[BoulderCouncilHotline] Re: Updated ordinance for 30Pearl

[Firnhaber, Kurt]

Dear Roxanne,

The Trinity Commons affordable housing development was not financed through Low Income Housing Tax Credits and therefore is not subject to these IRS rules.  It is also worth noting that the vast majority of our affordable rental units created in the city either through new construction or preservation uses LIHTC.

Thanks,
Kurt

From: roxanne_peterson at yahoo.com <roxanne_peterson at yahoo.com>
Sent: Monday, October 28, 2019 7:00 PM
To: Firnhaber, Kurt <FirnhaberK at bouldercolorado.gov>; HOTLINE <HOTLINE at bouldercolorado.gov>
Cc: Allen, Michelle <AllenM at bouldercolorado.gov>; Sugnet, Jay <SugnetJ at bouldercolorado.gov>; Laura Sheinbaum <sheinbauml at boulderhousing.org>
Subject: Re: [BoulderCouncilHotline] Updated ordinance for 30Pearl

Why wouldn't this apply to all low income affordable housing projects - like Thistle's Trinity Commons that charges tenants $150/month for off-street parking?

Sent from my LG Mobile

------ Original message------
From: Firnhaber, Kurt
Date: Mon, Oct 28, 2019 5:43 PM
To: HOTLINE;
Cc: Allen, Michelle;Sugnet, Jay;Laura Sheinbaum;
Subject:[BoulderCouncilHotline] Updated ordinance for 30Pearl

Dear Councilmembers,

Staff is requesting a change to the 30Pearl emergency ordinance agenda item to address a last-minute issue related to parking. In addition to the issue of a revocable permit for the parking structure, Boulder Housing Partners (BHP) received a legal opinion from its tax credit investor that the paid portion of the city???s SUMP principles (share, unbundled, managed and paid) violates federal Internal Revenue Service tax code in relation to affordable housing.
The financial and real estate closings on the property is scheduled for early November, requiring timely action by the city.  As the council is aware, BHP has applied for qualified census tract funding for this project.  The project needs to be under construction by the end of the year to keep this source of federal funding.  It is very important for the viability of this project to stay on this tight schedule.
BACKGROUND
BHP and the city crafted a parking agreement which describes that low-income residents pay for parking by providing a rent reduction to anyone who does not bring a car to the property. The advisors for the tax credit partnership opined that charging for parking is not allowable under the federal tax code.
Staff requests that council give the city manager the authority to review and approve an exception to the requirements of Subsection 9-9-6(i) to allow alternative arrangements for the leasing of parking spaces associated with any permanently affordable housing.  This exemption would only apply to the permanently affordable units at 30Pearl.
ANALYSIS

The city is preparing to transfer sections of the 30 Pearl Project site to Morgan Creek Ventures and Boulder Housing Partners.  As a part of the preparation to close, lenders for the purchasers have reviewed the project specifics and are resistant to financing a project in which use of the parking structures could be revoked by the city.  The lenders also object to requiring paid parking as it violates federal tax code as discussed below.
The city has been working with BHP to implement the vision of the Transit Village Area Plan and the subsequently adopted zoning regulations that were intended to implement that vision.  One of the requirements of the zoning code is that landlords offer to lease parking separate and apart from the leasing of a dwelling unit.  BHP and the city looked at a variety of options to meet this requirement.  These efforts did not result in a solution that was acceptable to BHP???s tax credit investor.
This conclusion was based on an interpretation of the federal Internal Revenue Service tax code that the common areas of an affordable housing project, to be included as part of the financing of the overall project, must be made available on a comparable basis to the tenants of all residential rental units.  No separate fee may be required for the use of the facilities.  This was made clear in the legislative history when Section 42 was originally passed as part of the Tax Reform Act of 1986, which stated, ??????the allocable cost of tenant facilities, such as swimming pools, other recreational facilities and parking areas, may be included provided there is no separate fee for the use of these facilities and they are made available on a comparable basis to all tenants in the project.???
If the parking is being constructed with low income tax credit it funds, then it becomes a common element of the project.  Under low-income tax credit law, you cannot require a tenant to pay for this amenity.  Within the items financed by low-income tax credits, common areas must be (1) a facility reasonably required by the project; (2) subordinate to the residential rental units; (3) available to all residents on a comparable basis; and (4) available for no fee.
The change that is proposed in the emergency ordinance that is attached provides the city manager with the authority to waive local zoning standards that conflict with the federal Low Income Tax Credit laws.  See 26 U.S.C. ?? 42, specifically, ?? 42 (d)(4)(B).  The standards that are at issue are the standards that require parking to be leased separate from dwelling units.
Approval of the emergency ordinance will provide the certainty and clarity that lenders need to finance the project.  If the requirements of the paid parking are applied, the future of the project is in jeopardy.

STAFF RECOMMENDATION

Suggested Motion Language:

Staff requests council consideration of this matter and action in the form of the following motion:

Motion to order published by title only and adopt as an emergency measure Ordinance 8362 suspending the requirements of Sections 8-6-3, 8-6-6, 9-9-6(i) and 9-9-10, B.R.C. 1981, to permit the construction of improvements in public access and other public easements and to allow alternative arrangements for the leasing or ownership of parking for permanently affordable housing for the Boulder Transit Village Replat B, generally located at the northeast corner of 30th and Pearl Streets; and setting forth related details.


The revised ordinance is attached to this email.  Staff will provide hard copies at the meeting tomorrow.  Please feel free to call me if you have any additional questions.

Sincerely,
Kurt Firnhaber, Housing and Human Services Director

ATTACHMENTS

A ??? AMENDED Proposed Ordinance 8362


Kurt Firnhaber
Director of Housing and Human Services
[cid:image001.png at 01D58DB6.08786590]
O: # 303-441-4424<tel:303-441-4424>
C: # 303-917-0914<tel:303-917-0914>
FirnhaberK at bouldercolorado.gov<mailto:FirnhaberK at bouldercolorado.gov>

Department of Housing & Human Services
1300 Canyon Blvd  Boulder, CO 80302

Bouldercolorado.gov<https://protect-us.mimecast.com/s/rpazCwp76giLrV8XU9jIMN?domain=bouldercolorado.gov>


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