purchase is contingent on approval by HUD and the City of Lawrence, Kansas. HUD has granted approval for this purchase, see Exhibit 4.
The LDCHA will apply for tax exempt status for this Property pursuant to KSA 75-201(a) sixth. The LDCHA will assume the current leases for the Property and work with tenants on certification according to the above outlined sliding scale.
Benefit to LDCHA:
· The LDCHA is engaging in conversations with KVC Health Systems and Department for Children and Families to look at developing a program that would provide a preference for youth aging out of foster care to be offered housing at this property when units become available.
· Efficiencies and cost savings from proximity to Babcock Place. The LDCHA has maintenance and management staff at Babcock and the cost of adding these units will not require the addition of new staff members. There are many services including case management, a computer lab, and transportation that are provided at Babcock and could be extended to eligible tenants of this property.
· The property includes 5 garage units that can be used for storage by Babcock and LDCHA as a whole.
· There are potential future uses of the property, including reconfiguring the Babcock parking lot. This area is very congested and would be beneficial to the area to NOT to have Babcock Place residents parking on the neighborhood streets so that we can continue to be good neighbors.
At Babcock Place there are 44 parking spaces:
· Loading zone parking space (1)
· Bus parking (4)
· Handicap parking (7)
· Regular parking spaces (32)
There are 57 vehicles with Babcock Place parking permits, so the parking lot is 18 spaces short.
Public Input: On February 23, 2015, the Board authorized the use of MTW funds from the agency's reserves to make the acquisition and for necessary renovations, closing costs, and approved the establishment of an initial $200 per-unit reserve.
On July 23, the LDCHA held a special meeting to take public comment on this project. At that meeting, all the comments received were positive and supportive of the acquisition. One negative comment was received by email. The Board voted unanimously to bring this matter back to the City Commission.
Property Management: The LDCHA will manage the Property and will charge only actual cost of administration and maintenance to the Property.
Request: The LDCHA requests that the City Commission authorize the LDHCA to purchase the Property and permit the Executive Director of the LDCHA to execute all documents required to complete this transaction.