1995-08-29 (Report) (3)
...
u
PART 3.
Summary of Subcommittee meeting with Jim Williams
3-]
SUMMARY OF SUBCOMMITTEE MEETING
JUNE 1995
The Housing Subcommittee, composed of Board Members Bond and Hano, met with staff'
(Director Holder, Coordinator Brown, and Assistant City Manager Benson) and Consultant Jim
Williams to discuss a housing program for the City. Issues were raised regarding the scope of the
program, staffing requirements and methods of financing. The primary areas of the discussion
were:
. Primary citizen group to be assisted
. Method of obtaining housing assistance programs
. Private or public ownership
. Methods of financing the housing program
· Staffing requirements and City costs for a housing program.
Citizen Group to be Assisted
Rental housing programs can focus their assistance to families, senior citizens or both. When the
focus is on families, the rental unitio are usually larger with a large proportion of three- and four-
bedroom units in the mix to provide for families offour or more. Multi-family units require an
overall greater number of parking spaces per bedroom, since there are usually two or more
vehicles for each family unit. On-site amenities are usually oriented toward child care or play
areas for the children. The proximity to services, such as markets, pharmacies, cleaners, and
medical care facilities are not as critical as with senior housing.
Senior housing requires one and two-bedroom units. Security is critical since a large number of
the occupants may live alone. The proportion of women occupant$ is usually higher than men.
The parking space requirement is less than one vehicle per bedroom. Depending on the area and
availability of public transportation, the parking spaces can range from 0.5 to 0.75 per bedroom.
As noted above, the proximity to medical, pharmacy and food market facilities is very important
due to reduced mobility of residents. Most new senior units now being developed in Southern
California provide a washer and dryer in the rental unit and, at least, an on-site laundry facility
would be imperative.
3-~
Obtaining Housing Programs
The options discussed for obtaining rental units for the City housing program were in the
following general categories:
· Housing Authority and/or private developer construct new housing.
· Housing Authority acquires and rehabilitates existing rental units.
· Housing Authority provides rehabilitation assistance to private owners of existing rental
units. (City has rental rehabilitation program funded by CDBG )
..,:11:
New Construction - building and ownership
The construction of new rental units will probably require some form of subsidy because of
current rental rates in the area. The revenue generated from rents will not support the cost of
land and construction as well as the associated miscellaneous costs, such as financing and desi~
costs.
The following ownership options are possible:
. Private profit or nonprofit developer builds and owns land and building. Assistance
from the City or the Housing Authority can came from:
1. Direct cash grant or loan from CDBG or HOME (only nonprofit developer).
2. Developer can obtain low income housing tax credits in a joint project with the
Housing Authority and the developer. City would be asked for additional subsidy.
Developer could own all or part of the project.
. Housing Authority owns the project.
. Housing Authority owns the land and leases land on long term lease hold to the
developer. The developer owns the building. Normal time on lease hold is 30-50 years.
Acquire and rehabiiitate existing housing - how acquire and ownership
The following ownership options are:
. Housing Authority owns and contracts with a private housing management agency for
operation of the units. One of the issues the City and the Authority will need to consider
is the minimum number of units which would be acquired at a site. Most public projects
are based on a minimum of 10 units at a site and some require a minimum of 25 in order to
achieve a higher level of operating efficiency.
. Housing Authority owns and manages units.
. City would provide a loan or grant from CDBG or HOME to a nonprofit to acquire and
rehabilitate existing housing.
Private or Public Ownership
Whether the Housing Authority owns the rental housing units or whether the City Council wishes
to assist privately owned units is controlled primarily by the risks of ownership and the desire to
retain control of the assisted property over a longer period oftime. The Housing Authority can
enter into an agreement with a private agency for the management and operation of the units. The
3-3
.-,r.. ,..'
.
. , . J i J " . ..'
; '" . I .J, - .
risks of ownership, the primary one being meeting the loan or bond payments, would continue to
rest with the Authority. With the assistance of privately owned units, depending on the nature of
financing the project, all or part of this risk may be eliminated. For example, rehabilitation 102l1s
by the Authority may be secured by the underlying value of the property assisted which could be
sold in a foreclosure proceeding if a default on the loan repayment occurred. Since the conditions
of each potential housing project vary greatly, the evaluation of risk must occur with each project
in order for the City Council to m~e the decision of public or private ownership.
When the Authority or the City provides assistance to private owners, the conditions imposed for
meeting low income assistance terminate within a specified period oftime usually controlled by
the time during which the assistance or loan is in effect. When the Authority owns property, the
conditions for low income assistance remain in effect so long as the Authority continues
ownership. For this reason, some cities choose to retain property ownership through their
housing authority.
Methods of Financing
1. The City provides the developer either grants or loans. CDBG or HOME funds can be used
for a nonprofit developer. The City can borrow money using future CDBG entitlement grants as
collateral under Section 108.
2. The Housing Authority can fonn a nonprofit and develop a new construction project under
Section 202 (HUD funded senior housing); or the City and/or the Housing Authority can assist a
nonprofit in app,lying for Section 202 funding from HUD.
3. The Housing Authority, which will own the property, borrows funds through bonds or a bank.
Usually housing assistance programs require some form of borrowing by the City or the
Authority. This borrowing may, in some instances, take the form of bonds issued by the
Authority with the debt service payments based in part on the rental income from the units and in
part on grant or loan assistance programs of the state or federal governments. When bonds are
issued by the Authority, the responsibility for repayment and, therefore the associated risk,
remains with the Authority. There are ways to limit this risk through various bond insurance
programs, through trust deeds against the assisted property, or through additional owner or
developer guarantees of assets. This issue of financing risk is one which should be carefully
evaluated and understood before establishing any housing program.
For longer term borrowing, greater than 10 years, the usual financing method is public bonds; but
for 10 years or less, the City may want to review a bank loan. The costs of borrowing for a bank
loan are less than for a bond issue. With the City or its Housing Authority guaranteeing the loan,
banks are usually receptive to providing loan quotations to cities to compare with tbe cost of
issuing short term bonds or notes. Loan rates arl~ usually competitive with bond rates and, if the
City reserve funds are deposited with the lending bank, better loan rates can sometimes be
achieved.
4. The City issues mortgage revenue bonds for a, private for profit or nonprofit developer.
3-4
'. -.
Risk considerations if the Housing Authority issues bonds
lithe Housing Authority issues bonds and the project fails, the City has no responsibility for
payment of the bonds. The default does not impact the bond rating of the City. However, the
City would need to explain the situation the next time the City issues bonds.
In practical tenns, the City Council may not want the Housing Authority to go into default on the
bonds. They may determine to assist the Housing Authority on a voluntary basis.
Staffing Requirements for a Housing Program
Whether the City wishes to create a housing staff to manage a program will depend on the size of
the program it adopts. If the City Council chooses to enter into a program of ownership and
management ofa relatively large number of units, say 100 or more, then full time staff would be
required, including positions for acquisition and project management. If, on the other hand, the
City Council chooses to pursue a program with fewer units involved or with assistance to
privately owned units, the program can probably be managed with existing staff. As discussed
above, the Authority can contract with a private property management company if the rental units
are publicly owned. Public ownership does not, of itself, require the addition to City staff. Most
cities find that until the City or its Housing Authority own or assist 75 to 100 units or more, a
minimal housing staffis required. Depending on the amount of time allowed for the establishment
of the program, usually 1 to 1.5 positions are sufficient to create and manage the housing
program. The staffing required for larger or more aggressive programs will depend entirely on
the nature of the program, construction or rehabilitation, whether public or private management,
and the time allowed to establish the program.
Advantages and Disadvantages of the City having a Housing Authority
A.dvantages:
. The Housing Authority can issue housing revenue bonds.
. The City cannot own or manage housing. A Housing Authority or Redevelopment
Agency is needed to own and manage housing.
Disadvantag~
. Technically, there are no disadvantages. The Housing Authority can be used as little or as
much as the City wishes. However, the establishment of the Housing Authority and the
subsequent approval of a five year plan for the provision of housing sets up production
expectations by the Community.
3-5
~ . . - , . .
'. 'I'. P " .
.."I
PART 4. Low Income Housing Tax Credits
Federal and State Low Income Tax Credits, Goldfarb & Lipman.
Proposed Changes to the Allocation Process
Allocation Process
Target Areas
134 --I
GOLDFARB & LIPMAN
FEDERAL AND STATE LOW~INCOME
HOUSING TAX CREDITS
July, 1995
Copyright c 1995 by Goldfarb & Lipman
(415) 788-6336
(213) 627-6336
B4-J.
GOLDFARB & LIPMAN
TABLE OF CONTENTS
Page
I. FEDERAL LOW-INCOME HOUSING TAX CREDIT ... ............. 1
A. .An1ount. . . II . . . .. .. . . II . .. ..... ..... II II . . . . .. 1
B. Set-Aside Requirement . .. .. . . . . . . . . . . . . . . . . . . .. 2
C. Rent Restriction .. . .... . . .. .............. 3
D. Other Restrictions ......... . .. ... ...,... II . . . . . .. 3
E. Penalty for Noncompliance. .. . .. ... ............... 4
F. Available Credits .. . .. ...... . ........... 5
G. Transferability... ... . .. .............. 5
H. Carryover Allocation. .. ... . .. ... ..... ..... 6
II. CALIFORNIA LOW-INCOME HOUSING TAX CREDIT . . .......... 6
A. .An1ount ..... .. ..... . .... ................... 6
B. Difficult to Develop Areas/Qualified Census Tracts . .......... 7
C. No Pro-Ration of First Year Credit. .. ... ... ........... 7
D. Restriction on Cash Distributions . . . .. .... ............. 7
E. Increase in Qualified Basis .. .... .. .......... 8
F. Total State Credit Authority. . . . . . . . . . . . .. . . . . . . . . .. 8
G. Carryover of State Allocation Authority .................. 8
H. Compliance Period . . .. .... ...... ............. 8
I. Regulatory Agreement ........................ '. . . . .. 9
III. TCAC ALLOCATION PROCESS. . . . . . .. ... ................. 9
IV. REGULATORY AGREEMENT . . . . . . . . . . . . . . .. ........ 10
INHSEIMM.PSO
-i-
134-3
GOLDFARB & LIPMAN
FEDERAL AND STATE LOW-INCOME HOUSING TAX CREDn:S
I. FEDERAL LOW-INCOME HOUSING TAX CREDIT
The' federal low-income housing tax credit is available to owners of low-income
rental housing. It was originally enacted to replace tax incentives for low-income
housing such as preferential depreciation schedules, five year amc::,....dzation of
rehabilitation expenditures and special treatment of construction period interest and
taxes.
The Omnibus Budget Reconciliation Act of 1993 (HR 2264) signed on August
10, 1993 (the "Act") permanently extended the federal low-income housing tax credit.
The permanent extension of the credit was dovetailed with the prior expiration date of
June 30, 1992, so that the credit is continued as though no expiration of the credit
occurred. The Act also made a number of modifications most of which were effective
with the signing of the Act on August 10, 1993.
A. Amount. The credit is claimed in annual installments over ten years.
The maximum annual credit is 9% of eligible costs for new construction and
rehabilitation. The maximum rate is 4% for the acquisition cost of existing housing
which was placed in service more than 10 years before the present acquisition. The
IRS may waive the 10-year rule for buildings which currently have low-income (but
not tax credit) units that are at risk of being converted to market rate units and in
the case of certain foreclosures. Project owners can also receive a 4% credit for the
cost of new construction and rehabilitation if the building receives other federal
subsidies, e.g., tax exempt bond financing or any federal loans (direct or indirect) with
an interest rate below the applicable federal rate. HUD 221(d)(3) BMIR and 236
loans, as well as loans under the Farmers' Home Administration Section 515, are
examples of federal subsidies. Loans of Community Development Block Grant funds
are specifically excluded from consideration as federal subsidies. HOME funds are
considered federal subsidies; however, under the Act HOME funds may be exempted
from federal subsidy treatment if certain conditions discussed below are met.
The credit amounts are intended to equal the present value of 70% and 30% of
eligible costs, respectively; therefore, the actual rates are adjusted monthly to reflect
changing interest rates. The actual percentage for computing the credit is generally
detemlined and fixed in the month the building is placed in service, or if the
appropriate election is made, when a project receives a carryover allocation.
Projects eligible for the 4% credit with respect to acquisition costs may also
qualify for the 9% rehabilitation credit. Rehabilitation expenditures claimed in
INHSEIMM.PSO
-1-
BY-4
--..
GOLDFARB & LIPMAN
connection with the acquisition of an existing building must average at least $3,000
per unit and must total at least 10% of the adjusted basis of the building to qualify
for the 9% credit.
1, Oualified Basis. The "qualified" basis on which the credit is
computed is equal to the proportion of "eligible" basis attributable to the low~income
units. TlW proportion equals the lesser of (1) the proportion of the number of low~
income units to the total number of units, and (2) the proportion of floor space of
low-income units to the total floor space of all units. The determination of this
proportion is generally made at the end of the first taxable year after placement in
service. However, if the number of low-income units or the floor space of low-
income units increases after a building is placed in service, credits claimed on the
additional "qualified" basis will be equal to two-thirds of the credit percentage allowed
for the initial "qualified" basis for the remainder of the 15 year compliance period
with respect to the additional "qualified" basis.
2. "Eligible" Basis. "Eligible" basis is the adjusted basis of a new
building or any qualified existing building. The cost of land or any property which is
not residential rental property is not included in eligible basis. But, the cost of
common areas and amenities nonnally associated with residential rental property is
included. "Eligible" basis must be reduced by the cost attributable to any market rate
units in a project which are above the average quality standard of the low-income
units. Likewise, rehabilitation expenditures which improve any unit above the
standard of the low-income units cannot be included in eligible basis. Grants, to the
extent funded by the federal government, such as Community Development Block
Grants, and Rental Rehabilitation Grants, must be excluded from eligible basis.
For buildings which are located in areas determined by HUD to be qualified
census tracts or difficult to develop areas, the owner may elect to increase the
otherwise eligible basis by 30%. This option is not available to buildings which are
assisted by HOME funds, if an election is made to have the HOME funds not be
considered a federal subsid~r, and to use the 9% credit.
B. Set-Aside Requirement. Property is eligible for the credit if (1) at least
20% of the housing units in the project are occupied by individuals with incomes of
50% or less olf area median income, adjusted for family size, or (2) at least 40% of
the units in the project are occupied by individuals with incomes of 600/0 or less of the
area median, adjusted for family size. [n order to use HOME funds with the 9%
credit, at least 40% of the housing units ll:.\. the project must be occupied by
individuals with incomes of 50% or less of area median income. The owner must
make the detennination that a tenant satisfies the income requirement at least
lNHSE1MM.P50
-2~
B4-5
I
GOLDFARB & LIPMAN
annually. Under the Act the annual certification requirement may be waived if the
building is 100% low-income.
The minimum set-aside which will apply to the building or rehabilitated
property must generally be elected when the building is placed in service. The set-
aside requirements must be met by the close of the first year of the credit period
(usually the year in which the building or rehabilitated property is placed in service,
or by election, the following taxable year). The owner must agree to maintain this
set-aside for the greater of 30 years or the period mandated by the state. (See
discussion of Regulatory Agreement in Part IV below.) Each year the taxpayer will be
required to certify to the IRS that the project has complied with the set-aside
requirement, which is to be computed on the aggregate residential rental units in all
existing buildings in a project.
C. Rent Restriction. The rent charged' for the eligible units may not exceed
30% of the qualifying income limitations, adjusted for the size of the family deemed
to occupy the unit. Prior to 1990, the rent restriction was 30% of gross income
applicable to the specific number of individuals occupying the unit. To prevent the
landlords from raising the rent by increasing the number of tenants, beginning in
1990 the law based the rent on an imputed number of occupants in a unit. A unit
without a separate bedroom is deemed to house 1 person. Other units are deemed to
house 1.5 persons per bedroom.
Gross rent includes the cost of any utilities other than telephone. If the tenant
is required to pay any utilities directly, the maximwn rent that may be charged must
be reduced by a utility allowance prescribed by the IRS, which will take into
consideration the procedures under Section 8 of the United States Housing Act of
1937 ("Section 8"). The gross rent limitation applies only to payments made directly
by the tenant and does not apply to any rental assistance payments made on behalf of
the tenant such as through Section 8 or certain other governmental payments for
supportive services.
The imputed limitation does not apply to determine if the set-aside is met, but
is used !to determine if a unit is rent-restricted. The area median gross income for the
purpose of detennining the set-aside, and the adjustment to art~a median gross income
for the purpose of detennining the rent restriction are determined under Section 8 of
the United States Housing Act of 1937.
D. Other Restrictions. In addition to the requirement tnat tenants meet
income limitations and the units be rent-restricted, there are other requirements in
order to qualify as a low-income unit. The unit must be available to the general
INHSEIMM.PSO
-3-
BY-b
GOLDFARB & LIPMAN
public, suitable for occupancy and not used on a transient basis. A unit is not
considered "transient" if it contains sleeping, kitchen and bathroom facUities and is
located in a building operating under a transitional housing for the homeless program.
Single room occupancy units are not considered to be rented on a transient basis
merely because they are rented on a month-to-month basis.
Originally low-income units could not be occupied solely by students unless
they were entitled to file a joint income tax return. The Act broadened the categories
of students who may live in the units which qualify for credit. Individuals who are
students and either receive assistance under Title IV of the Social Security Act, or are
enrolled in job training programs receiving assistance under Federal, state or local
laws such as Job Training Partnership Act, may occupy a tax credit unit. In addition,
full-time students who are mamed and file a joint return, and single parent students
(if neither the student nor the children residing with the student is a dependant of
another individual) are qualified to occupy a tax credit unit.
E. Penalty for Noncomplia~. The penalty for any building failing to
comply with the minimum set -aside requirement or the gross rent requirement during
the IS-year compliance period is disallowance of any further tax credit and recapture
of the accelerated portion of the credit for all previous years (if noncompliance is
corrected within a reasonable time, there will not be any recapture). The accelerated
portion of the credit which is recaptured in the year of noncompliance is equal to one-
third of the credit claimed each year if the violation occurs during the first 11 years,
and is four-fifteenths for violations during the twelfth year, three-fifteenths for
violations during the thirteenth year, two-fifteenths for violations during the
fourteenth year, and one-fifteenth for violations during the fifteenth year. These
amounts are recaptured with interest from the date the recapture amount is claimed.
The interest rate will be the "overpayment" rate under IRe ~ 6621, which is equal to
two percentage points above the short-tenn federal rate.
If a project initially exceeds the minimum set-aside requirement of 20% or 40%,
and later the percentage of low-income units upon which the credit may be claimed
decreases, recapture will be limited to that portion of the credit attributable to the
basis which is no longer qualified if the project still continues to satisfy the minimum
set-aside requirements. The recapture amount with regard to units which no longer
qualify is computed as described above. For example, if a taxpayer claimed the credit
for a project based on a "qualified" basis of 35% of the project allocated to units
occupied by individuals with incomes of 50% of less of area median income, and
during the first ten years the qualified basis dropped to 25% of the project because
vacancies were filled by tenants with non-qualifying incomes, the minimum set-aside
requirement of 20% still would be satisfied. Therefore, recapture would be triggered
INHSEIMM.PSO
.4-
BY-7
GOLDFARB & LIPMAN
only on the credit amount allocable to the 10% basis of the project no longer eligible
for the credit.
Under the Act, the IRS may waive de minimis errors in complying with the set-
asides. Likewise, if there is a de minimis change in the amount of the qualifying basis
which is attributable to changes in the floor space for low-income units, but the
building continues to qualify as a low income building) no recapture will occur.
A unit occupied by a household whose income increases above the limitation,
will continue to be a low-income unit, if the unit remain\) rent-restricted. If the
household's income increases to 140% of the income limitation, then the next
available unit must be rented to a tenant whose income is above the limitation.
Further, if a unit fails to comply because a tenant's income increases, the project
owner is not _equired to evict tenant to return the project to compliance so long as
the unit remains rent-restricted. The project owner, however, is required to rent each
rental unit of comparable or smaller size that becomes vacant while the project is not
in compliance to a tenant having a qualifying income.
F. Available Credits. The total dollar amount of annual credits that may be
issued by each state is equal to $1.25 per state resident. Ten percent of the credit
authority must be reserved for projects developed by tax-exempt, non-profit
organizations, which are not controlled by for-profit organizations and which have as
an exempt purpose the fostering of low-income housing. Eligible housing financed
with the proceeds of tax-exempt bonds receiving an allocation under the bond volume
cap qualify for the credit without reducing a state's credit authority. The California
Tax Credit Allocation Committee C'TCACIt) has been designated the State agency to
administer Califonua's federal and State authority. States have the authority to
allocate less than the maximum allowable credit percentages or to allow a smaller
lIqualifiedlt basis on which the credit is computed. The credit agency's authority is
reduced by the amount equal to the credit percentage multiplied by the qualified basis
for which an allocation is granted by the agency. A state may carry oveI' any unused
credit authority from one year to the next year; however, any amount not used in the
subsequent year must be returned to the national pool. National pool credits are
allocated to states which have used up their allocation in prior years.
~
G. Transferabilitt. Recapture is triggered if the taxpayer disposes of a
building receiving the credit, unless the seller posts a bond to the IRS in an amount
satisfactory to the IRS, and provided it can be reasonably expected that the building
will continue to be in compliance for the 'remainder of the compliance period.
INHSEIMM.P50
-5-
BLj-'6
GOLDFARB & LIPMAN
The purchaser of the building during the compliance period, who maintains the
building as a low~income building, will be able to take the credit to the extent the
seller could have taken it; provided, that the seller had been allowed a credit. The
Code requires that the credit be divided between the buyer and the seller based upon
the number of days the project was ovv'1led by each. However, the IRS may in the
future issue regulations providing that the buyer and seller may agree to use either
the exact number of days or th,~ mid-month convention to determine the division of
the credit in the month of disposition. If the sale is a recapture, event, no credit is
allowed to the seller in the year of sale.
H. ~ml-Jver Allocation. Although the law generally provides that the
building will be placed into service in the same year as it receives a tax credit
allocation, in practice, most projects rely on the carryover allocation exception. In
order to receive a carryover allocation, the owner must have incurred more than 10%
of the reasonably expected basis in the project by the end of the year the allocation is
received. For this purpose, basis in the project means basis in land and depreciable
real property which, expected to be a part of the project. If a project receives a
carryover allocation, the project may be placed in service within 2 years after the end
of the year in which it receives the carryover allocation.
Careful planning and consideration should be given to meeting this test, as it is
critical to the validity of the tax credit allo\~ation itself. An allocation is invalid unless
the ten per cent test is met. TCAC has imposed an earlier deadline to assure that the
federal year end deadline is not violated.
II. CALIFORNIA LOW-INCOME HOUSING TAX CREDIT
In September 1987, California enncted the State low~ income housing tax
credit, which is modeled after its federal counterpart with the following important
exceptions:
A. Amount. The credit period under tht~ State law is four years, and the
amount of the credit for projects which are not "federally subsidiz,~d" totals 30% over
the credit period. The amount of the annual credit for the first thtee years is the
same as the applicable percentage established by the Internal Revenue Service for the
federal "9% credit." The amount of the credit for tht~ fourth year equals 30% less the
sum of the credits for the first three years.
For a qualified low~income buildin'g which is either (a) a fedel'aUjl ~ubsidized
new building or (b) an existing building that is "at risk of conversion": the ..unount of
annual credit for the first three yean, is the same as the applicablt.~ perce,ntage
INHSEIMM.PSO
-6-
BY-C)
GOLDFARB & LIPMAN
designated by the Internal Revenue Service for the federal "4% credit". The amount of
credit for the fourth year equals 13% less the sum of credits for the first three years.
A building which is "at risk of conversion" is an existh,g building which meets
each of the following criteria:
1. It is not owned by a qualified nonprofit organization. A qualified
nonprofit organization is tax exempt pursuant to Internal Revenue Code Section
501(c)(3) or (4), is not affiliated with or controlled by a for-profit organization and
one of the exempt purposes of the organization is fostering low-income housing.
2. It is federally assisted, and the low-income use restrictions will
tenninate if the mortgage is eligible for prepayment under Subtitle 13 of the
Emergency Low Income Housing Act of 1987 or under Section 502(<:) of the Housing
Act of 1949, within three calendar years after the year of application to TCAC.
3. The person acquiring the building agrees to enter into a regulatory
agreement that requires the building to be operated pursuant to the State low-income
housing credit provisions for the longer of 55 years or the life of the building.
4. The rehabilitation expenditures for the building meet the
requirements of the federal tax credit law except that the expenditures do not need to
total at least 10% of the adjusted basis in the building.
There are special rules for pre-1990 projects which are not discussed in this
brief overview.
B. Difficult to Develop Areas/Qualified Census Tracts. Under the federal tax
credit, buildings in difficult to develop areas or certain qualified census tracts are
entitled to a 130% adjustment to the tax credit eligible basis. If TCAC allocates State
tax credits to these buildings, the federal credit can only be allowed with regard to
100% of the basis.
C. No Pro-Ration of First Year Credit. In the first taxable year in which a
project is placed in service, the taxpayer will be eligible for a full credit regardless of
when during that year the project is placed in service or occupied. For the federal
credit, the first year's credit is pro-rated based on the number of months the project is
occupied, and that portion of the first year's credit which cannot be used is carried
over to the eleventh year.
INHSEIMM.PSO
-7-
~4 - 10
GOLDFARB & LIPMAN
D. Restriction on Cash Ojstributiom. The amount of cash distributions that
an investor in the project can receive from operations of a project, less lequired
reserves, is limited to either of the following at the election of the taxpayer:
1. An amount not to exceed 8% of the lesser of (1) owner equity
actually paid to date (not including any amounts not paid on an investor note); or (2)
20% of the adjusted basis of the building as of the close of the first income year of
the credit period. h.1 amount allowed but not available for distribution under this
formula during the first five years of the credit compliance may accumulate and be
distributed in the first 15 years of compliance; or
2. The amount of cash flow from the units in the building which are
not low~income units. Cash flow and operating costs shall be computed by using the
proportion of floor space of low-income units to all units in the project.
Any other net cash flow must be used to reduce the rents or increase the
number of low-income units. The federal credit does not restrict the return an
investor may receive.
E. Increase in Qualified Basis. If the "qualified" basis of a building increases
after the first compliance year, for instance if the number of low-income units or floor
space for low-income units increases, then the project owner is eligible for a credit on
the increased basis. The credit on the increase in basis is calculated by using the
appropriate state percentage for the project. The project owner is entitled to take the
credit on the increase in basis for a four-year perloW. beginning with the first year in
which the increase in basis occurs; provided that the total credit cannot exceed the
project's credit allocation.
F. Total State Credit Authority. The total amount of State tax credit that
may be granted annually cannot exceed $35 million, plus any carryover from a
previous years plus the amount of returned housing credit in that year. The total
amount of the credit allocated to a project for the four year credit period reduces the
State's annual housing credit authority in the year the credit is allocated.
G. Canvover of State Allocation Authority. Any unallocated State credit
authority in one year may be carried over to subsequent years until fully allocated.
H. Compliance Period. The statutory compliance period for the set-aside
and rent requirements is 30 years with tne following exception: if a project is not
economically feasible after the first 18 years of the compliance period, the project
owner may remove, as necessary, one or more of the low-income units from the set-
INHSEIMM.PSO
-8-
~4-'\
GOLDFARB & LIPMAN
aside and rent requirements of Section 42 of the Internal Revenue Code to enable the
project to become economically feasible. The project owner must return the next
available units to low-income use, subject to the set-aside and rent restrictions, if and
when it is economically feasible to do so.
I. Re~latory A~eement. The requirements for the credit are enforced
through a regulatory agreement between TCAC and the project owner rather than
recapture of the credit. The regulatory agreement is discussed in Part rv below.
ur. TCAC ALLOCATION PROCESS
Federal and State housing credit dollar amounts must be allocated by TCAC
pursuant to a qualified allocation plan. The qualified allocation plan is amended from
time to time and should be consulted for the latest procedures and qualifying criteria.
The State law provides that TCAC shall allocate the federal and State housing credits
up to three times a year, subject to adjustments due to changes in State or federal
law. TCAC is presently in the process of revising the qualified allocation plan perhaps
reducing the number of annual allocation rounds.
TCAC is also required to evaluate each project taking into consideration sources
and uses of funds and total project financing, proceeds to be generated by tax
benefits, percentages of housing credit dollar amount used for project costs other than
intermediaries and~ under the new Act, the reasonableness of operational and
developmental costs. The standards of reasonableness are set by state agencies such
as TCAC, based upon facts and circumstances including the location of the project.
These determinations are made at the time of original application for tax credits, at
the time of allocation and at the placed in service date.
TCAC evaluates tax exempt bond projects to make certain that these projects
comply with all the requirements of the plan. However, because credits for tax
exempt bond projects do not count against the state's ceiling, such projects do not
compete with other projects for tax credits.
[n addition, the federal and State law provide that the following criteria must
be met at the time an application is filed with TCAC and that the criteria be included
in the qualified allocation plan (the ''Threshold Requiremeni:s"):
(i) there is need in the community for low-income housing; (ii) sufficient
funding is available to construct and opetate the housing project; (ill) the project
sponsor must have secured either construction or pennanent financing commitments
for at least one-half of the estimated financing of the project; (iv) the housing sponsor
INHSEIMM.PSO
-9-
~~- ,~
GOLDFARB & LIPMAN
should have site control; (v) the project is in compliance with all local land use and
zoning ordinances; (vi) the project development team is experienced and has the
financial capacity to ensure project completion and operation through the compliance
perlod; and (vii) the amount of the tax credit must be necessary for the financial
f5asibility of the project throughout the compliance period taking into account certain
financial factors, including a development fee as calculated pursuant to a factor
detennined by TCAC.
TCAC uses the following statutorily mandated criteria in allocating tax credits
for projects that meet the Threshold Requirements.
1. Projects serving very low-income tenants;
2. Extending the maximum tompliance period to 55 years; and
3. Projects with public agency long-term financial support of at least
15%, or with owner equity of at least 30%, of total development
cost.
IV. REGUlATORY AGREEMENT
The regulatory agreement incorporates the requirements of the State and the
federal low-income housing tax credit provisions. The regulatory agreement is for a
term at least as long as the 30-year compliance period but typically 55 years. It is
recorded in the official records of the county where the project is located as a
restrictive covenant binding on the project owner and its successors and provides for
enforcement by certain State and local agencies as well as prospective, present, or
future tenants of the project whose household incomes are within the applicable
income limits for the project. The regulatory agreement prohibits the sale of a portion
of the building to anyone who does not acquire the entire building and prohibits the
discrimination against a prospective tenant on the basis of the tenants' status as a
Section 8 certificate or voucher holder. The remedies available if a project owner
does not comply with the conditions of the agreement include collection of rents from
the project, taking possession of the project, specific performance, receivership, or any
other relief available under the law. The regulatory agreement also provides that the
project owner must give advance notice to those State and local agencies that can
enforce the regulatory agreement if the project owner plans to remove low-income
units from the set-aside and rent restrictions in order to achieve economic feasibility.
[t requires that the project owner notify the relevant State and local agencies if there
is an IRS determination that the project is not in compliance with federal low-income
housing tax credit provision. The regulatory agreement may be subordinated to the
encumbrances of institutional lenders financing the project.
INHSEIMM.PSO
-10-
]4-\~
\\J
GOLDFARB & LIPMAN
"
,"!
housing tax credit provision. The regulatory agreement may be subordinated to the
encumbrances of institutional lenders finan.cing the project.
.
INHSEIMM.PSO
~11-
8'1-/4
CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE
QUALIFIED ALLOCATION PLAN AND REGULA nONS
SUMMARY OF PROPOSED CHANGES
August 8, 1995
I. INTRODUCTION
At its May meeting, the California Tax Credit Allocation Committee ("TCAC" or the
"Committee") instructed its staff'to examine the current allocation criteria and process, and refine
the tax credit distribution apparatus so it is:
. Less Complicated;
. More Objective;
. More Predictable;
. More Efficient; and
. Good Public Policy.
\,
Furthermore, State Treasurer Matt Fong, the chairman of the Committee, described two
specific goals the allocation criteria should accomplish:
. Maximize the public benefit of the scarce housing resources TCAC distributes; and,
. Clearly address the needs of as many low-income Californians as possible.
Federal and state legislation provide specific direction as to allocation priorities and
preferences. Program authorizers want TCAC to:
. hold a competition among only those projects considered sound investments of public
runds;
. prioritize projects that produce housing for families and individuals who can least
afford housing;
. establish preferences for certain types of developers, project locations, tenants served,
and unit compositions; and,
. expend public funds in the minimum amount necessary to achieve program goals.
n. POLICY OBJECTIVES
Implementation of statutory intent require's adoption of state regulations and a detailed
"Qualified Allocation Plan," or "QAP." A review of the goals and priorities noted above
necessitate formulation of policy objectives before a detailed QAP can be developed. Staff
recommends five primary policy objectives be adopted by the Committee to guide formulation of
the allocation plan and regulations:
1;4 - 15
QAP & Regulations-Summary of Changes
Page 2
August 8, 1995
. NEED.. neighborhoods with greater bousing need will receive the majority of the
federal tax credit;
. AFFORDABILITY - propos:!ls targeting households with the lowest average incomes
will be awarded allocation before competing proposals targeting higher avef'age
incomes;
. UTILITY - proposals utilizing the least amount of federal tax credits per household
served will be awarded allocation before competing proposals utilizing greater amounts
of Cederal tax credits;
. DISTRIBUTION - proposals targeting low-income populations - includilllg large
families, transients, the economically displaced, persons with special needs, and senior
citizens - wil! receive an apportionment of federal tax credits in amounts determined by
the Committee.
. DELIVERY - program administration will encourage projects be built alrld occupied
quickly, so those in need can enjoy program benefits soon after credits aJre available.
A. HousinS! "Need"
Housing "need" may be viewed from a variety of perspectives. Primarily, "need," for
purposes of subsidized housing programs, is a reflection of relative housing affordability. A case
in point; the tax credit program allows a qualifying household to earn no more than 60% of the
area median income, adjusted for family size, and allows the maximum rent payment charge,
including utilities, not to exceed 30% of said income. Housing programs generally consider rent
payments over 30% of income to be excessive rent burdens.
Additionally, housing need may be linked to the relative "quality of life" enjoyed by
households due to their housing accommodations. In particular, residents of substandard or
overcrowded units may not enjoy a decent living standard, even though their rent burden may be
at or below 30% of their income.
To recognize that certain neighborhoods within California have greater housing needs than
others, and that a primary goal of the Committee is to address the worst case needs of households
within those neighborhoods, stafT recommends an apportionment 'of 50% of each years'
federal tax credits be allocated to projects proposed in neighborhoods with high
percentages of households possessing excessive rent burdens and overcrowded conditions.
rhe following criteria is proposed for determining neighborhoods most in need:
. "Excessive Rent Burden" - rental households paying 35% or more of their income to rent.
. "Overcrowded" households - rental households with more than one occupant per room
(bathrooms excluded).
U. S. Census data will be used to quantify the percentage of households, within each
census tract in California, that have excessive rent burdens and overcrowded conditions. For
example, a tract in Los Angeles that includes the intersection of Slauson and Florence Avenues
'E>4 - lit,
QAP & Re~lations-Summary of Changes
Page 3
August 8, 1995
has 23% of its rental households living in overcrowded conditions, and 59% ofrentet households
paying fent in amounts of 3 5% or more of their' income, for a combined total of 82%. This
combined percentage will be called the census tract's "Need Quotient." The Need Quotient can
then be used by the Committee to, distinguish between those areas of the state w:.h the greatest to
least relative housing need. The Committee will then select a portion of the census tracts, say, the
top 20% exhibiting the greatest Need Quotient, and apportion 50% of the federal tax credit
allocation to projects proposed in the designated tracts. .
B. A fforda bilitv
Statutes authorizing'the federal and state tax credit programs provide an allocation
preference to projects that serve the lowest-income households for the longest period of time.
This preference can be implemented by comparing the average affordability and the "low-income
use" period proposed by competing project applicants.
Additionally, a minimum average affordability threshold can be established, thereby
limiting allocation priority to applicants reaching the threshold. In order to serve the various
population types that will occupy each type of housing, it is necessary to establish different
affordability thresholds for each housing type. Encouraging deeper affordability also achieves
public policy goals.
Administratively, there is added risk if the depth of afford ability reduces project revenue to
very low amounts. Placing a floor limit on the proposed level of affordability will reduce project
operating risk.
In consideration of the above factors, staff recommends er.tablishing a competition
among applicants whereby the primary criteria shall be the spread between the threshold
and the proposed average affordability for qualified project units, with a floor limit on the
depth of the proposed average affordability. The average affordability will be expressed as a
percentage of area median income. The recommended threshold average affordability and the
corresponding floor limits are as follows for each housing type:
Housing Types
Threshold
Amount
Floor
Limit
. Large Family
. Single Room Occupancy
. Preservation
· Special Needs
. Senior
. Non-targeted
56%
40%
56%
40%
56%
56%
46%
30%
46%
30%
46%
46%
1?>4 - J 7
QAP & Regulations-Summary of Changes
Page 4
August 8, 1995
An application's "score," in the "Affordability" competition described above, is the
differenc~ between the threshold and the proposed average affordability for qualified project units
(e.g., 56% less 46% = 10).
As noted above, authorizing statutes of the federal and state tax credit programs state a
preference for projects that provide assistance for the longest period of time. The authorized
minimum "low-income use" period for all approved projects is a term of 30 years.
The current QAP encourages low-income use agreements of up to 55 years. But, a
preliminary projection ofTCAC monitoring costs, and monitoring fees collected to cover those
costs, indicates that 55-year use periods may require an increase in the monitoring fees currently
charged. This added cost would negatively impact the ability to produce affordable housing.
Therefore, staff recommends a threshold low-income use period of 40 years for "Targeted
Projects," and 30 years for "Non-Targeted Projects.
C. Utilitv of Limited Public Resources
A basic tenet of administering publicly-funded programs is to maximize the utility of
resources available. This principle, applied in its most fundamental form, purports that a program
that assists, equivalently, the most people or households for the least cost is the most desirable
program. This principle is readily applied to housing programs for California, since the need for
affordable housing far exceeds the supply ofhousi!lg assistanc,e offered by government.
Wholesale application of this principle may limit the ability of project sponsors, and the tax
credit program, from accomplishing goals not addressed by statute. To allow for state and local
goals, federal regulations declare that tax credit awards should be made in light of local conditions
and state housing priorities. Nevertheless, there are often conflicts when attempting to
simultaneously maximize utility and reach other goals.
A "geographic distribution" goal is a good example of one that may conflict with a goal to
maximize the number of households serv'ed. For example, an above recommendation, which
attempts to reach households in neighborhoods with the greatest need, may result in project
selections that are more costly, thereby sacrificing some number of additional households the
program could otherwise serve. For that reason, staff recommended only 50% of the allocation
be allotted to projects based upon housing need.
Simila~ly, deeper Affordability is a program goal that may at times conflict with the goal to
maximize the number ofhouseho!ds served, or expand the geographic distribution of assistance.
This is because deeper Affordability will most often require "soft money" loans or grants that are
c:h'11y available in specific localities, and vary greatly in terms of available amounts.
~4-lg
QAP & Regulations-Summary of Changes
Pagc 5
August 8, 1995
To address these conflicts, expand the ~eographic distribution of allocation and maximize
the utility ofits limited resources, staff recommends establishing a competition among
applicants whereby the primary criteria shall be the requested amount of eligible project
basis per "Unit-Cost Factor."tfle UUnit Cost'l competition will be held in addition to the
U Atfordability" competition.
The recommendation to use only the requested eligible basis when comparing proposals
allows for local and state governments to accomplish goals that reach beyond the tax credit
program, without being penalized for higher per-unit development costs. Additional goals often
require larger per-unit expenditures. By requesting a lower eligible basis, for purposes of
calculating tax credits, than that reflected by the cost of the project, the applicant will be better
positioned to compete against proposals that dOIl't have additional goals to accomplish. In effect,
this "cost" comparison is most directly an effort to reduce the amount of tax credits allocated per
unit, thereby serving more needy families per allocation dollar.
To appropriately compare proposals based upon cost, recognition of the unit configuration
must be taken into consideration. Using either "cost-per-unit" or "cost-per-bedroom" can skew
the comparison towards smaller or larger units, respectively. Therefore, a "Unit-Cost Factor"
must be established that more accurately addresses the cost of additional bedroom units. Staff
recommends the following Unit-Cost Factors be used:
Number of Bedrooms
o
1
2
3
4
5
Unit-Cost Factor
0.60
0.75
1.00
1.25
1.45
1.65
The number and bedroom-size of all qualified units in the project will determine the Unit-
Cost Factor. The requested eligible basis divided by the Unit-Cost Factor will determine the
"score" the application will receive.
An additional project cost control, beyond that which will be realized by the competition,
is believed by staff to be necessary to maximize the utilization of tax credits. Staff recommends
an eligible basis cap (for purposes of calculating maximum allocable tax credits) equal to
the maximum allowable mortgage limits published by the U. S. Department of Housing and
Urban Development for the 221(d)(3) Non-profit program. Different maximums have been
established for each area of the state based upon the relative costs of developing housing.
~4- 19
QAP & Regulations~Summary of Changes
. Page 6
August 8, 1995
D. Distribution Arnone Housin~TvDf.s
Both federal and state tax credit program authorizers have directed the Committee to
allocate resources to population& of families and individuals with the most pervasive affordable
housing needs. Additionally, studies of California households cite major affordability gaps for
specific populations, not able to increase their income to improve their economic situation.
In light of the fact that some populations have greater needs than others, and housing
product can be tailored to appropriately suit those needs, staff recommends that the following
groups -large families, transients, persons economically displaced, persons with special
needs, and senior citizens - receive an a"pportionment of federal tax credits in an amount
determined by the Committee. Targeted categories of housing types to serve these
populations are Large Family Projects, SRO Projects, At-Risk Projects, Special Needs
Projects, aild Senior Projects.
As a stop-gap measure, the "Non-targeted Projects" category will be continued, but staff
will recommend to the Committee that no apportionment be made to Non-targeted Projects at this
time. The "AcquisitionlRehabilitation Projects" category will be discontinued. Projects acquired
and rehabilitated will apply as either Targeted Projects, or Non-targeted Projects.
To qualify as a "Targeted Project," various threshold criteria must be met by the applicant.
Complete details on minimum requirements for threshold categories will be provided at the end of
August, when a draft QAP is made available for comment. At this time, staff recommends for
all Targeted Projects the following minimum thresholds be met:
· A demonstrated need for the project must be evident;
· The sponsor must demonstrate experience owning and operating the type of ho~sing
proposed;
· Minimum construction standards, tied to the length of the applicant-proposed low-income use
period (details to be provided in the draft QAP);
· Resident services requiring third-party funding sources must have finnly committed contracts
in place at tax credit application;
· A public agency must provide direct or indirect long-term financial support for at least 15
percent of the total project development costs, or the owner's equity must constitute at least
30 percent of the total project development costs; and,
· Adequate laundry facilities must be available on the project premises.
Additional minimum 'thresholds for Large Family Projects include:
· A minimum of30 percent of the units have three or more bedrooms; and,
· The project must provide outdoor play/recreational facilities suitable for children of all ages.
If a rehabilitation project, with no possibility of providing outdoor recreation, indoor
play/recreation facilities must be provided for children of all ages.
'.
'B4-~O
QAP & Regulations-Summary of Changes
Page 7
August 8, 1995
Additional minimum thresholds for SRO Projects include:
· Units may be efficiency units, but the project must include at least one bathroom and one
kitchen for every eight units;
· The project configuration must meet the needs"ofthe population; and,
· A vacancy rate of at least ten percent must be used for detennining feasibility.
The current QAP description of requirements for At-Risk Projects will remain in its
entirety for the time being. It is anticipated that Congress will adopt new guidelines for at-risk
properties. At that time, ti1odifications to this section may be required.
Additional minimum thresholds for Special Needs Projects include:
· The project configuration must meet the needs of the population; and,
· A vacancy rate of at least ten percent must be used for determining feasibility.
Additional minimum thresholds for Senior Projects include:
· Age restrictions are required (the specific provisions are under review);
~ Access to basic services must be available by other than resident-owned transportation;
· Projects over two stories must provide elevator access; .
· No more than 20 percent of the targeted units in the project are two-bedroom units;
· Emergency call systems must be included in all units, with 24-hour monitoring; and,
· Appropriately-sized community room(s) must be provided o.n site, or within immediate
proximity to the project site.
E. Product Deliverv
The following additional changes are proposed to increase the readiness of applications,
thereby decreasing the time between TCAC's receipt of tax credit allocation authority and the
delivery of housing Ullits to program beneficiaries. Staff recommends for Targeted Projects:
· Disallowing additional soft second fund sources (amounts may change) not identified in
the application (e.g., cannot pledge owner resources and substitute HOME funds);
· Soft second financing must be "committed" at application, evidenced by a resolution or
firm (not preliminary) commitment letter from the authorized public or private entity
providing the funding;
· If project has a reservation or allocation of tax credits, must return at application to
reapply for tax credits; and, .
· Within one year, or less if necessary to meet other deadlines, of receiving a reservation
of tax credits, all proceeds necessary to complete project construction must be deposited
in escrow, or the reservation or allocation of tax credits will be revoked. Extensions will
be granted only in cases of natural disasters or law suits directly thwarting the start of
construction.
~4- ~\
~
-
QAP & Regulations-Summary of Changes
Page 8
August 8, 1995
m. ADDITIONAL CHANGES
Additional changes to the QAP and regulations will be available when draft QAP and
regulations are released at the end "of August. The application form is incorporated as part of the
regulations.
In addition to changes outlined above, staff recommends the following:
· Eliminate the "Large Project Additional Thresholds" and limit project size to 175 units.
Two-phase projects will not be aliowed to receive forwarcl commitments of tax credits;
· Eliminate points for "Physical Facility and Services Featul'es." Additional amenity
requirements have been incorporated into Targeted Project thresholds;
· Eliminate "Bonus Points;"
· Limit Developer Fees to the lower of 15% of non-adjusted req:uested eligible basis, 10%
of Total Development Cost, or $1.2 million.
IV. THE ALLOCATION COMPETITION
To compete for tax credits, applicants need to prepare a project proposal that reduces
project rents to the greatest extent possible, requires the least amount of tax credits possible, and
is economically feasible. Additional decisions applicants must make include:
· Selecting either the "Affordability" competition, or the "Unit-Cost" competiHon;
· Selecting either the "Non-profit," "Rural," or "Small Development" set-aside, or competing as
a "General Pool" project; and,
e Selecting either a Targeted Project category or a Non-Targeted Project category.
As noted above, staff recommends that applications proposing a Non-Targeted Project
category will only be considered in the absence of applications for any of the Targeted Project
categories.
Once applications are received, TCAC staff's first task will be to rank projects applying in
the Affordability competition. As noted above in the "B. Affordability" section of this document,
the highest ranked projects will be those committing to the greatest spread between the
threshold and the proposed average affordnbility for qualified project units, with a floor'
limit on the depth of the proposed avernge affordability.
TCAC will concurrently r,ank projects applying in the Unit-Cost competition. As noted
above in the "C. Ut.ility of Limited Public Resources" section, the highest ranked projects will be
those committing to the lowest' "quested amount of eligible pr'oject basis per "Unit-Cost
Factor." .
-"BL\-~~
-
QAP. & Regulations-Summary of Changes
Page 9
August 8, 1995
Staff will rank the projects based solely on the above criteria, but will not evaluate
applications beyond those criteria until later' in the process.
Ti.e-breakers currently under consideration tor purposes of the ranking under the two
categories include the following:
· Applicnt~ons requesting a final reservation;
· Total Dev,~lopment Cost per Unit-Cost Factor;
· Proposals offering specific public benefits, including housing/mass transit linkages, and
employment and training opportunities for disadvantaged youth; and,
· For the Affordability competition only, the lowest requested amount of eligible project
basis per Unit-Cost Factor.
Following the ranking of projects in the two categories, staffwill combine the two "lists"
into one list by alternating projects between the categories. In other words, the highest ranking
proposal in the Affordability competition will receive Rank Position # 1, the highest ranl..dng
proposal in the Unit-Cost competition will receive Rank Position #2, the second highest proposal
in the Affordability competition will receive Rank Position #3, the second highest proposal in the
Unit-Cost competition will receive Rank Position #4, etc. It shoulci be noted that this method 'of
alternating between the top-ranked projects in the two categories will not result in pre-determined
amounts of allocation for each competition.
Once all applications have been assigned a Rank Position, the set-aside categories will be
filled. Beginning with the application that holds Rank Position #1, staff will look to see if the
applicant has applied for the Non-Profit set-aside. If so, staff will assign credits for the
application. Ifnot, the application that holds Rank Position #2 will be examined to see if the
applicant applied for the Non-Profit set-aside. Staffwill continue to go down the list, in rank
order, until such time that the amount of credits required by the Non-Profit set-aside has been
completely assigned (if necessary, the amount of all set-asides will be surpassed in order to fblly
subscribe them).
Once the Non-Profit set-aside has been filled, the Rural set-aside will be filled by starting
with the application in Rank Position #1. If the application has already been assigned credits in
tht.' Non-Profit set-aside, then it is skipped. Staff will continue to go down the list until the Rural
set-aside is filled. For the Small Development set-aside the same process will apply; beginning
with Rank Position #1, etc.
Once credits are assigned to all of the mandated set-aside categories, staff will assign
credits to projt:cts to reach the apportionment described above under the "A. Housing Need"
~4-;l~
QAP & Regulations-Summary of Changes
Page 10
August 8, 1995
section of this document. Projects located in targeted census tracts will be assigned credits until
the apportionment is reached. For this apportionment, and all of the following apportionments,
the applications already assigned credits will be counted toward the apportionment ifit qualifies
for the apportionment: As an example, if a project was assigned credits in the Non-Profit set-
aside, and the project was located in a targeted census tract, the amount of the credits previously
assigned in the Non-Profit set-aside will be counted toward the 50% apportionment recommended
for targeted census tracts. Once again, to fulfill the apportionment, staff will first look at Rank
Position # 1.
After reaching the appOltionment for Housing Need, staffwill assign credits to projects to
reach each apportionment described under uD. Distribution Among Housing Types." As noted
above, the Committee will apportion amounts (in quantities to be recommended by staff at the end
of August) to each Targeted Project category, As noted immediately above, applications already
assigned credits, in any set-aside or apportionment. will be counted toward the subsequent
apportioned categories. Staffwill begin assigning credits, as bl;;fore, by starting at the top of the
list with the application in Rank Position #1, until each apportionment is fulfilled. Staff
recommends' assigning credits to remaining apportionment categories in the following priority
order: Large Family, SRO~ At-Risk, Special Needs, Seniors.
It should be noted that if an apportionment is exceeded, staff will skip over projects in the
ranking. But it is further noted that if the filling of a set-aside or apportionment, say the Non-
Profit set-aside, results in an excess apportionment in, say SRO, the application will still receive
an assignment of credits, because the Non-Profit set-aside is filled before consideration of the
Housing Type apportionments.
After all credits have been assigned, staff will begin analyzing the applications for all other
threshold requirements. Should an application not meet threshold, it will be re-ranked accordingly
and the assignment of tax credits to the set-asides or apportionments will be adjusted.
In the event that reallocation is required after the second round, waiting list projects will
be assigned credits after adjusting the set-asides and apportionments. For the Housing Type
apportionments, staff recommends reallocated amounts be divided evenly between Large Family
and SRO applications.
B4- J..4
\tl ~
,,,,,,,~,.L
./~
Renter
Occupied
Housing Gross Rent
Unit" ,'oI\h asa%of .
Rental 1. f~. '/ Household combined
Occupied more Income Renter O\l'8l'DOWd-
Census Housing persons Renter Over- High Rent Ing end rem
County Tr-r:ct Units cer room Occupied crowd/no Burden blldtn
, 35% or more 35% or more 35% or more
San Bemardlno 59.00 194 91 89 4e.0196 45.8896 02.7896
San Bemardlno 85.00 1275 334 599 2e.2096 4e.0896 73.1'"
San Bernardino 69.00 370 104 177 28.11" 47.8496 75.05"
San Bemardlno 70.00 1028 329 403 32. OO'J(, 30.2"" 71.2196
San Bemardlno 75.00 13 13 13 100.009(, 100.~ 2oo.00'J(,
San Bemardlno 98.00 982 306 410 31.1696 41.7596 72.0196
San Bemardlno 104.05 543 73 305 13.4496 56.1796 eo. 81"
San Bemardlno 117.00 197 82 68 41.62% 34.5296 7e.1496
San 01800 22.00 2387 843 1121 35.3296 46.0696 82.2'"
San Diego 23.00 2649 627 1182 23.6796 44.6296 68.2996
San Oleao 24.00 2619 731 1214 27.9196 46.3596 74.2696
San Diego 25.01 1041 338 537 32.47% 51.59% 84.05"
San Diego 26.00 2483 930 1281 37.4596 51.5996 89.0596
San 01600 27.01 3395 1076 1621 31.6996 47.7596 70.4496
San 01600 27.04 1509 530 908 35.1296 60.17" 05.29"
San 01800 28.01 504 57 348 11.3196 69.0596 80.3696
San Diego 29.02 1058 167 599 15.8196 Se.7296 72.5496
San 01800 29.03 400 55 218 13.7596 54.50CJ6 tSB.25"
San 01800 30.02 1068 384 467 35.9696 43.73% 70.~
San 0/800 31.02 1232 355 643 28.8196 52.1096 81.01"
San 0/800 31.03 318 104 137 32.7"" 43.0'" 75.7096
San 0/800 31.05 193 68 82 34.2"" 42.4096 7e.8ft
San 0/800 31.09 104 48 45 4e.1596 43.2796 80.4296
San 0/800 32.02 300 80 145 26.6796 48.3396 75. ()()fJ(,.
San O/egO 33.00 2826 1068 1630 37.7996 57. e8'J(, 05.47"
San 01800 34.02 1365 525 714 38.4696 52.3196 go. n"
San 0/800 35.00 1402 560 616 30.9496 43.9496 83.8896
San 0/800 36.00 1484 843 715 56.8196 48.1896 104.0996
San 01800 39.00 1569 766 819 48.8296 52.2"" 101.0296
San Oi8Oo 40.00 883 403 ....0 46. 7096 50.0896 07.~
San 0/800 41.00 1391 ' 407 639 29.2696 45.0496 75.2""
San 01800 45.00 1807 672 729 37.1996 40.3496 n.5396
San Oi8Oo 46.00 996 310 ....1 31.1296 44.28CJ6 75.4096
San O/egO 47.00 573 351 296 61.2696 51.6696 112.9196
San 0/800 4113.00 958 496 406 51. n" 42.3896 94.1596
San Di800 49.00 955 505 388 52.8896 40.63" 03.5196
San Diego 50.00 428 226 235 53.0596 55. 16" 108.2296
San Diego 51.00 352 127 176 36.0896 50. OO'J(, 8e.0896
San Oi8Oo 86.00 1050 461. 451 44.4896 42.9596 87.4396
San Oi8Oo 88.00 1202 493 422 41.0196 35.1196 76.1296
San Diego 90.00 724 261 259 36.0596 35. n" 71.8296
San Diego 1 00.01 288 63 143 21.88% 49.6596 . 71.5396
San Diego 100.02 903 359 263 39.7696 29. 1396 68.8896
San Diego 100.07 170 126 66 74.1296 38.8296 112.9496
San Dieco 100.08 2264 1114 947 49.2096 41.83% 91.0396
San Oieoo' 100.09 985 532 552 54.0196 56.0496 110.05%
Page 21
m-~S-
Rent.r
Occupied
Housing Gross Rent
Units with asa%of
Rental 1.01 or Household Combined
Occupied more Income Renter overr:rowd-
Census Housing persons Renter Over- High Rent Ing end rent
County Trac::t Units Der room Occupied aowdina Burden bllTlen
35% or more 35% or more 35% or more
San Dleao 101.06 1070 394 397 36.82% 37.1()fJ(, 73. Q3"
SIn 01800 1 01.07 553 186 214 33.83% 36.7()fJ(, 72.33%
San 01800 101.09 335 119 111 35.52" 33.13" 08.00"
San 01800 114.00 323 188 142 57.59" 43.Q6~ 101.55"
San 01800 116.00 2132 747 808 35.04" 37. Q()fJ(, 72.Q4"
San Diego 118.00 1971 734 945 37.24" 47.95" 65.19"
San 01800 121.00 801 267 355 33.33" 44.32" 77.05"
San Diego 122.00 . 329 127 153 38. 6()fJ(, 4CS.5O% 85.11"
San Dleao 132.04 460 142 176 30.87" 38.26" CSQ.13"
San Dleao 1Q.75" - 4Q.25" eQ.~
139.01 1458 288 718
San Diego 182.00 1814 721 854 39.75" 47.089(, 8CS.82"
San Dleao 184.00 1061 316 558 29.78" 52.59" 82.3B'J(,
San Dleao 185.01 2426 591 1122 24.36" 46.25" 70.01",
San Diego 186.03 613 276 348 45.02" 56.77" 101.7Q"
San 01800 189.02 1715 ....5 758 25.95" 44. Ow, 70.03"
San Diego 192.02 1164 244 602 20.96% 51.72" 72.08"
San 01800 195.00 2290 644 . 1000 28.1296 43.67" 71.79"
San 01800 199.02 523 167 191 31.93" 36.52" 08.45"
Ssn 01800 200.06 800 248 246 41.33" 41.~ 82.33"
San 01800 200.09 1862 568 713 30.50'J6 38.29" CS8.8~
San 01800 202.98 2091 622 936 29.75" 44.76" 74.51"
San 01800 205.00 820 - 292 375 35.61" 45.73" 81.34"
San 01800 206.01 921 316 401 34.31" 43.54" 17.85'1(,
san Francisco 114.00 1388 518 512 37.32" 36.89" 74.21"
San Francisco 176.98 1406 285 786 20.27% 55.Q()fJ(, 76.17'1(,
San Francisco 177.00 532 147 231 27.63" 43.42" 71.05"
San Francisco 180.00 222 57 108 25.68" 48. CS5" 74.32"
San Francisco 201.98 1559 489 664 31.37" 42.59" 73.Q6"
San Francisco 208.00 2090 829 965 39. CS7" 46.17" 85.84"
San Francisco 209.00 1415 500 505 35.34" 35. CS9" 71.02"
San Francisco 229.00 2353 883 982 37.53" 41.73" 7Q.26"
San Francisco 232.00 402 97 258 24.13" 64. 1B'J(, 88.31"
San Francisco 233.00 126 50 47 39.68" 37.3"" 76.Q8"
San Francisco 25a.00 158 38 78 24.05" 4Q.37" 73.42"
San Francisco 262.00 602 221 223 36.71" 37.04" 73.75"
San Francisco 263.00 907 338 3'13 37.27" 41.12" 78.39"
San Francisco 264.00 1482 482 539 32.52" 3CS.37" 08.80"
San Francisco 314.00 461 142 181 30.8()fJ(, 39.26" 70.07"
San Francisco 605.00 811 305 . 257 37.61" 31.CS9" 69.3()'J(,
San Joaauin 1.00 1873 576 812 30.75% 43.35" 74.11"
San Joaquin 3.00 395 214 136 54.18% 34.43" 88.CS1"
San Joaquin 4.00 2369 558 1205 23.55% 50.87% 74.42%
San Joaquin 5.00 607 283 282 46.62% 46.46% 93.08%
San Joaquin 6.00 423 255 149 60.28" 35.22" 95.51%
San JoaQuin 7.00 839 307 317 36.59% 37.78% 74.37%
Page 22
Ell -;l ~
LOW INCOME HOUSING TAX CREDIT
ALLOCATION PROCESS
FOR PROPOSED ALLOCATION PLAN
1. Rank all proposals based on atfordability criteria.
2. Rank aU proposals based on cost categories.
3. Blend the two lists.
4. Go down the consolidated list and take out the set asides for rural, small developments (under
1 0 units), and 10% nonprofits.
5. Out of the remaining proposals select those in the targeted census tracts. (Encinitas has ~.)
6. Portion the proposals in the target census tracts into large family, special needs, and senior
projects.
~4 - ;4 ~
"
. '\
I
PART 5.
Escondido Study
Comoarisons of Affordable Housino Strateaies: New Construction and
ACQuisition/Rehabilitation
"Cost Effectiveness"
"
'B~ - I
")
....
ATTACHMENT 4
COMPARISONS OF AFFORDABLE HOUSING STRATEGIES:
NEW CONSTRUCTION AND ACQUlSITIONIREHABILITATION
October, 1994
City of Escondido
Department of Planning and Building
Charles D. Grimm, Director
Housing Division
Patricia Getzel, Housing Manager
Desiree Scott, HOME Program Consultant
Telephone: (619) 741-4841
FAX: (619) 738...4313
~-~
-
COMPARISONS OF AFFORDABLE HOUSING STRATEGIES:
NEW CONSTRUCTION AND ACOUTSITION/REHABILITATIO.M
With the number of existing multifamily properties currently available in the City of
Escondido at relatively low per-unit purchase costs, provision of low-income units through the
acquisition and rehabilitation of existing multifamily units appears to be a better use of public
funds than the construction of new low-income units. A comparison of the per-unit costs for
new construction versus those of acquisition of existing units favors the purchase of existing
units. However: there are other important considerations which should be factored into the
discussion of new construction versus acquisition of housing for the purpose of providing
affordable housing. Both new construction and acquisition and rehabilitation have a number of
associated costs and benefits which should be taken into account when funding agencies consider
subsidizing a specific project. The considerations that' are discussed here are based on the
conditions generally found in San Diego County, and specifically, in the City of Escondido,
California.
Assessment of the HODsin!! Need
In the City of Escondido, the greatest housing need is found among low-income renters.
A substantial proportion of low-income households pay an excessive amount of their income for
rent payments. Census data for Escondido shows that in 1990, fully sixty-three percent of the
City's renter households who earn fifty percent or less of the area median income were paying
more than fifty percent of their income for rent. Overcrowding of rental units is also on the rise
among low-income households. Due in large part to housing payments that are out of proportion
with household incomes, an increasing number of families have been forced to oc~upy units that
are much smaller than they need, or to "double-up" with other families. According to census
data, 846 of the City's renter households (seven percent) were classified as overcrowded in 1980.
By 1990, however, that figure had jumped to 3,227 households, which was equal to seventeen
percent of all renter households.
The market research and experience of developers of low-income rent-restricted housing
in Escondido indicates that there is a strong demand for secure, well-managed affordable units.
In addition, there is a particular need among low-income families with children for affordable
three and four bedroom units. Although the City's overall average multifamily vacancy rate now
stands at about 8.7% 1, recently completed affordable units have achieved full occupancy in a
very short time period. The 21-unit Daybreak Grove and Sunrise Place development, where
48% of the units have three bedrooms, achiev~d rent-up in less than two months from its official
opening and currently maintains a waiting list of about 150 families, the majority of which
require three bedroom units. Only one unit has turned over since initial occupancy. Rent levels
range from $275 to $300 for very low-income families and $450 to $500 for low-income
households, which are significantly below current market-rate rents in Escondido. The
substantially lower rent levels of low-income units keep the one and two bedroom units at full
occupancy and in high demand also.
I Aparlm~nt R~l1y & Managemt!nl N~wslell~r. July-August 1994.
~-3
City of Escondido
Affordable Housing Strategies
Page 2
Experience at a recently completed acquisition and rehabilitation project in Escondida also
clearly demonstrates the demand for larger units. The forty units in the first phase of the
opening of the Paseo del Prado project, which contains 33 % townhouse-style three bedroom
units, were fully leased within three weeks of opening. Although not all of the units contained
in the final phase of the project have been leased, all of the three bedroom units are occupied
and there is a waiting list of 16 families for the three bedroom units. According t.o the
developer, the demand for the larger units is primarily froin families with children.
Shortal!e of Suitable Units iJ:l the Existine Rental Stock
The problem of overcrowding is compounded by a lack of suitable units in Escondido's
existing multifamily housing, especially by the 'unavailability of a variety of unit sizes. The
private housing market in Escondido does not provide sufficient multifamily units with three or
more bedrooms to accommodate households of five or more. The vast majority of multifamily
housing in Escondido consists primarily of studios and one and two bedroom units. A survey
of twenty-one multifamily properties that changed ownership in Escondido in 1993 and 1994
showed that of the 1,676 units in those complexes, only four percent had three bedrooms and
none had four bedrooms. Due to the shortage of larger units, there are relatively few existing
multifamily buildings that are suitable for rehabilitation for families.
In light of the need for larger units, use of existing units to provide affordable housing
results in the need to reconfigure and enlarge them. The costs involved in reconstructing existing
units add up quickly and are considerably higher than simply renovating units in their current
configuration.
Desien Considerations
Escondido's existing multifamily housing has generally been poorly designed for families.
Much of the existing rental housing lacks amenities such as open space for children's play areas
or common meeting spaces for residents. Sufficient parking and security features are also often
lacking. New construction projects allow the opportunity to design secure housing that is
,specifically suited to the market for which it is intended.
However, there is a cost tradeoff associated with including such amenities. As an
example, the City recently gave preliminary approval to a 31-unit low-income limited equity...,
cooperative on a vacant site which allows a maximum of 41 units. The developer of the project V\
has deliberately elected to develop only 31 units in order to design a project which promotes a /,(
sense of ownership among residents and fosters stability in the neighborhood. All of the units""
will be townhouses with, according to the developer, "front and back porches, individual unit
City of Escondido
Affordable Housing Strategies
Page 3
identity and other features intended to make families feel like they live in homes, not temporary
apartments." Because larger families are expected to reside in the project, ample open space and
a playground will also be included on the site. The development will also incorporate a
community building for neighborhood residents. These design features obviously carry a higher
cost but, because of their inclusion, it is more likely that the project will contribute to overall
neighborhood improvement than would a standard apartment design.
Costs to Relocate Existin~ Tenants
There are other factors associated with the rehabilitation of existing housing units that are
often masked when considering just per-unit purchase costs. State and federal laws require that
when public funds are used for a rehabilitation project, existing tenants must be given relocation
assistance, either temporarily while rehabilitation is being completed, or for permanent
relocation. Relocation costs on a per-unit basis are often as much, or more, than the
rehabilitation. As an example, the relocation consultant for a current 8-unit rehabilitation project
in Escondida has estimated the relocation costs to average abom $19,000 per family. Before the
rehabilitation project was started, four of the eight units in the project were occupied by seven
families, while the other four units were vacant, thus making the average relocation costs
$33,500 per occupied unit. The rehabilitation costs for the project are estimated to total
$100,000, or only $12,500 per unit. Having to expend project funds on relocation benefits for
existing tenants does not result in any lasting benefit to the project or to the City.
Remaininl! Useful Life and Condition of Existinl! Housinl! Stock
Other factors can impose additional costs on rehabilitation projects. The law requires that
when public funds are used for acquisition and/or rehabilitation, all lead-based paint and asbestos
must be abated. Lead-based paint is typically found in pre-1978 buildings, and almost all
buildings more than ten years old contain asbestos. Further, much of the existing housing has
a limited remaining useful life. Many of the existing apartment complexes in Escondido were
ori~inally constructed for a quick return on investment and have, consequently, been poorly
constructed. Extending the life of such buildings to the length of the affordability period
required for subsidized projects (40 to 55 years) entails substantial expenditures as well as a
higher level of ongoing maintenance and repair. In addition, major systems repair and
replacement are required in an existing building much sooner than they are in a newly
constructed one. It is also not unusual for actual rehabilitation costs to be higher than initially
projected because it is difficult to determine the true condition of a building until after work has
begun.
'&S"-5
Housfng-Autnority WorKsnop
8/29/95 0
2r3~IOT507-221
2 of 2
o
City of Escondido
Affordable Housing Strategies
Page 4
Hieher Costs and Fees for New Constructl.n.n
There are also costs which are specifically associated with new construction of affordable
housing units. As previously noted, lowwincome housing projects typically contain a significantly
higher percentage of three and four bedroom units than do market-rate projects, which results
directly in higher construction costs on a per-unit basis. It is also important for the developers
of housing projects with long-term affordability restrictions to minimize the costs of maintenance
and repairs over the expected life of the project. That concern demands a higher quality of
construction than is typically found in existing market-rate multifamily buildings that are
constructed with a shorter project life expectancy, resulting again in higher overall construction
costs. (A list of the typical line items found in the development budgets of acquisition and
rehabilitation projects and new construction projects has been included in Attachment A.)
Other costs that are much higher for new construction than rehabilitation are the
development fees charged by the City. Because the City does not have a policy of waiving or
reducing fees for affordable housing projects, developers of low-income housing are charged fees
at the same rate as develof.ers of market-rate units. For example, total City development fees
for the Daybreak Grove/Sunrise Place development added up to $351,000, or about $16,700 per
unit. Development fees, however, 3hould not be viewed negatively because they 'are used to help
pay for public facilities such as schools, parks, and other infrastructure improvements. Thus,
while development fees contribute to higher per-unit development costs, the fees also benefit the
City in that they help to offset the costs that are generated by the development.
Levera2inl! of Outside Sources of Fundine
Focus on the per-unit costs of low-income units ignores another important aspect of the
financing of affordable housing projects. The City's housing policies have placed a priority on
leveraging other public and private sources of funding in City-subsidized projects in order to
increase the public benefit achieved with the City's funds. New construction has the advantage
of being more competitive in leveraging outside sources of funding than acquisition and
rehabilitation. Developments involving new construction almost always qualify for a higher
proportion of conventional loan financing than rehabilitation projects. Additionally, state and
federal low-income housing tax credits, which are among the most significant sources of equity
investment for affordable housing projects, are targeted predominantly for new construction
projec:ts. Rehabilitation of existing units can qualify for tax credit financing in only exceptional
cases. While tax credit financing is inefficient because of the associated costs, it is nevertheless,
at present, one of the most important financing mechanisms available to developers of affordable
housing units.
~s - (p
City of Escondido
Affordable Housing Strategies
Page 5
Leveraging of other financing sources, such as tax credits, brings outside funds to City-
subsidized developments. Those are funds that would, in all likelihood, go to housing
developments in other cities if not used in Escondido. The addition of tax. credit financing and
other private sources of funding can result in a lower required local subsidy to a project and a
higher quality housing development. It is a common misconception that low-income housing
projects are completely paid for with local tax dollars. In fact, the City makes every effort to
obtain the highest quality development while keeping its contribution to the lowest required to
make a project feasible and to keep it financially healthy over the long-term. Additionally, the
City's subsidy is almost always in the form of a loan, which is repaid when, and if, project cash
flow permits repayment. --.
Alternative Measures of Efficient Use of Public Funds
Those who are involved in the financing and development of low-income housing units
typically use additional standards to measure the efficiency of the use of public fnnds in
subsidizing affordable projects, whether new construction or rehabilitation. Because affordable
housing projects in the state of California usually include a higher number of three and four
bedroom units, project costs on a per-bedroom basis rather than a per-unit basis can provide a
more accurate measure of the cost efficiency of a project. A per-bedroom cost analysis provides
a better measure of the total number of residents housed. The cost of new construction is
competitive with the cost of acquisition and rehabilitation when compared on a per-bedroom
basis. Attachment B includes information on the development costs and local public subsidy for
several current and recently completed low-income projects located within Escondido and other
cities in the San Diego region. The analysis in Attachment B shows that, while new construction
costs are typically higher on a per-unit basis, that difference diminishes when compared on a per-
bedroom basis.
It is also useful to measure the efficiency of the use of the City's housing funds by
looking specifically at the local contribution required for a project on a per-unit and per-bedroom
basis. The figures in the last two columns of Attachment B show that, in spite of generally
lower total development costs, acquisition and rehabilitation projects often require a larger local
subsidy than new construction on both a per-unit and a per-bedroom basis because of a lessened
ability to leverage outside sources of fundin~.
Attachment C shows an analysis of the total costs and the public costs in present value
to obtain affordable rent It.vels over forty years in three approaches to providing affordable
housing units: construction of new units, acquisition and rehabilitation of existing units, and
rental subsidy which allows lowwincome households to rent a market-rate unit at an affordable
rent. When looking at the total cost of each of these approache~ over forty years, this analysis
demonstrates that the construction of new units is competitive with the two other approaches.
Comparing the present value of the total public cost over the forty year period demonstrates that 7
new construction requires a much lower subsidy to obtain the same benefit. ~5"' -
City of Escondida
Affordable Housing Strategies
Page 6
While the present value comparison for forty years of affordability in each of these three
approaches shows that they are fairly comparable in total cost, it could be argued that new
con:;truction in fact produces a greater long-term benefit. That is because at the end of the forty
year affordability period, the value of the improvements remain as an asset to the community.
Rehabilitation, on the other hand, contributes less investment to the community, and does not
allow as much opportunity to design projects that are of long-term benefit to the City. Finally,
at the end of forty years of rental subsidy, no remaining asset has been achieved other than
maintenance and repair of the subsidized units over that time.
Benefits Associated with Acquisition and Rehabilitation and New Construction
The benefits that are obtained with acquisition and rehabilitation and new construction
make it difficult to determine that one particular strategy is always the best one for providing
affordable housing units. For example, new construction can further the City's goal to promote
infill development on vacant parcels in developed areas. Rehabilitation of troubled properties,
on the other hand, can significantly improve neighborhood stability. Both types of developments
can provide highly visible new investment in areas that have been experiencing disinvestment.
These kinds of neighborhood benefits, however, are not as easily quantified as total development
costs. Nevertheless, these benefits are real and are carefully weighed when the City considers
support of a housing development with public funds.
Over the past few years, the City has made a commitment to participate in the new
construction of 211 low-income units by subsidizing the Daybreak Grove/Sunrise Place and the
Terraces developments. Both of these projects gained substantial outside funding commiltments.
The City has also contributed recently to the rehabilitation of the 8-unit Aster Street projiect, the
16-unit 15th Street Cooperative, 78 units in the Paseo d~l Prado project and numerous other
individual rehabilitation projects. In deciding whether to participate in the financing of each of
these housing developments, obtaining the maximum public benefit for the City's investment
within the context of specific neighborhood needs was an overall goal, not simply minimizing
total per-unit costs. Each of these projects has contributed to improvement of Escondida's
neighliorhoods in addition to creating much needed affordable housing for lower-income
households.
In summary, the City is best served by pursuing opportunities to rehabilitate existing
housing alli! to construct new units for lower-income households. The City views these two
appr.o::l.ches as integral and complementary strategies in its progress toward revitalizing
neighborhoods while also expanding housing opportunities for all residents.
~s- -~
",
ATTACHMENT A
TYPICAL DEVELOPMENT BUQGET ITEMS
ACQui si tion/Rehabi 1 i tati on
~w Construction
Site Acquisition
Land Acquisition
Rehabilitation Hard Costs
Building Construction
Design and Engineering Fees
Design and Engineering Fees
Relocation Costs
Sitework
Asbestos and Lead-Based
Paint Abatement
City Development Fees
Legal Fees
Legal Fees
Reserves
Reserves
Financing Costs
Financing Costs
Development Fee
Development Fee
Marketing Costs
Marketing Costs
Syndication Costs (with
use of tax credits only)
-r5-Cj
.
=
~
w
::E
:c
{,J
<(
~
>
~
is
>8
n
5~
=<
~o
;s
S~
~~
<~
E
~~
~f
g.,e,:,
o~
..:lCJ:l
~s
~=
~~
o~
Z(iS
~r:.:
;~
~<
::E~
8~
~
B
>.
'0
]
='
en
u
2i
If
]
e
~
"2
a:l
,
..
cf
-
~
~
cf
CI:I
~
e
~
-g
a:l
~
<<)
j:l.,
c
~
8-
1
Q
-
'a
;:)
~
cf
N
~
e
N ~
~!
_ CI:I
.! 'a
~;:)
8-
~
c1/:l
~
"
Z
li
.,."
e
g.,
00
00
IQ
r-:
N
~
00
~
~
on
~
....
on
ro-
l"'l
v\
on
....
r0-
o-
00
g
~
\0
-
00
.tl
ell
.c
<<)
"
'8 g 0
... .- "C
en 'i :os
...s 6
~ 8" &l
.'2<w
ro-
C"l
ro-
~
-
~
~
~
~
....
N
co
.-
oQ
N
, ....
8
on
r:
ro-
~
'O:t
~
\0
-
.tl
ell
Q..c
8~
. S 0
<<).- ~
> ::: .-
<.!!! 'i
.c='o
- 8" &l
~<w
-
N
-
r:
-
ioIt
g
0-
~
ioIt
0-
q
l"'l
fI'l
ioIt
11'1
00
o
oQ
~
ioIt
~
-
-
.tl
ell
.c
<<)
t:!!!:
::s c 0
Uo .2 =ij
.':: \I
"C CI:I'-
:.::'S C
u8"c
~<~
C"l
\0
\0
0\
~
~
N
~
l"'l
N
....
~
o
on
ioIt
o
-
~
l"'l
N
-
~
N
on
N
c
~ .g
o CJ
.. 2
0-
.:.l ~.g
~ 0 .-
..{,Jog
.r.~o
~ III &l
CZW
\0
~
N
..
-
-
N
~
....
N
r0-
C'!.
-
~
..
'O:l'
l"'l
0-
..;
Ql)
....
-
01
l"'l
o
01
-
c
o
* '=
CJ
~ e
CJ1no
ell c "C
t: 0.-
~u-g
III ~ 0
,c III &l
t-ZW
-
r0-
o
o
-
~
0-
0-
~
M
N
ioIt
fI'l
N
00
v\
fI'l
ioIt
to
on
roi'
00
ioIt
\0
fI'l
fI'l
~
~
-
III
C c
~.5l
t:-
!.e
<tio
o a ill
"iUQ
~ ~ !;
~ZCIl
~,
"
00
ro-
fI'l
~
~
l"'l
00
-
ioIt
00
0-
00
0\
fI'l
ioIt
~
.,;
-
-
ioIt
.~
II:
:s
';
~
-
]
ii
c
I:
c
1
00
\0
c
c
!!i
-=
-g
.:::-
;::
~
~
.s
.!
.r.
'C
.!!! a c
c.'= !::
< u ~
"C e .~
~i :e ~
"0 Co
.. U :l
i ~.~ ~
U Z > ~ ':-/0
II
"<
l-.
. .
II
I-
Z
ll.I
,:::a
::c
u
~
<
-i
:u
.:.!::! ~
CO - ~
~Z>o
c:_=
~,~ ~
ctz:;.cS:
u __
::I III ~
=8~
>->0
- CO
C:Q~
ti ~ 1.0'
c!:'a.E
U
::I
- c:
CO._
>-
.....e~
ii;l 1.0
J! b ~
g.e;.>o
-
U r::
ZGI
-BS
II. ~
~ ~
4C-
-~
=.-
8.~
t::
~
C5
~
.".
i
C"\
..0
~
'0
ClO
C"\
..0
CI\
.".
c: ,...
=... .
".:ol!l
C"l ~ >-
C~ 0
--..,.
g].!!!
U l~
~ M'S'
Zea
...
0\
~
..,.
r--
.".
'Co.
~
~
-
.".
8
C"\.
-
r--
.".
.=
J!...o ui.~ ~
~ .. cu.......
a! .. >- >- >- 0
".::; "0 ..,.
c: :.:: !?'lii C:.c
= ., ,J:j.- ell
.= 1 .!!l a 1 :I
.- -... "t:I e
.~ ~ ~ '3 .- .c
::I l5..".., c > _
5'I<Ooe_
4Ce~~ Cl.N
r--
r--
C"\
~
CI\
...
r--
r--
f'1
ClO
CI\
.".
8
ClO
~
.".
<Il .!.
,. -- G)
~~~.:e:
'-.- ... !!I
.!llo2c
::l::l It .....
CJ') <Ill ....6
1"3:202::1
!~i~!
.s
..
.
r
'S
'a
~
i
I
2
,r
"8
.
l
.s
~
o
!l
'i
..
-5
'l!
e
...
.
o
.!
..
oW
:!
~
..
g
...
51
:c
,,;
g
...
..
-i-
t!
"8
.
..
l!
!
v
i!
'i
~
all
.5
!
8-
..
...
:I
l
8
!
>.
1
..
111
o
"
>.
...
1
ii
i5
2
"8
.
'i5
I
go
i ..:
:!.t
.! Q,.
:i .;
.....
~ 0
i .~
- :I
- 1
...
IIli
'i5
I
.A:
a
<
.5
...
.;!
I
0:
t:
l
..
.
.A:
>.
:z
1
.2
1-
..
-5
.A:
...
i
.2
!I
...
..
'e-
0.
c:
o
.~
~
o
...
~
~
05
..
-5
'0
..
g
...
c:
.g
e
~
o
...
'2
::I
i
..
..
e
..
>
.
c:
.
I
g
."
~
=
r,
III
'i5
e
.A:
...
:!
<
.5
]
I
l::
c:
u
J:
.
.
.A:
>.
:'i
i
.!!
:s
::I
-
..
oS
1i
i
..
oS
..
li
'e-
0.
c:
.9
~
C!
1
o
...
~
II
!
oS
..
oS
..
oS
>.
...
1
.!:!
:s
Eo
~
e
~
c:
i
c:
o
."
lit
=
...
III
1$
e
.A:
...
:!
:c
.5
."
u
."
:l
]
..
'2
'e-
0.
c:
.2
~
~
.A:
t!
..
t!
oS
..
-5
...
o
..
111
o
...
.~
~
:is
.
.A:
e
"8
.
c:
.g
.;;;
'g.
...
.
'c
:I
i
:.
l!
..
>
.
c:
.
..
e
c:
o
."
~
=
.
....
."
';;;
1
...
o
x
!
.~
I
.~
ii
!
c:i
...
of.
~
'IS
~
:is
~
.
-0 t
eT.
::.a
>'J:
!i."
... -
~ i
i ....
.:2
.~ 1
~ ...
l&z
.9 Eo
>'u
:JoS
1~
..~
'E .~
t!oS
'00;
S ~
~t!
~.~
'O~
1 0
...."
.. ;
-; g
.al! ii
0. ,_ 3!
ai'~
i!!oS
e!
.A:;:C
X ..
~.s
:;~
.. .
]~
l!!..i
.- I-
.. 0
.i x
e !
~l!
o .-
.! I
;:: 0
i .~
oC_
1 i
-- .
.a c
.= .
8-1
. .
~\t
-....
.2-0
~a
ow; tj
,JQfI!
a c
.~ .i,
i&
Q..S
:'r
t .;;;
> 8
OOoC
c_
i i
u .
oS c
c .
~ e
j!
... ..
!
u
1
.
c:
.
"8
.
~
.....
...
o
..
o
~
.:!
.~
10
c:
.5
r
';;;
8
.A:
.
i!
c:
.
.:
..
i
!
.
51
:c
c:i
....
""
...
...
o
N
l!
.
u
>.
..
.s
>.
."
.;;;
,l)
il
..
l!
j
ii
~.
i1
"8..
.oC
cJ:
t!."
~8
. ~
E ..
~]
'i i
ii
i!
!
...
o
r!
.
~
~
..
::
~
on
'lii
o
...
c:
.2
~
:is
.
.A:
~
- u
'c ::
:It
~'.s
." .
:1/-
"t ~
MJI
c; ill
":a
oS!-
1;
I I
.. l!
l!..._
8l
~
"'0
...."
o .
i'1
"" l!
i.:
~~
'S 'E
"; !
.' "
g ~
oC
." -
:t~
cI!,
.. tr.
'"
,..;
1!
.
c:
:i
'g.
...
.
~
:5
c:
o
."
:It
~
'"
"85-//
I~
:)
.:J
...
PART 6. ARTICLES ABOUT OTHER CITIES
Coronado
Escondido
, ;,""
"
B~-I
)
,~~ ftl~1 j~ j~ ~1.'~* ~~i~;~ ~~ ~lJ~~ iJ=~~j J~ ~~
lU!ijC.c IlOtlI) OU.c= 511l.::l41Cogj ~~I:l:::-;oG..J.c.... e7iilllsv .00 1Il1ll+;! ~1Il 'l:!~
C::'a, OJ 1.1 g..6 C :l ......8.,; t">Il tIl 1.1 t;! ~ : ~ ~ III III . .0 ~ = .- OC ~;io 0 III =-- > = at;! :5! "tl 2
!' c:: ~ gJ f5~'~ ]"tl'~'~j .s ~ l';Iofi,g! 8 ~.~~~~~'e.~.s ] ~.~ III ~1 ~~ ~ ~ ~ OJ.c m a e
III 'U.~ - ~ l:llll .6 -5....: 1.1 "6 l:! olll ::: el';l..2 ~".:: ~~ ~o ~ '0 .0 -cij ~ l:! Co:S'~ ..8 C'G 'fj :g .!l.c ~ ..... 0 s ::: .c'!:! .g e,g
u~~ ~ -1Il1ll0....~ ww.~ o..o.c~u'U tIl "tl=IIl'~~C::"" _~_
c:: C'G = o' C .~ > Co 0 = ~ ""' .c OJ OJ .;:;::ld 0 C'G .... .c >. ~... c:: c C'._.... U:>.- IlO tlll '::! ~ _ .~
.l3....1Il c:: 8s:l'6J!~iii~!l~ :5po;....oc e e llOJC'G........- W'OJoo Jii.... ... C ~ olll"tl
Co III :a - ~ III U ~ "tl .... C = = < III ~ ~ . 0 0 ~ ti'8 :- ~ "a.s ~ l!. ~ CI.l 1.1 1! III ~ ..: l:! .~ '8 0 vi g ~ '0
8 .a ~ :;= CI.l.c = .... c::.~ - 0 l5":.c: ;.; C >.t:.Q.c ..c .s .~ = C e ~ C'G. C'G 0 ~"9. C'G._ ....0 ~ ....0 ....CI.l 2:l ..!!.! .~ q = ~
1.1 ... ::t .c ........ . = . e - .... .... ><'r;; Co 0 'U CI.l 0 ~ 4l - ... oc OJ - CI.l C C'G C'G ~ Q "tl C'G
: ~~ ~ E--.5 III e ~.5 jl OJ ~ OJ "0 ~ ij ~::ld oS ] ~ a~'~ oS ~] ~ .~ i 8,g 8. ~.g:8 ~ -5 ~ ~ ~: ~.! ~ 8
~~C'G ~.,;~>,8....Bo~~~ lle.cIll>,"O eOJCI.lCl.l~""oC'G .cOJ=.c~o8.u_"tlm-5~ "tlc~_OJ~O
= OJ....:;:; III "". ~ C'G = .... C III C 0 ~ 'C OJ .... .c ii 1.1.... .c ::a; ...;:s ::- ._ _ .0'" 0
:g l:! ; i1 8 iJJ E S CI.l OJ l:l8 c:: jl 0 J! 1.1 Cola:t= c :S ~ ~ ~,8 !l ~ ~ e. l:! ~ Co.= l:l ~ 1}l 7ii ~ ~. 0 e ~ = r.c CiS
CI.l .... III III .c 0 1Il.o tllllil .-.. lil ..::: E! Co OJ OJ . < c:: 0'" 8 .. 0 0 Q)o .... 0 OJ 'U jg OJ bO C'G C'G . 1.1 C'G "tl'S: "tl
ovi'U~J~u'~egSl"a~~~~~1~ij_811l11~~~~1~l;l"O-5-5-58~~j418C1.l~J~~:1~
E-- a -= ::: E-- ~ tlll5 ~ ~ ~u C GJ Q:l OJ OJ I:l::: .5 .e. ~:5! OJ ~ ~ .... ~ .C: OJ 2:l>. 0 ~ u "':5! bO ~ lot. tlll 0 Q e e E-- 'n; ;-':g S
.0 set <.....'5-5 C'G '6il"S. t;!-6 e S l:llJ! a'O g 8~ l;l'RiE-- Slu j m.5.Sl2:l .g.een 5U~ fi3 6. C'GC
""""'\
,.."I
o
-c:I
fa
=
!
..-~
a~
't:O..-
==
.~ Q,)
me,)
==
0=
.c=....
Q,)m
--
.ern
=~
'EQ,)
~s
< ..;5
~>' ~.8~i~ r.cvi'~'cC'IlO~.c~ S~.,;~60 "tl~8~i J~$~~~~
.,,~ Q,E"o ~'al:l ~!;, 8 ~l:l'~ 8~:O cl OJU ~-s 8,-; la.s Q = .l3 Co~r, 8.~e
." 0 OJ ." IE 1 i:.:l Jill 8.~ ... = jlil.n; ~ J! Q 1.1 1 OJ ... ,'Cl 'U 8 !3 "0 ~ . ~ 0 Co
~ .~ a-5 ~ 0 fSl:\I' J~.::: 8.~. 8 :i~'~Be"iQ..s] ~"O~!(8 .~ lij'o.aCoS,ji
.c G C 5 ~ ::: u 0 > f .... 1.1'0 -;s III ~ 0 9. c: . - III 1:\1 III U lil ~ Ul III tlll!o!
OJ . ~ "".~ gj C'G Ul r}1:\I f ." OJ ~ '~"tl OJ'~'~ R is.." -t: cU ~~ 1:\1 ] "tl ~ 'U'5 5"c::.5 ~
J~ljJiuoo .c"OC::bC::]:l~~eala~"'~u~~eec~-....lij 1~~.c~~"O
c: >, 0 .... >,:; tlll 0 C'G .".- ~ ~.- lij Co . 8. OJ.... ." G lil ~ 8 ::t C'G 1:10 III IlO .c OJ to....
Co-;s-= .... C'G ~o vi~< ~"O tlll~~8 ~ ~ 8'0;5 =.b'o.e..s8.....s m-.s ~.= o~ Co~.e
~~~J~J~ S~~-5c:Slilt118~!~1~i~o~E..:~..J~~u~~~."
~gt"O-st! ~!~J~~gJ-5"tl~8:~:~sJ~~18m!~~I"o~~~!i
>.g ~ c ~ '8 0 ..: "0 ~ iJ;, C!.J! ~.~ C'G ~.: III C'G ': ~ J! Co ~ c::'i ~ ." ~ j.!l f.5 ~.... e.o OJ
i~~~l"O! ~c.~]~~~~~3e~8.~]~~~~~.a~e~~~~~~~:0~=~.
o :l OJ'" oW Q OJ - C'G l! III - W 1.1 III w, E--'- C'G W ~ .... OJ u. 8 ~ If 1i! C'G ... 0 _ .
ColQ:l'5 8 gj .8:5 en ~:5! ~ '6 *, ~ ~ 8 8 C'G ~. OJ la.a oS OJ 05..s '8 ~ ~ ~ ~ ~ CS .a-:5! ~ 5 ~ E
gj." C'.5!!l8 C'G m Co1}l.=~C' lij'= 8 tlll~'= -5::a;r"~"S.'C 8 l;l_Co~ 1:10'= m:a'=-5J!
..-
rb
E
e
-
'"0
CD,
=
c:
:;::l
c:
8
Q~S
1~i
~=i
~~~
8i=
,..-.j
:;:)
.c
~
j"
ILl..
CFS
z~
.c-
>o'1ii
IDcii
"tl"tlC::OJ 'q)CI.lui' C::6. i:'~~1!-5 BC'G~
OJ = ~.c.... 8' ~ !l =c a 1! eo, = ......e ""C .... c:::: I
.... C'G > ." :; C'G - >< OJ = ...._.w ,
~ t: .!!.~ m 0 ;;: ~ '-5 -:= ~ .a 13.0 ~ < .sa bO gj~
.- .- ....... "tl -- . >, ~ OJ lil <::> 0 ~
Co"tl OJ - 'C ~ OJ..... 8.0 'C .. <::> - 0 - 5 Ul'
C'C -. '-4 tIC - rn"en.-
~-S~5~~~~.g"9.~:5! .o~<::><::>oS~ ~=~;l
.-.C -" u -~ C - Of; co ~ ~ ~::: a 0 _
-- ~.Q lil.t: a.i'~ C'G 5'g C'G III 0 <::> - e .o.c ~ \
....~ ~~ ~"'U::tCovi C>'~C::C'G c
~C'Gel=l::OJo O-'C OJ-O.... OJ OJ 0
I ~ 8 <' ~ -5 C::'~ t::.~ 5 := -5 ~ 1! CI.l -5 ~ 1.1
o 8 8 51 ~ 8 'g ~ S 51 ~ ~-5, ~ ..J',g~ ~ 8 "O"E.s
Q OJ Ul OJ:a ~ C'G ~ >, OJ 'C OJ ~ ~ gj g ....,g OJ
< tlIl"tl.c"tl.c lil_ C'G.o"g OJ, =~.... -.- '"''Ri '"'
z~;~]....Eg~=.,,-S<.cc6~~ l!. ]
0'0 .....Q C'G .~ OJ ~'i llil.c ~ .... - g ,'"'." Ul OJ ~
c:l=: <.J '" ~.... g c ",.:: c 5!!l 0.... '.~ ~ ~ .-:5! c:
o OJ OJ 0 0 ~:.c: tlll >,.- - V = III u. ;: ~ .,;.... ;> ~
U .'!::::s! E OJ iJl 0 .... = OJ li e en !Xl .'!:::;:; !'S 0 '<; - 8 0
"i ~]'1il 6C ~ 'ii ~ 1il ~ ~ 6 _ c e Ul Co ....
~~
cs-
1-" __
\- ~-
\ \ -.
,'""") .~
.\~
~~ -;t
I(f)
leD
CD
C)
:.
'C:
o
~
.
,8
"8
CD
Q)
rJ')
---')
~1:~ j~~.tG! :'i ;~Q.! Ls ~~l3.2 ~ ~ ~~,.8i]'~~~~j : ::j~~' ~~-~"~~~'s-~-~-~---i~ ~~_.
::J ~ .- Ul . Il.... Q.. "'= C c:: l5 III CI) e Ul ,.- := CI) 1.. '" .... .... .... CI) III CI).c:: ·
'1; .: .c:: 0 :s! en c::.. Il CI) E=.c:: 0 t:' ~ t l:l;g........ 0 QJ .oJ CI) (Q In'" -s C'.8 <II Cll Cll r.n c:: >. l'lI .c:: ... i u'
~'fJ .~~ t !!j~ ~ ~]j Ile' ~ ~i ~ ~ m ~J~ ~~:.~~ !lj 1 e'~8~ ~.;;g-S ~ ~ S"i 1, ~!
~ ... .c:: .... . !:l '" tIlI1ij till I~ O";j;;l CI) .l: lib c:: CI) ::J - CI) llil Cll Cll ." .- :s.= ~.... !:l ....c:: e CI) = ...
e.s ~ .....>4""8 mj! !11ll;! g..~~ 1~1l ~c .5t"' A,~~_tl:5 ~al.5 ~.lSC::In~ ~8 ~~]~lf ~-5 rI!~ ~; '~~
I 'w CI) CI)::l 6O";j;;l ~ 5 CI) 0 III "" "".-4 "",- -'- ." CI)' I . Cl:;.... 'W .'. Cll
~ f~ ~i5.e ~ ~ ~~~ ~~ :~ 1~=E] ~~: ~ Cll,].:~~.!a ~ ~~'i1,~.~~~] ~l~~-di g B ] ~
, ;s. .- l'lI 5';;:; e -." .;) 1Jl CI) (Q III .... .... 1:: eX .:.: till Cl) .... ~ r CI) CI) C ..... u::J ....'.3.c:: 'D u)... ~
.8.e:5i! ~8 & .g e ':~.~e l:lj t.S l!.fA.3'5.8.c:: l:=:.:aJj~~ ~~ .1ij-S.~.~~.5 ~~~.B CI).8 . .!~ 82:1
:i~ 1'2 c .s ~ If ij'ij ~ ij ~.2 ~ f ~ 'Ii : ~ &:i ~ ~,.s 2:1 ~] ~ -s i'e ~ ~ a ~ i ~.~ Jl ~ -s ~ ! : ~ :oS ~ .s
8 m ~ :8 i." >..~ ~ to i oS -5 .... l! = .s ~ g -So ""8 ~ .g ~ .fA ~ ~] :: J! 1: 's oS till i3 g:.e i~ -< .... ~.~ 8 ~ ~.~ :r CI).S
-,-~:~'Rt"' g ~ ~!;'~.g iiiil ~.!l18i= ~ 8:~ III 8=Er ~ ~~.s m ~ ~.!~ : ~It 1: 8 ~ I! 8:'~ ~ .=! ~i5 i=~:si
~. CO) If :a ~"fa III tl ~ III ~ ~ ~ ~ 'm ... '8 -S fa ~ 1Jl ~ e -S ?- c:: c l! .e J:I " 13 e J:I E-< l'lI a.S S ~ till m
'f :=." ~,'~. ~:~;'~!I~' ::11:!!""g -sa'": . ~:'\J!lf: l'f dl: t.) dl ~ e S.c ~ CI) ~ iii "'0 III III ell l'lI .:. . ~'... 1Il,C
it :::9>. 1Jl~Clla "':a- .... .c::. CI) c::'w, ... ~~'a u':':i'::l~C!J i]O.O;:.....
1 t =j m II] 5~~.e :'8 8 ~-o ~ f -8 ~ o:2~ 's . a.!a ~j 0 =:: fA' c::; e Ii
-S ~ =r- L a III J! ~ -s 0 till ~ ~ -0 ~ .c:: -g :s.... . g. ~ ~ ' "C ~ ~ ~ .s ~ Il.s.g <II
~') ,.... CI) t' ~ 8 CI) J!. c -F CI) 0 ~ 'n; l'lI.5 -S t B III ~ ~ t < l! 81 "i'i5.E-< c:: m'fl .!!: c:: ... 5
CI) ':W C'I':I till > ! 'fl ~ .... CI).c:: CI) Ill, > ... c;; ";j;;l .- .... f.I. ~ llO III - e '::l.s . - C c:a
~~ ~.s~; ~1Il~~8Jt!~ 1-5 .fA~1 ~~85~~~~~d:~181~-8I~i~JI
o ." u :.s 's CI) ";j;;l l'lI ~ '~ ,.'" -g e := . c Cll.c::.iiii. - ... ~ CI)::l In c::. l'lI .8 c
,~~~.i ~~B~. ~i~~.lt~l ~~t~l~:; :>l'lIi~.~~ !~i i~:8~~~jll~~c.~1i3 i
u .... u CI) Cl) CI) :e . 0 ." +o! lJ CI).- Cl) .- ....." CI) .... till...... Cll - e:= a In.:l:! .c:: ..r:
~ .'1." &-5Jj ~ ~3 ~~~'ii ~ ;.:3.c:: 8.tIlI~ i 'Qg.~fa ~ ::.5~ i3 e i5.." l!.o] 8~lij Sj! r
~isj &6~~; ~ t~~.fA & . >.]1,:::1~ .~il'~~ ~J ~.~~.g.i~~~ ~~~.s~1 ~~.
~ s~r"19~~~~ ~ ~~r:: lf~l~ ~ &r~~ ~r ~ 8..;!~~~1f l,ic~:i! ij! i ~ ~'~G "'8' ~t ~
crJ 0 ... en f VI ~ f.I. CI) Cll .!!, u till .c:: In .c:: III e .c:: 8' c ~ I ~ ~ ~u Q. fA''s 'm .s :li! ." ~ ~-S
,.,J
~-3
. .
~\,.....';;-: '1.0
t1l0
~.
'~
.~
0..
~.
<D' ,
S
o
Q..
.6
~:i -l~~'t!il,frUttlf
~ O""tIl ~ Be! \llll!:i'"
~ .;].G 0 ]u~'it~
. ~ "'P.'I~'_ ;. ~-; j~fl; 'Ii; ISl
.-, . 't L......~. il~!jlf~ )J~! .
'.. r: - ~il!llZ ~ i~~J!
J' as . ~F-~-;~f:~~.i].~.!
. "'d .<t:< ::.::i-l iihJU~~
. .....,~~.~.. S-I:B 8-= ei~~a'::l~.
~..: ~. . ",s:t:. it: rl~~'G 1;18 ~ 8~
~. ~ (;-:~:i ~" 111) t~'ljli';;lB i
" !'-~:'., .~ 11 i]; IiJ~ ijllD'hl
~ -.8 '.']i'" . <=~!~.; ~ Ii] ll.",i~
,.... ',' ";!It].Jio ~""iil "'~'l:!"'JI r:!
,. ~ - = v "'11 ~ II 0 =.ai 8
~'c ' ; .g .! .... 1J",,=, .... fi '-IiI
,I ---. .' . Q . " .\. . . '" ','..'h. O'
~ \e'-l . ~.:. . _ ..... . 'l5~.." ~l
~~" .' t. .;. " ~t.8!11 c:o! Q S,g ~
'wAAJ Ii" !I'lS~.,:I oil';;; ~"(l..
~ = ~, -- _..j ;;-: 11~1]1~~ 11]
oc:.o ~.~.,:.; ~"'i:-" ,U " . rlllzs.fl c: Ii rl- C1l:5 ~
. '.' ; .::;-~-."" II. . ^.. 'JJ'l:'" 0 -5 vIliS, .n or,,;
:! . " a: . :.:,:..:.~.. . .. . '.;;0,,. -s!.S~""'" t1 0.,
" . ...... '. . iii 8. OJ ~
1. ';,;. I I . ' <p.;;'~. " ~., . . I .: ~ -;;':. 11 ~ ..!! r;; ~ '! ul ...ze "6.
,9 0 .' .iI"r;~..~-:" "" l.g.. ~! .s~!."-a~]~.518
~ .' ~. ';". ,,",';..' " .., ......';; '. .....;. I .8 II. -t! ~ ~.~.Sl ~'s v
: "', ,~~':'~:;(~ .:,:';. ~..<.- it: i'fi-il'~l~.si l
.... 1>/' l. ~.. ...!.,cElF.!.li!......."'....
.. "C ~ 111 '"E 2!d r ~I~ ~h118'1~.h8.i1~i
tr. >os; l!iiJi!j.~il!lliliiljll-l!l!tll~J.l!ll~iiilj
= 11.:1] J: ~ ! l.il; itll! 181 e:fllll.!. J!....~ c:~ .....s&!.a.:; rJ! 51 .... Ol> Ii
- Q I .-;. ~ -e"g,:15l~-ali. f...l@~ 8'li~ E.~~~]]~c!~ ~.c~ ~:c ~tIl ~g~ r
- . ~~ ill i:a ~ ],i .~~1~ ,~~~~,g t 1l=~'S :.!!.S:.i!.., "'.., .s~.c.
" ..,. ~.,~ .:",........~..
l:S
?
.rl
c'"
,II:.! .
,~
~'"
13~
~.-
~l
./2.
';'; ,
:::S,G
it'
!!~
le~
~.e
oIlC'.
..~ri
I.e.E
~E
~e
~-l/