Title
Proposed 9th Street Apartments Rehabilitation and Affordable Housing Project Overview and Proposed Term Sheet
Body
Los Alamos County ("County") is committed to preserving and rehabilitating housing options for all its residents. The County is authorized to provide housing assistance grants pursuant to Chapter 14 of the Los Alamos County Code of Ordinances and the Affordable Housing Act.
In September 2024, the County adopted an amended Affordable Housing Plan ("the Plan") to address the current housing market needs. The Plan recommends utilizing Public-Private Partnerships and deed restrictions to preserve and create permanently affordable housing.
This presentation outlines the broad terms of a partnership proposed by a private developer ("Developer"), the 9th Street, LLC, who is purchasing the Aspen Studio and Thunderbird apartments located at 1027 and 1203 9th Street and 1211 11th Street (collectively known as "the Project") and comprised of 87 studio apartments. The goal of the proposed partnership aims to rehabilitate these properties and ensure long-term affordability for residents with County participation through an Affordable Housing Rehabilitation and Participation Agreement ("the Agreement") should the Council direct staff to proceed.
Project Overview
The Developer proposes a public-private partnership to rehabilitate approximately 25-percent of the Project's 87 studio apartment units and deed restrict all 87 units for twenty (20) years, ensuring affordability for households at or below 45% of the Area Median Income (AMI). This Project aligns with the County's Affordable Housing Plan and the Council's goals to provide diverse housing options for low- and moderate-income households.
A thriving community requires a range of housing options affordable to essential workers, including teachers, construction workers, and those employed in the retail and service sectors that support local businesses. Currently, Los Alamos faces a significant shortage of affordable housing, as evidenced by:
- Los Alamos Affordable Housing Plan. Generally, rent for Studio and one-bedroom units in the County range from $1,250.00 to more than $2,900.00 per month. A recent analysis of 10 multi-family properties with Studio and one-bedroom units in proximity to the Project indicated rents ranging from $925.00 - $2,931.00 (rental deposit not included) and low availability.
In the Plan, Goal 2 directs the Housing Office to “Buy down” or otherwise preserve existing units through affordable housing grants in exchange for long-term affordability.
This short-term goal immediately provides additional permanently affordable short-term units at a low per unit cost and is much more time and cost effective than constructing new units.
- Extensive waiting lists: Canyon Walk and Bluffs affordable housing developments have approximately 100 individuals on their waiting lists. Rents for bed-room units range from $1,020.00-$1,500.00/month depending on income plus a deposit.
- High demand for housing vouchers: 83 individuals currently utilizes housing vouchers in Los Alamos, with an additional 124 on the waiting list. The waiting time for vouchers is approaching two years.
Given the lack of available supply of affordable units, there is a justified rational to support the preservation of additional affordable units.
This Project will preserve 87 units with long-term affordability for households at or below 45% of the Area Median Income (AMI). By ensuring access to affordable housing, the County can attract and retain essential workers, fostering a more stable and economically viable community and thus meet the goals of the community and plan.
Key Provisions
- Deed Restrictions: Upon acquiring the Project, the Developer will record Restrictive Real Estate Covenants ("Covenants" or "Deed Restrictions") ensuring that average rents for all 87 units remain affordable as detailed in the Rent Table below. These Covenants will run with the land, binding the Developer and any successors for the term of the Agreement or the Affordability Period, whichever is longer.
- Affordability: Years 1-7: Rents will be restricted to approximately 35-40% AMI for new residents, as outlined in the Rent Table. Years 8-20: Income qualified residents will be restricted to those making at or below 45% AMI with rents set at 30% of the qualify income. Rents for existing tenants rolling over from year 7 to year 8 shall be limited to a 7% increase year-to-year during the term of their lease.
Rent Table:
Year Average Rent/Month
1 $900
2 $945
3 $992
4 $1,042
5 $1,094
6 $1,138
7 $1,138
8-20 < 45% AMI
Site Renovations:
- Scope of Work: The Developer will renovate the Project Site in accordance with County-approved plans and specifications. To assist in the renovation of the Project Site the County will provide a grant of $520,000.00. This includes, but is not limited to:
• Roof replacement
• Parking lot improvements
• Electrical upgrades
• Heating, cooling, and water system upgrades
• Painting and siding upgrades
• Washer/dryer replacements
• Signage
• Landscaping
• Unit upgrades for older units (e.g. kitchen, bathroom, flooring, and similar)
• Picnic area, bike racks, and miscellaneous site fixtures
- Capital Improvements Budget: The total budget for site renovations is $2,350,250.
- Completion Timeline: The Developer shall complete the renovations within three (3) years of acquiring the Project. Completion will be evidenced by documentation from the relevant permitting bodies, such as the Construction Industries Division and/or the Los Alamos County Chief Building Official.
- Income Verification: The Developer will verify tenant income and household size annually to ensure compliance with affordability requirements. Tenants exceeding 45% AMI may remain but will pay the lesser of 30% of their monthly income or the market rent. Tenants exceeding 80% AMI for two consecutive years will not have their lease renewed.
- Project Management: The Developer, or a County-approved professional management company, will manage the Project throughout the Agreement term.
- Development Schedule: The Developer will complete renovations within three (3) years of acquiring the Project. Completion will be evidenced by documentation from the relevant permitting bodies.
- Inspections: The County may conduct inspections of the Project during normal business hours with reasonable notice.
- Reporting: The Developer will provide quarterly reports during the rehabilitation phase, detailing progress and unit completion. Annual reports will demonstrate compliance with the restrictive covenants and income qualification requirements.
County Contribution
In consideration of the above, the County will donate:
•$3,480,000.00: For the purpose of obtaining the deed restrictions for long-term affordability.
•$520,000.00: To assist in the renovation of the Project Site.
It should be noted that the County’s participation does not constitute a windfall to the developer as rents are significantly below the market rate thus impeding the return on investment. Developer profit will generally be limited to long-term appreciation of the property.
Conclusion
This Public-Private Partnership represents a significant step towards achieving the County Council's affordable housing goals. By leveraging private investment and expertise, the County can ensure the preservation and long-term affordability of these crucial housing units through the approval of this Affordable Housing Grant.
Alternatives
County Council could decline the request to participate in the 9th Street Apartments - Affordable Housing Rehabilitation and Participation Agreement
Fiscal and Staff Impact/Planned Item
Funding for affordable housing projects has been previously budgeted and are available in the Community Development Economic Development Fund.
Attachments
A - Overview 9th Street Affordable Housing Proposal