Planning Commission - Regular Meeting

Welcome back to this weekly meeting of the Community Planning and Housing Committee with Denver City Council. Your Community Planning and Housing Committee starts now.

All right, good afternoon. Oh, I'm not wearing my reading glasses. Good afternoon, everyone. It is Tuesday, August 11th. This is the Housing and Homelessness Committee of Denver City Council. I'm Amanda Sawyer. I have the honor of representing the residents of District 5, and I'm the vice chair of this committee, and I'll be chairing today, so watch out, world. Before we get started, we will do council member introductions, and I will start with Zoom first.

Hello, Council Member Flora Alvarez. District seven.

Fantastic. And then I'm going to let you two fight it out for who goes first. Jamie Torres was Denver.

I'm going to bring it in. Diana Romero Campbell, Southeast Denver district four.

Fantastic. We have one action item today. So if you guys want to introduce yourselves and take it away.

Amazing. I'm Cole Chandler, executive director of the department of housing stability.

I'm Erin Clark. I'm the chief real estate investment officer with the Denver housing authority.

All right. Well, Erin is going to be the star of the show today. Thanks to the many of you who took briefings on this topic. We appreciate the opportunity to talk with you about that and improve the presentation and the amendment that we're bringing forward. So this project has been underway for a really long time, since back in 2018. And Erin's going to provide a background, an overview, the history of it, as well as talk about what we've learned through this and what we were able to deliver through the DHA Delivers for Denver Intergovernmental Agreement. And so, with that, I will turn it over to Erin to provide an update on that, as well as the amendments that we're preparing to bring forward through Council.

Thank you so much. Thank you, Cole. It's been really good to work with you on this. And this is really a number of years in the making for us to be in front of you today. When I joined DHA in 2022, I was really excited to get to know this program, DHA Delivers for Denver. I think it's a really quite an impressive, really thoughtful approach to intergovernmental partnerships. really leveraging some of the best tools of the city with the best tools of the housing authority and looking at how we can work together to move things forward faster to create more affordable housing and deeper affordability. And so DHA Delivers for Denver, or D3, which we know can be, especially with Jamie Torres here in You are D3. But this program, really, it's one big pilot program that's broken up into two distinct sections. And so you'll hear me throughout this presentation talk about D3 direct and D3 permanent supportive housing or D3 land banking. Nice to see you Councilman Cashman. And so wanted to start out the first slide here is mapping those two subsets of this program. So you'll see that on the left are our D3 direct locations. So those are the where it was DHA's existing pipeline that we agreed for additional funding to support from the city to move those projects forward. And so you'll see a lot of those, seven of those 10 projects are in the Sun Valley neighborhood. We also have 655 Broadway, Studebaker Lofts, and 32nd and Shoshone. So those are our 10 D3 direct projects. projects. And then on the permanent supportive housing side, DHA acquired 11 properties across six different council districts throughout the city. So you'll see that we have more geographic distribution with respect to that land banking part of the program. And we'll dive more into those particular projects as we go forward throughout the presentation. Just to start with some history that a number of you were directly a part of and others of you joined later on as we've been working through the D3 program. But our original premise was simply that affordable housing need was immediate. It remains immediate today, we know that. But the idea that DHA could rapidly produce more affordable housing and being able to leverage the city's forethought in terms of creating the affordable housing fund to put money, dollars directly into projects. So using property tax allocations to repay debt, the city joined forces with DHA so that we could use our revenue bond issuing capacity backed by the city's affordable housing fund to we ended up with 129.81 million dollars in net bond revenues to put towards this with just over 50 percent of those dollars being for the land baking side of the program and just under 50 percent of those funds being used for the d3 direct kind of filling capital stacks for for direct developments by dha So in going to the timeline at the bottom of this slide, we started with, of course, the city creating that affordable housing fund in 2016, moved on to, in 2018, the city adopting a housing plan, and that is also when we executed the intergovernmental agreement between our two organizations. In 2019, DHA issued those revenue bonds, and then we were off to the races. So between 2020 and 2023, we looked for strategic acquisitions, and we did complete 11 different property acquisitions in that few-year period. Some of those were us going out to find vacant land opportunities. Others were opportunities brought to us. For example, Fusion Studios with Colorado Coalition for the Homeless on Quebec Island. the old airport area, that was an opportunity that they brought to us that fit within the IGA and within the goals of the D3 program. And we did acquire that property for CCH to then be the owner and operator of that facility. In 2021, when I was prior to being at DHA, I was selling property to DHA when I was at Urban Land Conservancy, when we partnered on the Mosaic Community Campus. So that's how DHA then was involved with Denver Public Schools and with Urban Land Conservancy to purchase that campus and DHA owns land and two buildings there. So all of those happened between 2020 and 2023. At the same time, DHA was conducting self-developments and moving forward the pipeline for the D3 Direct side of the program. And so, again, a lot of that was the Sun Valley redevelopment, really moving forward that transformation plan via the HUD Choice Neighborhood Grant that we received in 2016. These funds from the city on top of the grant dollars that we had from HUD, that's really what supercharged us being able to ultimately successfully deliver 965 new apartments and townhomes in Sun Valley to go from 333 former public housing units to 965 units of affordable housing there today. Brand new construction. The other thing I'm working on today is how we're getting a park there next year. And so really excited to finish that out. And without kind of those seed dollars from the federal government and from our local government, we would not have been able to move as quickly and to close in a timely fashion on all seven of those projects of those tax credit deals. So this was really very critical to moving that forward and ultimately resulted in over $550 million worth of projects development activity. So we are now at the stage of between 2026 now and 2031 looking to complete three other projects permanent supportive housing projects that are in progress now and then we are looking for it is a 20-year bond maturity and so the full program all of the bonds should be repaid by 2038. But you'll see in the middle of this slide, our original target for the program when we set all this up in 2018 was to deliver 2,500 total units. 1,300 of those on the D3 direct side, 1,200 of those on the permanent supportive housing side. the d3 direct side of the program is complete we have already finished all of those projects those we got we opened our final of those 10 in 2025 and so ultimately we resulted in 1161 total units that were completed on that side of the program 959 of those are deed restricted in perpetuity and that when we say in perpetuity we really mean that dha On both sides of the program, DHA has maintained land ownership for all of these projects, and so they are on 99-year renewable ground leases. So those units are permanently income-restricted. And then you'll see that on the permanent supportive housing side of the program, we have completed 600 total units so far as of the end of this year. And the original target was 1,200 units. One of the amendments that we are putting before you today is related to those unit targets, and we'll talk more about our rationale for wanting to shift those numbers. These are the pretty pictures that show everything that all of your dollars went towards. So we have the seven tax credit projects in Sun Valley, Gateway South, Gateway North. Those actually did not receive direct D3 dollars because they were already in the pipeline before we started all of this. But they do count towards the total. in that they were contemplated as a part of all of this, and it is part of the overall plan. But there were direct dollars in the other five projects that are listed here, Greenhouse, Thrive, Jolie, Soul, and Flow. So six of these seven developments are for families. Flow is a senior disabled 12-story high-rise. It has 212 units, and a full half of those 106 units are... further subsidized with project-based vouchers. And so they are for deep affordability, 30% AMI and below. Across all of Sun Valley, approximately 80% of our units are income restricted and about 20% are unrestricted. But we are at this point leasing everything at or below 80% of the area median income. And then we had scattered sites identified as well. So Studebaker Lofts is 33 units of affordable housing above the old Patagonia store at the corner of 15th and Blake in Lodo. The turquoise building in the middle is an office to residential conversion. That's 655 Broadway. So that used to be Denver Health. administrative offices and this is on Denver Health campus so that project 655 Broadway represents another amazing partnership of local institutions so it's city it's DHA and it's Denver Health in that development are 110 units of housing all affordable again a senior disabled project And the second floor is specifically a partnership with Denver Health where they make referrals of folks who have been in the hospital, who are unhoused, and who are ready to be medically discharged from the hospital, rather than them being discharged to the streets, while they still are recovering, they have the option to go to one of these single-room occupancy units on the second floor of 655 Broadway to continue their recovery, work with housing navigators, and ultimately, hopefully, be go through a pipeline to get to permanent housing. And so that is a pilot within this D3 pilot that I just wanted to highlight as well. And then the final scattered site is 32nd and Shoshone. That was former public housing on that site that is now new construction there in Highlands. Part of why we're here in front of you is, again, to share through a pilot, the point of it is for us to learn some lessons along the way and see, okay, did our original idea pan out? And we think it has been very successful in terms of a delivery model, but there are just some specific tweaks we need to make along the way. And a lot of that is in creating more flexibility. So in this case, we had built out the program with some very specific, we're going to build this many units and they're going to be in exactly these income bands, things like that. Development is very complex. A lot of those Sun Valley developments, Julie, for example, had a capital stack that was 12 sources deep. Every one of those sources has its own other kind of competing obligations and lender requirements and things of that nature. And so a lot of what we're asking for in terms of proposed amendments is to reflect some of what has changed, some of what we had to respond to along the way to deliver the units that we did, and also to think through how we can create, build in a little more flexibility going forward to make sure that this is successful. So the market conditions changed drastically. This is not news that you're hearing from me. And so what this slide is showing, what these bars are showing is the light green is where the assumption was at the time of the IGA. And the darker green is where we actually ended up. So for Sun Valley alone, we were projecting in 2018, pre-COVID, Total development costs for those projects of around $332 million, we ended up at $480 million. You'll see that $93 million of that was in the middle there, was in the hard construction costs. And so essentially the cost in the market and we're moving a lot faster, increasing a lot faster than what we had originally modeled. Borrowing capacity tightened. We were in a really volatile interest rate environment. A lot of the capital markets were constricting. It was very hard to deliver some of these and we had to make some other negotiations. And so all of this being said, Again, we had an original target of 1,300 units. We ultimately delivered 1,161 units. Again, that's 959 that are permanently affordable. And then there are 202 units there that we also built and that we're leasing at 80% AMI or below, but are not officially counted in the D3 count because what The way a D3 unit is defined is that it is permanently income restricted to 80% AMI and below. But we did want to note this number as actual homes that are available to people at these rates. So what's showing in red in the middle of this slide is the actual increase that we had over even when we started the Sun Valley project. So this is... Subsequent to those assumptions in the IGA, but we still, it was just outpacing us beyond what we could imagine. But we always look at challenges as opportunities. Oops, I got rid of one side accidentally. And the opportunity here was for us to buckle down and get creative and look at what other tools do we have in our toolbox that can allow us to still deliver as many units of affordable housing and deeply affordable housing as we can in, within, or against these headwinds. And ultimately, the biggest thing that we did was to, again, look to our bond rating and our ability to issue revenue bonds. The Denver Housing Authority is one of a short list of housing authorities in the country that have a bond rating. And we're one of only literally a handful that have a rating as high as we do. We have a AA- Standard & Poor's credit rating. is valuable in this type of market. That meant that we could go to the capital markets instead of going to a traditional bank to get loans and negotiating what those interest rates were. We were able to go issue bonds to the capital markets, have people compete for our projects and for that debt, which ultimately meant that we had a much lower blended interest rate. By having lower interest rates, we could have less money that we were putting to interest and more money that went into the projects themselves. And the more money that goes into the projects, the more units we're able to build. So ultimately, we did that with three of the seven projects in Sun Valley, and that made a huge difference and was how we were able to get to 1,161 units where it could have been only around 763 or something like that. So that is my spiel on the D3 direct side. Now we're gonna shift to the permanent supportive housing side. Again, these are images of successfully completed projects there. Again, we took that more than 50% of the net bond revenues to purchase properties and then to either through direct relationships or through RFP processes, we attach development partners to each of these sites. So again, DHA is continuing to own the land under each of these projects and we have a ground lease and then we are leasing the land to these partners. The partners own and maintain the buildings themselves. So these are their projects and they're very much direct partnerships that we maintain long term. there is a requirement for this side of the program that 40% of each of the projects is permanently affordable to households earning 30% of area median income or below. So within the IGA, we're defining that as very low income households. So again, between 2020 and 2023, we completed six developments. You'll see five here Yeah, sorry about my math. And the last one there is being completed at the end of this year, Crane's Landing, by Mercy Housing, right next to our office at 10th and Osage, and also right adjacent to Burnham Yards and all of the new activity that's happening. That's imminent there. So really exciting to have been able to secure that site and have Mercy Housing have already completed or nearing completion of this project. It's going to be 190 units. all affordable and also has a federally qualified health center on the ground floor. They're partnering with Denver Indian Family Services and we're really excited and proud. I love looking out my window every day to see this beautiful design that they have on this project. The other three that we have in progress right now are 1139 Delaware. That's with Sherman and Associates. So that's going to be right over here in the Golden Triangle. So to have fully affordable housing, some permanently affordable housing and permanent supportive housing in a rapidly changing area like the Golden Triangle, that was also really exciting for us to be able to secure that property. So that's going on the site that's currently where the Nine Health Fair building is. And also there's a a few other businesses that are there that will be replaced by this housing. Mentioned earlier, again, Commons at Mosaic. So we're partnered with Archway Communities there. They already built the two projects that are on the north side of the campus, and we have the south side of the campus. And so that was part of why, a big reason why we chose to partner with Archway on that deal is that The Mosaic Campus is a very complex structure. It's multiple landowners and ground leases, and there's a lot of shared things happening. And so just knowing the complexity of that, thought it really would behoove us to have a group that already understood all of those things, had worked with lenders on those things previously. And so they'll be renovating the two former dormitory buildings that we own there, Gaby and Triangulo Halls. Both 1139 Delaware and Commons at Mosaic have already received tax credit awards from CHFA. So we're just heading towards financial closings for them. And both of those are projected to be open to residents in 2028. And then finally, 4745 Federal, so that is the former roadway inn right at Federal and I-70. So in the image here, you'll see it's right off of Rocky Mountain Lake Park. And so this is a site that, again, Colorado Coalition for the Homeless was uniquely interested in looking to provide permanent supportive housing there. And so that's who we've partnered with here. I do want to note that every time we are, we as DHA, when I say that we've selected a development partner, that's not just DHA doing that work. We have an advisory committee that was set up through the IGA as well. So we have partners from Metro Denver Homeless Initiative, from CHAFA, from the State Division of Housing, from hosts who are all engaged together in providing advice and in vetting who these development partners are and what their proposals are. So before they're even going in for tax credit applications or anything like that, we've gone through a kind of a multi-agency vetting process. And then ultimately, they're also going through, we take resolutions through DHA's Board of Commissioners as well to formally attach these partners. So I did want to just note kind of procedurally that there is an even expanded universe of folks that have been involved in making these selections. We have two additional sites that do not have partners yet. So to finish out the D3 program, we need to successfully reach financial closings and opening of buildings of these three, of Delaware, Mosaic, and Federal. And then we ultimately need to come up with our final plans for how we're going to move forward with the former Best Western at 4595 Quebec. So that's right off of Quebec and I-70. And then also this vacant land that we have at 39th and Fox Street. So these we have owned for some time. We purchased the former Best Western property in 2023. That was a direct partnership where a host brought us an opportunity to deploy ARPA dollars at that time to also leverage that with the D3 money to be able to purchase this 194-unit hotel that was being sold. It is now... Since 2024 been leased by host and then you have partners that are operating that as traditional housing and as a shelter use. But we're starting to rethink what that can look like. When we originally purchased that in 2023, the idea was, wow, this is 194 units. that are already furnished, that had really high-quality furnishings, that have a central lobby, where there are kitchens in most of these units. And in the 30% or 40% of the units that do not have kitchens, they're all on the same floors, and there's plumbing already in the walls. And so it seemed that it could be an easy solution. renovation to do to be able to get it to 100% permanent supportive housing. But that being said, we've also all learned, again, learned a lot of lessons along the way and 194 units in one property is a lot. And so, you know, I always I try to preach this with my team a lot. I think it's so important that we can be developers and we can say we can make these dollars and cents work and this is what it means to construct this project and this is, you know, all these things. We can put together a pro forma and say we can build this. But I always say that's necessary, but it's not sufficient. We have to go that extra step to say, what is this going to be like for the end user? How is someone going to feel living in this building? What is the quality of life going to be here? And so that's where we're rethinking this a little bit in terms of that size of a property, that many units, Are we really setting the future residents up for success? I often also say none of us are in the business of warehousing people. That is not our jobs. Our jobs is to provide homes. They need to feel like homes. And so that's where we're looking at kind of what is the opportunity here in the future? Could it be fewer units? Could we combine some? And so we also want to match that to the idea of we're not gonna have 194 project-based vouchers to be able to subsidize this property fully. And so that's some of the, just naming a few of the kind of realities that we wanted to just kind of name and discuss with you all and what are going through our minds in terms of, again, how can we complete this program successfully? Our goals from the start and our goals remain to deliver as much housing as we can but also high quality housing and to make sure that it will be sustainable long term for us to maintain and for people to live in. And similarly for Fox Street, our original models showed a yield of maybe around 101 units there. We're seeing a lot of projects getting smaller, both because of construction costs are going up and operational costs are going up, but also tax credits are harder to come by. And so a lot of where we used to see 9% tax credit deals that were maybe now they're around 50 or 60 units. And similarly on the 4% side, everything's coming down a little bit as another way to help reduce costs and improve the overall sustainability of those projects. And so with that being said, do wanna note that a big bottleneck for us in finishing out the program is the current state of project-based vouchers. The project-based voucher, Right now, the allocators are DHA, State Division of Housing, and HOST. So prior to the city creating your own local voucher program, which we definitely welcome to the space, it was really DHA and the State Division of Housing with respect to the D3 program, working together. So in 2018, DHA committed to a minimum of 300 vouchers that would go towards this program. And the idea would be that the state would match that with another 300. DHA has already used all of our 300 in the projects that we've already committed to. So now we meet regularly to try to kind of look at forthcoming pipelines and to say who... who can put in which vouchers to which projects, but we all have different budget constraints. So the state is dealing with their budget, the city has yours, and for DHA, we're talking about the HUD budget. We are a federal pass-through in terms of those vouchers. And so we're trying to manage that the best that we can, but we're also trying to be really smart and thoughtful and strategic about how we deploy those vouchers in the coming years to make sure that there are enough to go around. So I just wanted to name that, that at the current numbers for those final two projects At 194 total units for Best Western and 101 projected units on Fox Street, if we got vouchers just for that 40% minimum requirement of the IGA for 30% AMI and below units, we would need 118 vouchers. And right now, we're still working through making sure that we are able to deliver the vouchers for those three projects that I'd mentioned before, Mosaic, Federal, and 1139 Delaware. It is for this reason that we're looking for some extended deadlines to give us some additional runway to figure out how to structure these final deals in ways that will be successful for us and for the end users and that they can actually get built. So now is where I will end with the specific asks. First of all, there are two reasons we're coming to you for amendment requests. The primary one is that the IGA is very specific that if there's ever going to be a reduction in the total number of units delivered, that triggers a need for an amendment. And so that is one of the asks here, and that is part of why we're coming to you. But the other piece is that we have also made modifications to the IGA over the past few years. The IGA did, as a pilot, also allowed for there to be some administrative modifications to things like extending some deadlines or... Shifting the number of units that we expected in this particular project, and maybe they're show up somewhere else that type of thing. So those there were a few modifications that were made as agreed to by CEO and by the executive director of host. And it is our obligation to also bring those back to the council so that, you know. what those were. So we're packaging everything together in what is being presented to you now. So this slide is the key amendments that we're asking for on the D3 direct side and the slide to follow will be the key amendments that we're requesting on the permanent supportive housing side. So for D3 Direct, again, we started out with this target of 1,300 units. I will be very candid. I wish we'd brought this to you sooner to say this is looking like a lower number, but here we are today. And so again, this is to speak to the 1,161 units that we actually built, but 959 of those are officially counted as D3 units because those are the ones that are deed restricted to 80% AMI and below. The other reason that the number is lower is actually that one of the developments that was originally listed on the D3 direct side and in that count was the Westridge Homes. Westridge Homes is a 70 plus year old public housing community in the West Colfax neighborhood, also in District 3. It's near the Knox Court light rail station, so it's another transit-oriented redevelopment opportunity. That housing is definitely obsolete, and DHA is in the process of putting together a redevelopment plan now for a first phase of redevelopment there. But that being said, Sun Valley took longer and took more money than was originally anticipated. And so there are not additional D3 funds left to go into the capital stack for that first phase of Westridge. So we are asking to take Westridge out of this equation. The original projection was to complete 164 units. We're planning 133 units now in our first phase, but not to use D3 dollars to do that. We have used all of the D3 dollars. And another key element of the program was that we could not was that while we were using D3 funds, we could not come to host or request any other form of assistance. And so that's also where we want to kind of take this off the table so that we can reopen opportunities for what will be needed to develop to develop Westridge. The final piece on this slide is just showing where there are some shifts in the, it's the same income bands of very low income, low income and moderate income being zero to 30% AMI, 30 to 60% and 60 to 80%. But you'll see that we ended up ultimately with a lot more units in that 30 to 60% AMI range and really largely reduced the 60 to 80% AMIs. And then finally, on the D3 permanent supportive housing side, we have a new ask there, which is, again, the original requirement was 1,200 units, with 600 of those, or 50% of those, being... the very low income deed restricted units. There was some ambiguity throughout the IGA. We've had a lot of debates back and forth about what was intended and what, and so we also, what we're proposing is to clarify that language to say it is 1,200 units total that will be affordable to 80% AMI and below. 600 of those will be permanently income restricted to 30% AMI and below. And The original was 1,200. We're asking for a reduction now to 1,100 units as the target. Right now, we're projecting if we keep in the full 194 units at Best Western and the 101 at Fox, we're projecting we'd end up at 1,168. So we'd be 32 units shy of the 1,200-unit target. But with that being said, we were just talking about the potential for actually making those projects a bit smaller. So we're looking for some flexibility in bringing down that total target to something that feels a little more reasonable in where we are in the market to 1,100. But instead of... Also saying it's at 50% that'll be deed restricted, very low income units, which would make it 550. We are keeping that at 600 because we are very much on target to still deliver 600 permanent supportive housing units. It would just be another 500 that would be that 30 to 80% AMI. We're also just as kind of a cleanup asking to extend the delivery deadlines for those final projects. And so we already through an administrative modification had extended our deadline for attaching development partners to the end of this year. And so that's another big reason why we wanted to come to you at this point to be able to extend that now before we hit that deadline. So we're asking for an additional two years to attach development partners, so it would be the end of 2028. But then ultimately, the ask at this time is to extend the deadline to deliver units, which means opening of those buildings, completing construction, and getting a certificate of occupancy. To coincide with the end of the program, which is 2038, our goal would be for it to happen much sooner, but we thought just in the interest of not kind of continuing to have these conversations that we would ask for that to be to the end to 2038. And then. The restrictive covenants piece really ties to the unit count I was sharing before. Every time we do a D3 project, we record a deed in favor of hosts on those properties to maintain the income restrictions. This is another place where we were just looking to clean up some language to avoid any confusion because we've had lenders come to us concerned that that if they built a project like Mercy has built at Crain's Landing, like CCH is looking to build at Federal, where They have the 40% units of PCH and then they have other units from 30 to 60 or 30 to 80% of AMI. The concern was that all of those units would have to be income restricted in perpetuity. And that becomes a financing problem that when, because they're getting tax credits, they are having other lenders that are in for 60 years or something like that, when we're extending that affordability for them, it's affecting their ability to get loans on the front end and it's affecting interest rates and ultimately is the type of deal term that can sink the whole deal. And I do not... ever like to speak in absolutes. And that way we all hear those things like, oh, if you do this, then this whole thing's going to fall apart. And like, I don't think it's that dire. In this case, I'm saying this because I truly have heard this and seen this consistently that, and just in dealing with lenders myself in recent years, there's The last two years, I've never dealt with deals in the way that I have. I've never seen this number of lenders and development partners looking for guarantees, really concrete, 100% guarantees that are not possible for us to give. And so this is where we want to make sure that we're able to get these projects over the finish line, and we think this is a really important deal term to allow that to happen. And then the final piece is the IGA allows for us to ask for a waiver related to the amount of funds that are used in each council district. So again, we had to hit at least six council districts, which we did. But in the IGA, it said you could not spend more than 15% of the funds in any one council district. If you did, you could request a waiver. So this is us asking for that waiver that we did have more than 15% in a few council districts. And so as we look back at it, it was largely a function of what land was available at the time, the prices of those properties, the opportunities like getting a hotel and using ARPA dollars and those types of things that matched at those times. And so we do have a table at the end of this slide deck that shows where we ended up. But this is our other ask is just to formalize that waiver and acknowledge that we were over 15% in certain districts. But again, those properties have been purchased at this time. So...

Awesome. Thank you, Aaron. That was super comprehensive, but this is just really, really complicated stuff. And like you said, it was a pilot and you don't know what you don't know when you're going into a pilot. And I think none of us could see what happened post COVID with the costs skyrocketing. Um, and we've seen this in many other pieces of the bot of the Elevate Denver bonds as well, so really appreciate the comprehensive explanation, because it was really easy to follow in a really complicated space. So good job keeping this before we get to questions. I want to just welcome council member Cashman to the meeting. Thanks for joining us, sir. Um, and I have council member Torres in the queue 1st. Thank you.

Uh, thank you both. Um, and I really appreciated the briefing beforehand because it is, um, it is a lot to try to figure out what's happening. And a lot of it is taking place in my district, which I love, but I also like, there are kind of, there were grand, I think, visions of how this would be applied. And so, um, just a couple of quick things. Um, I think considering to Councilman Sawyer's point, how much things changed in COVID. And it wasn't just, I think, just how difficult it was to keep construction going or keep business going as usual. There was also a holdup on acquiring supplies. What is it called? Chain Service chain. Supply chain. Supply chain. Thank you. Heavily disrupted. And then now you're dealing with this federal government and HUD and tariffs. It's all the things and so I'm just, um, I just want to say, um, I think it was visionary to create this bond partnership. Um, and I think where you got is pretty exceptional. I do want to point, um, I think on your slide 11, you've got, um. under the direct section, Westridge, which you described thoroughly and for my colleagues, when we did the West Area Plan, which Westridge is a part of, we already provided the future places guidance for what Westridge could become should funding become available for this future development because you already started having those conversations with community anticipating there would be a pipeline of funding that never materialized. There is in the plan guidance support for what was envisioned originally. We even went so far as to rezoning some of your property to accommodate that. So the land is ready. DHA is ready. I think you're just positioned for kind of when that window opens up to be able to do it. But I do want to ask about the other unchecked box, which is the Sun Valley, 202 units. And I want to make sure that I'm understanding. You weren't is that gateway 1 and gateway 2?

No, no, it's actually, um, it's the units that. Are it's the units. So, sorry, gateway North and South are total. I used to know this number, but it's like 195 or something. Um. No, sorry, I don't have the number in my head anymore, but the 202 are the units across all of those. Projects all 10 that are in the direct side of the program that are, it's our market rate. It's our unrestricted units. And so. So those are between 60% and 80% AMI, but they don't have deed restrictions.

And so they're not able to count towards this total for what reason?

Because of the specific language in the IGA.

They're under construction. They're completed. They're completed. Yep. Okay. And we're not trying to change that. We're just eliminating them. They don't qualify? No.

Based on, I mean, that's part of the conversation is that that's what we, we wanted to, I mean, we were presenting that. We, we completed 1161 units. Yeah. Um, it was through, um, some of the back and forth with the auditor's reports and things like that, in terms of how we're looking at the. what we're counting as D3 units and...

So is that hinging on the restriction? Yes. Okay, thank you for that. I saw in the IGA the two sections, the development affordable housing, 959 total units, acquisition of buildings or land, 1,100 units. And I don't know if you guys are talking about, like, do you do this again? Like, is this feasible? What does kind of a next or different version of this look like? Because I do think we've demonstrated some of the riskiness about being tied. I think DHA having, I think, the most restriction around its kind of federal connections, right? And being very subject to what's happening federally. But is there conversation about what a next version, if it happens, looks like?

Yeah, I think at the end of the presentation, at one point, we sort of had a where do we go from here slide. And so we were in those conversations. DHA is currently in an executive director search right now. And so it's a transition period for that agency. And look forward to resuming those conversations when a permanent CEO is named. You know, as we look at our affordability goals over the next five years and beyond, I think we've proven that this is a really effective vehicle for being able to galvanize development and create a pipeline, right? For us, it requires a long term You know, we're going to be paying on this until 2038, and we can't just continue making those kinds of commitments in perpetuity. But I do think that there is opportunity to look at this and figure out how to expand the pie and front-load some development, aligning with a new housing needs assessment, a new strategic plan in the coming years. So it remains a tool that, at host, we're really excited to continue conversations about and just, you know, looking for the right time to continue to move those forward.

All right, thank you. And I would just add from the DHA side, I would love if we can have the opportunity to share kind of what our pipeline looks like. There's a lot of opportunity related to we're going into redeveloping Westridge, the first phase there. We have a lot of our dispersed portfolio. It consists of scattered sites where we own single family homes, duplexes, quadplexes, a lot of different things in neighborhoods throughout the city of Denver. And I've been looking at kind of, as this is land that is already tax exempt, is this a place where we can add some gentle density or fill in some gaps, align it with what are the city's priorities as well and helping us understand what those needs are. That we have properties that exist today that could be good opportunities. And the reason I mentioned the tax exemption piece is that when it's already tax exempt, we're not taking it off of the tax rolls. We're adding more housing where it's needed and not increasing those property tax costs on those end users. And is that a way to go about some of this too? And so just a lot of different ideas, a lot of opportunities for us to talk through these things. And I would say that something like D3 is actually It was really important when we supercharge us on the HUD choice neighborhood grant, but those opportunities don't exist anymore. We redeveloped the Mariposa neighborhood through the HUD hope 6 program, which is no longer. We redevelop Sun Valley seated by 34Million dollars from the HUD choice neighborhood program. The most recent federal budget was. enough to fund one of those projects in the country. So we now, as we're looking to Westridge and we have other larger public housing communities that need to be redeveloped. At the end of the day, these are, it's obsolete housing. It is not accessible anymore. There are They're four and five bedroom townhome, two-story units for families where it's one bathroom and that bathroom is always upstairs. Those are things that we really want to be able to address and to redevelop these communities. So it's a little harder because we don't have that federal seating, but in some ways, the more that we're able to do some things locally, we won't have that conflict in the future with trying to meet what we had to do for our HUD requirements for Sun Valley and what we put into this IGA. That was kind of one of the big issues is that we didn't reconcile that super well from the start, but now we're not tied to HUD in the way that we're doing that redevelopment, but we do still need some seed money to get it moving.

Thanks, Sarah. Thank you. Great. Thank you.

Council President Romero-Campbell. Thank you, Madam Chair. And thank you for the presentation. It is complex. But you say it, and I'm like, oh, I'm following. Thank goodness. I appreciate the ability to articulate it so clearly. also just a comment about thinking about the size of the developments and warehousing folks and I think often times we want to get to large numbers and big bang for the buck but not always best practice for people and so I just like that thoughtfulness that you're bringing to and thinking about in future developments and incorporating in as part of the lessons learned so I just wanted to put that out there as a Thank you for doing that. My question was actually a little bit aligned with those 200 units that really stuck out. You had mentioned they're not for the deed restriction. Is there a deed restriction and it's just not the

in perpetuity or are they is there no restriction on those uh 200 units there's there's no recorded restriction on those um so we've been for years calling them market rate um i i tend to lean more on they're unrestricted because they are still in a market that is developing um in terms of being in sun valley and other things and it's still largely affordable housing and so were not charging luxury market rates there. So part of the issue here, this is the specific conflict that we had with the HUD Choice program that I, again, we will reflect it now. Our obligation as being a HUD Choice neighborhood was to create a mixed income community. So we were required to have market rate units that we built. And so that's something where we have a very rigid definition that we've created in the IGA that is just fundamentally at odds with what we also had to do to meet our federal requirements that we did not reconcile, but that were trying to surface now. So it's just a reality of the situation. That's why I think it's important to name that this is what we did, this is what we're counting, but I think it's still important, even those 202 that are there that aren't officially able to be counted because of how D3 units are defined.

Thank you. I appreciate that explanation. Thank you, Madam Chair. That's all.

Great. Thank you. Let's go online now to Councilwoman Alvarez.

Thank you so much. Thank you for all this great information. I was curious about the caps. I know you mentioned the cap being superseded, but it seems. Like, uh, you know, 41% when the cap was supposed to be 15 in district 8 particularly catches my eye. So I'm curious at what point did know that they hit the cap and. How did they authorize a purchase at that point?

So this is where I will speak to only what I know for certain because some of this happened, it predated my experience with the program. So in district date in particular, because that certainly jumps out to us as well. So again, the, so we would have exceeded the 15% with the Mosaic Community Campus purchase in 2021. So I was on the selling end then, so I can get back to you to try to understand more of what was happening internally to the extent possible with that decision, because that then did take us to 30%. I was a part of the Best Western piece in 2023, and that's what took us from 30 percent to 41 percent in that district. And I could say that was where we—we knew that—I was looking to request a waiver then. It was getting complicated with all of the other amendments that we're talking about and how to bring that forward. But because it was set forth as you can exceed this number you just need to you know we need to talk about it and understand that's what's happening um and this was this opportunity to get some immediate shelter for the city and to use those arpa dollars that was what pushed us in that direction more so than where we were with respect to this cap that's interesting i appreciate the answer

Yes, there and then as far as the perpetual restrictions and changing the language on the affordability requirements, I think it could be reasonable, but I would like to see a property by property covenant schedule showing the number of restricted units. Applicable in my level and restriction expiration date. And the enforcement party, if that could be provided, that would help me. Feel more comfortable with that piece. Absolutely absolutely working on that. Great. And then as far as the Westridge property. So, is the plan to just look for a private partner outside of. Government now, or what is what does that path look like?

Thank you. So when we've done the prior redevelopments, neighborhood scale redevelopments, when we say that one was a Hope 6 and one was a HUD Choice neighborhood, that was in that having that seed money allowed us to do a master plan for the entire area at once and move forward also quickly with CHAFA would give us a set aside, for example, for Sun Valley. In 2016, we already knew that we'd have tax credit awards for all seven of those developments. So we don't have that either now. So when we're talking about Westridge, DHA is going to be self-developing a first phase there. And we're also planning the infrastructure master plan and kind of the broader future redevelopment. But instead of building seven buildings in six years, we're only planning for those first two right now. We are looking at, there probably will be more opportunities for development partners in that redevelopment than we've, so it won't, we'll have significant self-development there, but not as much as we had in the past. And this is, we're looking at this as more of a 20-year redevelopment versus a six to 10-year redevelopment. So at this point, we're only planning that first phase because that's what we, And we are operating in a more traditional sense in terms of When you go to get tax credits, you're not going to be able to go apply again to CHFA until you've completed your prior project and gotten at least up. They're going to look at geographic concentration, things like that. So it's not going to be the same path that we can say all of these are going to be affordable developments in this one area. But we have not yet... planned for what those future phases are gonna be. We're working on phase one right now. We're going in for tax credits next year. And we're doing a lot of really deep, important community engagement work to understand what else is gonna be possible on that site over time.

Okay, that's helpful. And then lastly, I am concerned about the 2038 year for extension. What kind of reporting can we expect for those next 12 years? My concern is that these properties could just sit and nothing could happen to them. Will there be milestones or are we just planning on not having any guardrails until it expires?

So we submit, DHA submits quarterly reports to host right now related to our development progress. We have annual reporting requirements within the IGA, and we've just wanted to get together to understand what is the ideal format for that and are happy to work with you on council to understand what you would like to see as well. So... So again, there are existing.

So how did you get to that number of 2038?

2038 is when the bonds mature now. So the end of the program right now is 2038. We could certainly have an earlier timeline. I think originally we looked at delivery in 2031, but now that we're asking for an extension to attach the development partners to 2028, given how much time it takes to put a project together, perhaps something like 2035 could be more reasonable. We're certainly open to bringing that forward from 2038 and also more than happy to work with you all to understand what types of reporting requirements you'd want and need to see along the way.

Yeah, I think, if I may, the fact is that this agreement will be live until 2038 because, as I mentioned before, we'll be repaying until 2038. So I think the big question here is, how do we best keep Council informed on that process as it goes forward? There's a couple of opportunities through the quarterly report and the annual report, and happy to discuss with you all about how you would like us to keep you informed for the next 12 years.

Okay, thank you very much.

Thank you.

All right, that is it for the queue. This is an action item, so I will need a motion and a second. So moved. Seconded by Tora, seconded by Council President. Do we need a roll call vote or anything? Mm-hmm. Councilwoman Alvidrez, checking in on you.

I'm good, thank you.

Great.

Councilwoman Lewis has been here.

You didn't recognize me, but I am here.

I'm just listening. Oh, I'm so sorry. You know what? It's okay. I did not even see that you were on Zoom. I apologize, Councilwoman Lewis. Do you have any questions? No, it's okay. Don't worry about it. No questions. I'm so sorry about that. It's all good. Hey, welcome to the meeting. And we're done. No, I'm just kidding. Sorry about that. I apologize. So it looks like we do not need a roll call vote on this. And so we will move ahead to the floor. Thank you all very much. We have no items on consent. So at this point, we are adjourned. Thanks for joining us.