SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving the Pre-Development Agreement with HousePAD Erie, LLC for the Cheesman Street Residences
Body
DEPARTMENT: Planning and Development
Department
PRESENTER(S): MJ Adams, AICP, Affordable Housing Manager
First Name Last Name, Title
TIME ESTIMATE: 30 minutes
only required for non-consent items
FISCAL SUMMARY:
Cost as Recommended: $3,200,000
Balance Available: $3,200,000
Budget Line Item Number: 205-30-430-560100-130430
100-30-430-604000-131430 (pending receipt of DOLA funding)
New Appropriation Required: No
POLICY ISSUES:
The proposed resolution supports a specific affordable housing development implementing the Council’s previous policy decisions to encourage development of a variety of housing types and levels of affordability throughout the Town. Acquiring land for affordable housing and partnering with private developers, a public-private partnership (P3) will help the Town efficiently promote more diverse living opportunities for households in a broad range of incomes and types-families, households without children, and individuals-and enable them to call Erie home. This will in turn make it easier for local businesses and organizations to hire employees who live in Erie, enable more people who have grown up in Erie afford to move back home, make it possible for more elders to afford to “age in community” when they downsize in Erie, and help reduce traffic associated with commuting to jobs in Erie.
STAFF RECOMMENDATION:
Recommendation
Approve the Pre-Development Agreement with HousePad Erie, LLC (the ownership entity for Vertikal Development for this site).
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The proposed Pre-Development Agreement sets the affordable housing and financial terms for the Cheesman Street Residences Development. This provides the basis for investment by both the Town and developer prior to the forthcoming approval of the Site Plan, Minor Subdivision, and final Development Agreement for the Cheesman Street Residence.
Project Description
The Cheesman Street Residence Development site sits at the northwest edge of Erie’s Old Town. The two-acre site is surrounded by a diverse mix of public, quasi-public, commercial, and residential development, including Erie Middle and Elementary Schools and First Interstate Bank to the south, Cavalry Bible Church to the north, the Conoco Gas Station to the west, and single-family residences to the east. To provide a compatible fit with the mix of uses and context of the area, the project includes 35 residences, including attached single-family units along County Line Road on the western edge, and detached single family homes on the east and along Cheesman Street. The homes will be for sale and affordable for families and households earning a moderate income. The proposed project design is described in more detail on the Town’s website here: www.erieco.gov/2310/Cheesman-Development <http://www.erieco.gov/2310/Cheesman-Development>.
Project Background
The Cheesman Street Residences Development is a public/private partnership that tackles Erie’s need for affordable/attainable housing as documented in the Housing Needs Assessment the Town completed in 2023. The Town adopted the priorities, strategies and goal to have 12% of our housing be affordable by 2035 (we are currently at 1.3%) and to collaborate with the Boulder County Regional Housing Partnership to work regionally on this issue.
In 2020, the Town committed to expanding affordable and attainable housing throughout the community and in 2021 signed the Regional Housing Partnership commitment to work towards the collective regional goal of 12% of the region’s housing inventory to be affordable by 2035. In 2023, the Town also committed to Proposition 123, which calls for a 3% annual increase in affordable housing units. The commitment to Prop 123 calls for the Town to create an additional 15 units of affordable housing by November 2026.
In November 2022, the Board of Trustees (now, Town Council) voted to acquire the property at 765-785 Cheesman Street to support the development of affordable homeownership units. In February 2023, the Town closed on the property and issued an RFQ for a developer to tackle the challenge. The Town received two responses which staff reviewed and recommended that Vertikal be selected as the developer. On April 11, 2023, the Board of Trustees accepted the committee’s recommendation to designate Vertikal as the developer and to start negotiations.
On June 22, 2023 staff presented the framework for the pubic-private partnership which includes:
• 35 for sale homes
• 50% of the homes to be priced to be affordable to households earning less than 90% HUD AMI (household of 4: $119,520)
• 50% of the homes to be affordable to households earning less than 110% of the AMI; (household of 4: $146,080)
• Design to fit with fabric of Old Town; meet 2021 International Building Code (IBCC); and be net zero ready and all-electric;
• 20-year renewable deed restriction to maintain long term affordability, with restricted rental and buy-out options
• Developer return on investment not to exceed 10%; and
• Town contribution of land, and up to $1,950,000 in rebates toward development and impact fees, water and sewer tap and dedication fees, and use taxes and up to $100,000 in public site improvements along East County Line Road.
In October 2023, the Town and Vertikal entered into a Letter of Intent as the site design progressed. On Nov. 22, 2023, Erie received Vertikal’s first submittal for Site Plan and Minor Subdivision. Vertikal held a neighborhood meeting on Dec. 14, 2023 which was attended by over 20 residents. The attached meeting summary includes the information presented by the applicant and comments collected by Town staff. Key concerns included density and resulting traffic, parking, school capacity, process, and occupancy limits. The development review process includes a traffic study, review against existing zoning and comprehensive plan designations as well as confirmation with the school district and other utility providers, consistent with all development review within the Town. In order to provide increased transparency on this development, the Town created a the Cheesman development website <https://www.erieco.gov/2310/Cheesman-Development> to provide ongoing updates to the community on the development.
To accomplish the level of affordability outlined, the Town is contributing the land (acquired for $1.15 milion with ARPA funds in 2023) and covering costs of up to $1,950,000, which represents the cost of taxes, fees, and $100,000 for public improvements along East County Line Road. Thus, the Town’s total contribution would be $3.2 million. ARPA funds and local general fund funds ($2.2 million) and a recently awarded DOLA grant ($1 million) will cover the Town’s contribution. The estimated public contribution of $88,500 per affordable home is well within the range of public contributions needed to create affordable units in the western Front Range communities, which currently ranges from $50,000-$150,000 per unit.
The development is currently moving through the entitlement process. If all proceeds as planned, staff anticipates a late spring 2024 construction start. Staff will start outreach and marketing of the homeownership units in early summer, with applications due in December for homebuyer selection in January 2025. Homes are expected to be ready for occupancy starting in late summer 2025.
The Cheesman Street Residences Development is the Town’s first affordable housing public-private partnership. The development brings high quality, energy efficient design and construction at an affordable price to the Town. The 35 new homes will offer opportunities for families who want to set down roots in Erie to become homeowners in a market where homeownership has been elusive for several years.
COUNCIL PRIORITY(S) ADDRESSED:
ü Attractive Community Amenities
ü Engaged and Diverse Community
ü Prosperous Economy
ü Safe and Healthy Community
ü Environmentally Sustainable
ü Fiscally Responsible
ATTACHMENT(S):
1. Resolution HousePAD Erie Pre-DA-R030424
2. Cheesman Street Residences Presentation
3. Pre-Development Agreement
4. December 2023 Neighborhood Meeting Materials
5. RFQ for Cheesman
6. Vertikal Response to RFQ
7. Letter of Intent October 2023