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HomeMy WebLinkAboutProposed Resolution - 5/6/2025 (4)1 RESOLUTION NO.________ OF 2025 (A Resolution to Adopt a Legislative Policy for the Salt Lake City Naturally Occurring Affordable Housing Preservation Program) WHEREAS, Salt Lake City Corporation (City), through the Salt Lake City Naturally Occurring Affordable Housing (NOAH) Preservation Program, supports the goals of preserving naturally occurring affordable housing stock and preventing displacement of current Salt Lake City residents; and WHEREAS, the NOAH Preservation Program provides financial assistance to property owners of naturally occurring affordable housing to carry out property improvements in return for a long-term covenant to preserve affordability; and WHEREAS, adopting a legislative policy for the Salt Lake City NOAH Preservation Program will facilitate budgetary and reporting transparency, streamline recipient application and recommendation processes, ensure alignment with City best practices, and increase compliance with state and federal requirements; and WHEREAS, the City Council does now meet on this ___ day of __________, 2025 to adopt a legislative policy for the Salt Lake City Naturally Occurring Affordable Housing Preservation Program. NOW, THEREFORE, be it resolved that the City Council of Salt Lake City, Utah, hereby adopts the attached legislative policy for the Salt Lake City Naturally Occurring Affordable Housing Preservation Program as set forth in Exhibit A. Passed by the City Council of Salt Lake City, Utah, this ____day of ______________, 2025. SALT LAKE CITY COUNCIL By _____________________________ CHAIR Approved as to form: __________________________ Salt Lake City Attorney’s Office Date: ___________________________ ATTEST: ________________________________ City Recorder April 17, 2025 2 Exhibit A to the Resolution Salt Lake City NOAH Preservation Program Legislative Policies 1. GENERAL 1.1 Mission The Salt Lake City Corporation (City) NOAH Preservation Program (Program) provides financial assistance to property owners (Owners) of naturally occurring affordable housing (NOAH) to carry out property improvements in return for a long-term covenant to preserve affordability. NOAH properties, constituting one of Salt Lake City’s largest supply of affordable housing stock, maintain affordable rents without public subsidy and, therefore, do not have a covenant that requires the property to be rented at an affordable rate. The lack of covenants and subsidies makes NOAH assets vulnerable to either redevelopment or disrepair, both of which create instability for communities. When NOAH properties are redeveloped due to market speculation or upgrades that result in higher rents, existing renters are displaced, and affordable housing units are lost. To preserve Salt Lake City’s affordable housing stock and prevent displacement, the Program shall provide grants and low interest loans to Owners with the shared goal of preserving affordability for the long term. 1.2 Program Administration The Program shall be administered by the Department of Community and Neighborhoods (CAN) and its Division of Housing Stability, including the administration and loan servicing aspects of the Program. 2. PROGRAM FUNDING 2.1 Funding Sources The Program shall be primarily funded from the Tenant and Homeowner Loan Fund (THLF) pursuant to the Salt Lake City Housing Program Funds Legislative Policy, attached hereto as Exhibit A (Funds Policy), or its successor. 2.2 Program Income Any and all repayment of principal and interest on loans issued through the Program, as well as other sources of revenue generated from the Program, shall be considered Program Income. The financial management of Program Income shall be pursuant to the Funds Policy. 2.3 Uses of Funding Funding allocations shall be utilized to issue loans to eligible Owners. 3. ELIGIBILITY REQUIREMENTS 3.1 Eligible Properties 3 Eligible properties shall be properties located within Salt Lake City boundaries that: A. Currently do not have a deed restriction or covenant requiring affordable rents; or that have a project-based affordability deed restriction or covenant that is due to expire within three years from the date of application; B. Include housing units that are currently being rented at a rate affordable to households at or below 80% of the area median income (AMI) as defined by the U.S. Department of Housing and Urban Development (HUD), hereafter referred to as an Affordable Unit. An Affordable Unit shall have an annualized rental rate, including cost for basic utilities, that does not exceed thirty percent (30%) of the maximum monthly income permissible for the applicable AMI, assuming a household size equal to the number of bedrooms in the unit plus one (Affordable Rate); and C. Are current and in good standing with the City on real estate taxes, water, and sewer payments. 3.2 Eligible Owners Eligible Owners include for-profit, non-profit, and limited equity cooperative (LEC) organizations that are existing owners or buyers of Eligible Properties, and that: A. Demonstrate a gap between the funding required to improve, maintain, and/or operate the property while maintaining Affordable Rates for the Affordable Units and the amount of financing available from traditional sources; B. Demonstrate property management experience; or participation in technical assistance to ensure the successful management and operation of NOAH properties; B. Are tax compliant and current on all City loans related to existing projects undertaken by the Owner and/or any related entity of the Owner; C. Possess all necessary legal and corporate authorization to incur the obligations of the Program financing; D. Possess the appropriate business license, or commit to obtain the appropriate business license, to operate rental housing within Salt Lake City; and E. Are enrolled in Salt Lake City’s Landlord Tenant Initiative. 3.3 Eligible Activities A. Capital expenses for emergency stabilization activities, including but not limited to roof repair, mold remediation, building systems, building envelope, life safety issues, or other physical needs that could impact the health and quality of life for current residents, or compromise the building structure. B. Capital expenses to provide necessary renovations to ensure the long-term viability of the property with the Affordable Units. Renovations may include, but not be limited to kitchen/bathroom upgrades, paint and flooring upgrades, historic preservation activities, and common area improvements. C. If in conjunction with capital expenses, operating expenses may be eligible to address operating shortfalls and to stabilize the property. D. Capital expenses relating to the improvement or preservation of a LEC, or 4 other shared equity model, in which a self-governing group of residents organize to form a corporation or cooperative to purchase the property. Eligible activities include costs related to renovation/rehabilitation required to ensure the long-term viability of the LEC. 4. FUNDING TERMS AND CONDITIONS Funding awards shall be based on the following terms and conditions: Mechanism housing authority or other qualified agency the HUD Local Payment Standard with a housing voucher per Affordable Unit and loan per Affordable Unit and loan per Affordable Unit and loan Ratio for the first five (5) years, any loan amounts to be repaid in monthly amortized payments for up to 30 years; any loan amounts to be repaid as balloon payment due at the end of the loan term for the first five (5) years, any loan amounts to be repaid in monthly amortized payments payments Contribution cost cost cost 5. REQUIREMENTS 5 A. Rent Restriction: The monthly rent for the Affordable Units, including all required housing costs per unit, such as utilities and other charges uniformly assessed to all apartment units other than charges for optional amenities and services, shall be as follows: a. Deed Restricted Units: The maximum monthly gross rental rate shall not exceed thirty percent (30%) of the maximum monthly income permissible for the applicable AMI, assuming a household size equal to the number of bedrooms in the unit plus one. b. Master Lease Units: The maximum monthly gross rental rate shall not exceed the fair market rent (FMR) or the maximum HUD local payment standard for the Housing Choice Voucher (HCV) program, whichever is lower. B. Income Restriction: The Affordable Units shall be made available only to Eligible Households that are qualifying occupants with an annual income at or below the AMI as applicable for the given Affordable Unit for Salt Lake City Utah, HUD Metro FMR Area as periodically determined by HUD and adjusted for household size. Eligible Households shall qualify upon moving into an Affordable Unit. C. Tenure: Affordable Units shall be provided as permanent housing as evidenced through a lease with a minimum tenure of six (6) months. D. Improvement, Operating, and/or Marketing Plan: Borrowers shall provide a physical remediation plan, operating plan, and/or management strategy, as applicable to the project. E. Fair Housing: Borrowers shall establish an affirmative Fair Housing Marketing Plan, including offering units to HCV and other tenant-based rental assistance voucher holders. F. Anti-displacement: Tenants may not be permanently displaced due to rehabilitation activities. Borrowers must establish a tenant relocation plan if tenants are temporarily displaced as a result of rehabilitation activities. G. No Net Decrease in Affordable Units: Projects shall not result in a net decrease of affordable housing units, provided however that a net decrease in units may be approved by the City on a case-by-case basis if the net decrease in units is to facilitate larger unit sizes with more bedrooms or to facilitate rental rates at lower AMI. H. Deferred Payments: Any outstanding loan balance shall be due at the expiration of the Affordability Term or Loan Term, whichever comes first. 6. APPROVAL PROCESS Program funds shall first be available through a competitive notice of funding availability (NOFA) process. For each issued NOFA, the City shall evaluate and consider applications for approval as follows: A. Eligibility Review: Applications shall be reviewed by staff to verify that eligibility requirements are met. B. Review Committee: For applications that meet the basic eligibility requirements, applications shall be forwarded to the Housing Program Funds Loan Committee 6 for review and recommendation. Applications that the Housing Program Funds Loan Committee ranks competitively shall be recommended to the City Council for a funding allocation. C. City Council: The City Council shall make the final selection of projects to receive a funding allocation, subject to the necessary requirements to execute funding agreements. If Program funds do not get disbursed through the NOFA, the City may offer the funds on a first-come, first-served basis, subject to a review by the Housing Program Funds Loan Committee and approval by the City Council. 7. LOAN DEFERMENT AND MODIFICATION In the event of economic hardship the City may provide payment deferment or a loan modification. Such adjustment to loan terms shall be considered on a case-by-case basis and shall be subject to a thorough review of the project's financial standing and other relevant information. The process for providing a loan deferment or modification is as follows: A. Deferment: The Director of CAN may elect to provide the borrower a temporary forbearance or deferment of payment for up to twenty-four (24) months, consecutive or nonconsecutive. If a loan deferment is granted by the City, the loan term shall be extended for an equivalent period. B. Modification: If the 24-month loan deferment has been exhausted and the borrower continues to experience an economic hardship, the borrower may apply for a modification of loan terms to facilitate affordability of the borrower’s monthly loan payments. The Housing Program Funds Loan Committee shall review such requests and provide a recommendation that is forwarded to the City Council, who shall consider and act upon all such requests. 8. REPORTING Staff shall submit a report on the Program to the City Council on an annual basis. The report shall include outcomes associated with the Program, including a summary of projects completed including a summary of units and affordability levels, number of new grants and loans, total outstanding balance of the loan portfolio, and number of delinquencies. 7 Exhibit A to the Salt Lake City NOAH Preservation Program Legislative Policies Salt Lake City Housing Program Funds Legislative Policy 1. GENERAL 1.1 Scope Salt Lake City Corporation (City) utilizes various funding sources to support housing and community development activities (Housing Program Funds), primarily through two different classes of programs: (1) to local organizations for the implementation of activities that support the City’s goals (Subrecipient Programs); and (2) to administer activities and programs that pass funds directly to tenants, homeowners, landlords, and property owners (Direct Delivery Programs). Direct Delivery Programs initially include the Home Repair Program, the Community Land Trust (CLT) Program, and the Naturally Occurring Affordable Housing (NOAH) Program. This policy establishes financial and reporting standards for the Housing Program Funds. In addition, this policy establishes a revolving loan fund as a self-replenishing pool of revenue to fund the Direct Delivery Programs. 1.2 Intent Housing and community development policies are outlined in various plans that have been adopted or approved by the City Council. The intent of the Housing Program Funds is to implement the goals and objectives that are outlined in various pre-adopted plans, including but not limited to the City’s moderate- income housing plan, anti-displacement plan, and the 5-year consolidated plan required by the U.S. Department of Housing and Urban Development (HUD). The uses of the funds for the Direct Delivery Programs shall be outlined in the specific program policy. 1.3 Program Administration The Housing Program Funds shall be administered by the Department of Community and Neighborhoods (CAN) and its Division of Housing Stability. 2. FINANCIAL 2.1 Revenue Housing Program Funds revenue sources shall include: A. Federal Ongoing: Revenue from federal funding sources that is allocated annually to the City for affordable housing and community development activities, including the following HUD programs: Community Development Block Grant (CDBG), Home Investment Partnership Program (HOME), Emergency Solutions Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). B. Funding Our Future (FoF): FoF sales tax dollars that are designated annually for housing programs. C. Program Income: Revenue generated from the sale of property, the repayment of principal and interest, or other sources of revenue generated from an 8 activity funded with the Housing Program Funds. To comply with the various statutory requirements for each revenue source, the City shall separately account for Program Income according to the associated source, as follows: • Restricted Program Income: Program Income generated from Federal Ongoing or other sources with federal, state, or other restrictions shall be administered according to associated requirements. For example, Program Income generated from Federal Ongoing funding sources maintains federal requirements in perpetuity and shall be recaptured and reallocated annually pursuant to federal regulations. • Unrestricted Program Income: Program Income generated from sources that do not have restrictions on the utilization of program income shall be deposited into a revolving loan fund, pursuant to Section 3: Tenant and Homeowner Loan Fund, to continue to support the implementation of the Direct Delivery Programs. D. Other Housing Program Funds: The City may designate general fund or other one-time funding from federal, state, or other sources for housing or community development purposes. 2.2 Annual Budget Allocations The City Council shall appropriate the Housing Program Funds revenue to specific Direct Delivery and Subrecipient programs through the annual budget process. The Administration shall propose funding recommendations to the City Council either through a competitive application process or through administrative budget recommendations, as follows: A. Competitive Application Process The following sources of Revenue shall fund either Subrecipient or Direct Delivery programs and shall be subject to an annual competitive application process: a. Federal Ongoing b. FoF c. Restricted Program Income d. Other Housing Program Funds (on a case-by-case basis) Applications shall be subject to a review and funding recommendation process conducted first by the Community Development and Capital Improvement Program Advisory Board (CDCIP Board), or its successor, then by the Mayor. The CDCIP Board and Mayor’s funding recommendations shall be submitted to the City Council during the budget deliberation process for the upcoming fiscal year. B. Administrative Budget Recommendations The following sources of revenue shall fund Direct Delivery Programs to support their financial viability. Funding recommendations shall be submitted through the Mayor’s Recommended Budget: a. Unrestricted Program Income 9 b. Other Housing Program Funds (on a case-by-case basis) 3. HOUSING PROGRAM FUNDS LOAN COMMITTEE Once the City Council has appropriated funding to a Direct Delivery Program, funding allocations to specific project recipients shall be determined by the respective Direct Delivery Program policy. A Housing Program Funds Loan Committee (Loan Committee) shall be established to provide recommendations or provide final approval of funding, as established by the respective Direct Delivery Program policy, and shall be comprised of five (5) members, as follows: A. Two (2) members of the CDCIP Board, or its successor B. The Director of Community and Neighborhoods, or designee C. The Director of Housing Stability, or designee D. The City’s Chief Financial Officer, or designee The Loan Committee shall be subject to the Utah Open and Public Meetings Act and shall meet on an as-needed basis. 4. TENANT AND HOMEOWNER LOAN FUND The Tenant and Homeowner Loan Fund (THLF) shall be established and maintained as a restricted account in the general fund to facilitate the revolving of Unrestricted Program Income for the implementation of the Direct Delivery Programs. The THLF shall be financially managed by the Department of Finance (Finance). There shall be deposited into the fund all revenue received by the City that does not have federal or state restrictions and that is dedicated to community development and affordable housing programs, including, but not limited to: A. Unrestricted Program Income; B. In lieu payments, mitigation fees, contributions, and other monies that may be received by the City for the purposes of tenant and homeownership housing programs; and C. Other monies appropriated by the City Council. No expenditure shall be made from the THLF without approval of the City Council. Through the annual budget, the City Council shall allocate funds from the THLF to specific Direct Delivery Programs pursuant to Section 2.2. 5. REPORTING CAN and Housing Stability shall submit a report to the City Council on an annual basis that provides an overview of budget expenditures, revenues, and associated outcomes. The report shall include a summary of property transactions, loans, grants, and populations served. To keep the identity of individuals, tenants, homeowners confidential, reporting shall include the census block group of the property, household, or individual served rather than the address.