TABLE OF CONTENTS
FOR CITY COUNCIL PACKET
october 28, 2008
POLICY SESSION AGENDA
Packet Date: October 24, 2008
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CITY COUNCIL REPORT
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POLICY AGENDA
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TO:
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David Krietor
Deputy
City Manager
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AGENDA DATE:
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October 28, 2008
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FROM:
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Donald L.
Maxwell
Community and
Economic Development Director
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ITEM:
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3
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SUBJECT:
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CITYNORTH --
OPENING FIRST PHASE
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CityNorth
will open its first phase, High Street, on November 13, 2008. High Street will feature nearly one million
square feet of development, including retail, restaurant, office, and
residential space situated at Deer Valley Drive
and 56th Street
in Northeast Phoenix.
ADDITIONAL BACKGROUND AND
INFORMATION
Bordered on the west by Desert Ridge
Marketplace, on the east by 56th Street,
and to the south by Loop 101, CityNorth
is a 144-acre development that will offer approximately 5.5 to 6 million square
feet of new, mixed-use development when fully built. This includes new department stores and hotels
in addition to residential, retail, and true Class A office space capable of
attracting corporate end-users.
Thomas J. Klutznick
Company is the developer of CityNorth. The Klutznick Company
and related companies are codeveloping the initial
phases of the project called CityCenter of CityNorth. CityCenter of CityNorth comprises
High Street, as well as two additional neighborhoods. The Boulevard and 54th
Street, which are expected to open in 2010 and
will feature Phoenix’s first Nordstrom
and Arizona’s first
Bloomingdale’s stores.
Prior to the first phase opening, the
project has already provided more than $5.1 million of permit review fees and
construction sales tax to the City.
At full operation, CityNorth will provide more than 19,000 jobs. An additional 16,000 construction jobs will
have been involved to complete the “city-within-a-city.” At that point, CityNorth
is anticipated to provide $1.9 billion in annual economic activity to the
region. During a recent job fair for the
250 jobs in the first phase of retail, more than 500 people applied in person
at CityCenter, and an additional 700 applications and
resumes were submitted on-line. Ultimately,
High Street will have approximately 500 jobs for the retail/restaurant component.
While economic conditions make this a
difficult time to advance new projects, CityNorth has
the potential to have a long-term, positive impact on the city of Phoenix.
RECOMMENDATION
This report is for information only.
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CITY COUNCIL REPORT
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POLICY AGENDA
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TO:
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Ed Zuercher
Deputy City Manager
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AGENDA DATE:
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October 28, 2008
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FROM:
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Jerome E. Miller
Neighborhood Services Director
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ITEM:
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4
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Kim Dorney
Housing Department Director
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SUBJECT:
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PHOENIX NEIGHBORHOOD
STABILIZATION PROGRAM FUNDING TARGETS
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This report
requests City Council approval to implement a Phoenix Neighborhood
Stabilization Program by receiving and awarding Community Development Block
Grant (CDBG) funds resulting from the Housing and Economic Recovery Act of 2008
(HERA), Neighborhood Stabilization Program (NSP) to establish funding targets
for HERA activities, and to enter into contracts for services required to
implement HERA-related programs and strategies.
The Neighborhoods, Housing, Historic Preservation, Arts and Culture Subcommittee
approved this item at its October 8, 2008 meeting.
THE ISSUE
In June 2008, the City Council directed staff to begin preparing a
foreclosure response program in anticipation of federal action on
foreclosures.
On July 30, the President signed the Housing and Economic Recovery Act
of 2008 (HERA). Information regarding
the many elements of the HERA and city efforts to mitigate foreclosure impacts
was provided in an information report to the City Council on August 14, 2008. The NSP element of the legislation is for
CDBG-like funding under a formula and regulations issued by the U.S. Department
of Housing and Urban Development (HUD).
On September 26, HUD announced the City was allocated $39.4 million in
neighborhood stabilization funding under the HERA Act. Staff estimates 800 properties and/or
families could be assisted through a combination of HERA and CDBG funds,
Neighborhood Services and Housing Departments’ programs, and the Phoenix
Industrial Development Authority. More
than 5,000 properties were foreclosed in Phoenix in 2007-08, and
as of the first eight months of 2008, approximately 11,000 additional
foreclosures have occurred in the city of Phoenix.
OTHER INFORMATION
The applicable provision of the HERA for the Phoenix Neighborhood Stabilization
Program is the $39.4 million in NSP funds distributed to Phoenix. Funding must be spent to address abandoned
and foreclosed properties through acquisition, rehabilitation, demolition,
redevelopment and financial incentives.
Income Eligibility: Funds must serve households or areas at or
below 120 percent of area median income (AMI). Currently 120 percent of AMI for a family of four
is approximately $77,000. Further, 25
percent of funds must benefit households at or below 50 percent of AMI, which will be
used primarily for rental housing opportunities. HUD will allow up to 10 percent of the funds
to be used for program administration.
Implementation
Timeline: Time is of the essence. Applications are due to HUD on December 1, 2008. Funds will be available on January 1, 2009, and must be
obligated by June 30, 2010. Funds must be spent within 48 months, or by December 31, 2012.
Program Goals and Proposed Strategies
The proposed Phoenix Neighborhood Stabilization Program will emphasize market-driven
strategies, partnerships, and leveraging to increase the number of properties
that can be restored to productive use.
Staff will also incorporate extensive counseling and education services
to prevent foreclosures and promote successful homeownership and tenancy. Funding awards will primarily parallel City
Council-approved underwriting policies.
Program Goals: Staff estimates up to 800 households can be
assisted by:
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Eliminating blighting conditions in neighborhoods;
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Connecting qualified buyers and sellers;
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Preserving affordable rental opportunities;
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Partnering effectively with qualified community
resources;
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Protecting taxpayer funds and efficiently
implementing the program.
Proposed
Program: Staff proposes
using existing contracts and programs administered by the Neighborhood Services
and Housing Departments to immediately fund the proposed neighborhood
strategies:
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Eliminating blighting conditions in neighborhoods through acquisition, rehabilitation and re-sale of foreclosed homes,
or demolition of blighted, vacant and foreclosed properties for buyers who will
occupy the home as their primary residence.
Staff is recommending 36 percent, or $14.1 million, of the allocation be
used for these activities.
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Connecting qualified buyers and sellers by providing assistance and incentives for homebuyers who will own and
occupy foreclosed homes as their primary residence. Staff is recommending 27 percent, or $10.6
million, of the allocation be used for these activities.
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Preserving affordable rental opportunities through acquisition or rehabilitation of foreclosed multi-family homes for
affordable rentals. This strategy will assist in meeting the
HERA-mandated set-aside of a minimum of 25 percent of the funds to preserve
affordable rental opportunities for households below 50 percent of median
income. Staff is recommending 27
percent, or $10.6 million, of the allocation be used for this activity.
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Partnering
effectively with qualified community resources, including
opportunities for community outreach, foreclosure prevention, pre-purchase and
tenant/landlord counseling and education services. CDBG and other funding resources are also
available for this activity. The Phoenix
IDA and Arizona Department of Housing are also
potential partners.
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Protecting taxpayer funds and efficiently implementing the program by administering programs and
certifying compliance with HUD rules.
Staff will follow Council-approved policies and guidelines to protect
these public funds. Staff is
recommending 10 percent, or $3.9 million, of the allocation be used for this
activity.
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Further details are contained in Attachment 1.
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RECOMMENDATION
Staff recommends City Council approval to:
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Receive, accept and disburse approximately $39.4
million in CDBG funds allocated through the Housing and Economic Recovery Act
of 2008;
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Establish funding targets for HERA activities as
described in this report:
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Amend contracts and programs to implement HERA-related programs and
strategies;
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Substantial Amendment to the HUD Consolidated Plan / 2008 Annual Action to
reflect new strategies developed to address recent HERA legislation.
Staff will monitor and evaluate implementation of these proposed
strategies, and solicit proposals to address service gaps while meeting CDBG
standards and HERA requirements. The
City Council will be provided regular updates on the program, as well as opportunities
to adjust the Neighborhood Stabilization Programs recommended in this report as
market conditions warrant.
CONCURRENCE
The Neighborhoods, Housing,
Historic Preservation, Arts and Culture Subcommittee recommended City Council approval
of staff recommendations at their October 8, 2008 meeting.
The Subcommittee encouraged staff to identify ways to expedite
disbursement of Neighborhood Stabilization funds in the community as quickly as
possible, understanding the HUD rules that govern how the money can be spent.
Attachment
ATTACHMENT
1
PHOENIX NEIGHBORHOOD
STABILIZATION program
INITIAL RECOMMENDED STRATEGIES
Amount: $39.4 million from the US Department of
Housing and Urban Development
Proposed
Strategies - Staff proposes using existing contracts and programs administered by the
Neighborhood Services and Housing departments to immediately fund the proposed
neighborhood strategies:
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Assist buyers who will own and
occupy foreclosed homes. This may
include direct assistance (“soft-seconds”), in conjunction with conforming
first mortgages, through programs delivered by community partners such as
Community Housing Resources of Arizona (CHRA) and the Phoenix Industrial
Development Authority. Other buyer
incentives may include loan loss reserves, shared equity loans, rehabilitation
loans and grants to new homebuyers.
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Acquire, rehabilitate,
and re-sell foreclosed homes through partners, non-profit or for-profit
intermediaries such as Local Initiatives Support Corporation (LISC). An intermediary would provide or link to
first time-homebuyer counseling/qualifying services, use existing bond or other
financing programs, and provide or refer borrowers to sources of soft-second or
down-payment assistance.
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Acquisition/rehabilitation
of
foreclosed multi-family homes for affordable rentals. This strategy will
assist in meeting the HERA-mandated set-aside of a minimum of 25 percent of the
funds to provide housing for households below 50 percent of median income. Units will be added to the Housing
Department’s rental housing portfolio, and additional units may be created
through partnerships with nonprofits.
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Demolition and
acquisition/demolition of blighted vacant and foreclosed properties will be
reserved for the most difficult properties, or in limited geographic areas that
are highly impacted, and/or in redevelopment areas.
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Community Outreach and foreclosure
prevention, pre-purchase and tenant/landlord counseling and education
services. Community stakeholders may
have a role in leveraging scarce counseling resources by being trained to offer
“Crisis Budgeting” and other workshops, preparing distressed borrowers for a
more successful interaction with their lender and counselor.
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CITY COUNCIL REPORT
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POLICY AGENDA
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TO:
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Thomas E. Callow, P.E.
Deputy City Manager
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AGENDA DATE:
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October 28, 2008
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FROM:
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Debbie Cotton
Public Transit Director
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ITEM:
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5
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SUBJECT:
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BUS PROGRAM FINANCIAL UPDATE AND EARLY BUDGET
ACTIONS
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This report provides
City Council an update on Transit 2000 (T2000) sales tax revenues and the
overall financial status of the bus program and requests approval of December
bus service reductions as a first step in mitigating the impacts of rapidly
declining sales tax revenues. The
Transportation and Infrastructure Subcommittee reviewed this item on October
16, 2008 and
requested that the item be presented to City Council along with additional
performance data.
THE ISSUE
As a result of
rapidly declining sales tax revenues, an in-depth review of the overall
financial status of the bus program was completed. This has prompted the need to consider
various ways to mitigate the impacts of this funding shortfall.
OTHER INFORMATION
As outlined to the
voters, the T2000 program called for a 0.4 percent sales tax that, together
with existing funding sources already allocated to bus service, would be
distributed to bus and light rail programs.
As a result, all General Funds, Federal Funds, state lottery funds
(LTAF) and system-wide revenues such as fares and advertising along with the
sales tax are pooled for allocation.
Consistent with the original program, light rail receives 34 percent of
the pool and 66 percent goes to various bus services and street improvements
(bus pullouts, left-turn arrows, and bike lanes).
New funding sources
introduced since passage of T2000 are directed to the program for which they
were added. The most significant is the
½-cent countywide sales tax that includes funding for both bus and rail.
This creates a
complex funding structure. A change in
any pooled resource impacts both light rail and bus. As a result, both the bus and rail program
forecasts are adjusted for changes in resources and each program’s expenditures
are evaluated only against its share of the pool. This report focuses only on the 66 percent
bus service portion.
TRANSIT 2000 SALES
TAX RESULTS
As shown in the
following table, 2007-08 T2000 sales tax collections were nearly 7 percent
below 2006-07 and even fell $1.6M, or about 1.5 percent, below the amount
collected two years earlier. Since
inception of the tax, the average annual growth rate is 4.4 percent, an amount
well below the 5.25 percent assumption used to develop the original program.
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Fiscal Year
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T2000 Sales Taxes (in 000s)
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Change from Prior Year
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% Change from Prior Year
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2006-07
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$ 124,432
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$
6,879
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5.9%
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2007-08
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$ 115,914
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$ (8,518)
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