780 Rand Road Affordable Housing Development
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June 2, 2022 – Community Development Partners (CDP) and Columbia Cascade Housing Corporation (CCHC) have taken several significant steps in the fundraising process for development of 129 affordable housing units, including:
- An application was submitted to Oregon Housing and Community Services (OCHS) for LIFT Rental funds. Announcements are anticipated at the end of August, 2022. If awarded, the project will be considered fully funded and CDP/CCHC will proceed with full design and permitting processes. However, more LIFT funding has been requested by affordable housing developers in 2022 than is currently available. If the project is not awarded in the current round, CDP/CCHC anticipate applying for OHCS LIFT funding again in 2023, and they will discuss alternative funding strategies and timelines with the City.
- The project’s income mix has been updated to consist of 39 units (rather than 20) for households earning up to 30% of Area Median Income (AMI), and 90 units for households earning up to 60% AMI. This results in a greater diversity of incomes, better serves the area’s most housing instable residents, and increases chances of success of receiving LIFT funding. Further, the 30% AMI units will be supported by Project Based Vouchers that strengthen both the social impact and financial outlook of the project.
- CDP/CCHC met with the Energy Trust of Oregon (ETO) to discuss their funding programs. The project will qualify for incentive funds for both Multi-Family and Attached Residences. CDP/CCHC also plans to use ETO’s technical assistance and incentives for “Path to Net Zero” and solar programs.
- CCHC submitted a request of $3 million for the project to Senator Merkley’s office via the community initiated spending process. The odds of securing this award, and precise timing, are unknown.
While CDP/CCHC remain optimistic about the outlook of this project, affordable housing developers in Oregon are experiencing a variety of challenges. Four of the primary challenges are summarized below, and CDP/CCHC will continue to track these closely to understand how heavily they will impact this project:
- Construction Cost Escalation – Many factors over the past several years have resulted in dramatic cost increases in construction materials and labor. Projects on the west coast are now seeing 12% cost increases year over year.
- Rising Interest Rates – the interest rate environment is also rapidly rising. The Federal Reserve increased the prime rate by 50 bps (0.5%) in early May and has signaled as much as a 2% increase by the end of 2022.
- New Limits on Private Activity Bonds (PABs) – 4% Low Income Housing Tax Credits (LIHTCs), which are central to the funding of this project, are required by federal tax law to be paired with PABs. The law requires that at least 50% of project costs must be financed with PABs. PABs are issued on a State level and until very recently Oregon always had excess PABs for 4% LIHTC projects. However, the recent increases in local and regional funding for affordable housing throughout the State has caused the demand for PABs to increase substantially, and last year OHCS determined they have more demand for PABs than available supply. This shortage is causing a slowdown in the amount of affordable housing projects that can move forward across the state. Affordable housing advocates are encouraging the US Congress to lower the “50% test” to a 25% test to enable more affordable housing projects to move forward. This policy change is in President Biden’s recently released Housing Supply Action Plan.
- Very High Level of Competition for LIFT Funds. The Oregon Housing and Community Services LIFT program is substantially oversubscribed this year. In 2022 there is $30,350,000 in LIFT funding in the category available to the 780 Rand Rd. project (LIFT Rural paired with 4% LIHTC), and approximately $110 million was requested by developers of seven projects throughout Oregon. It is the most competitive application process for LIFT in the program’s three-year history. It is likely that only one or two of the seven submitted applications will be funded in 2022.
Next steps include community engagement efforts beginning this summer which will move the development proposal into greater design detail. CDP/CCHC hired the Center for Public Interest Design (CPID) to facilitate outreach planning and events. CPID’s outreach scope includes the following phases:
- Phase I (May – June) – Research, community mapping and analysis of the community’s assets, stakeholders and potential partners. This research will initially be conducted via publicly available web and print sources, with an emphasis on learning the community’s history, challenges, assets, and needs. CPID will then perform initial outreach to local farm and school groups that the organization has worked with in prior engagements. The primary goal is to set research parameters and focus subsequent community engagement phases.
- Phase II (June – August) – One-on-one interviews with community stakeholders and small meetings with community organizations. For example, this is likely to include Latino/LatinX community organizations and westside residents. This phase is focused on identifying potential social programs and resources for the project’s future residents, and identifying potential community partners.
- Phase III (mid-late September) – Public meeting(s) for community members to gain awareness of project, and provide feedback on the project’s physical features and connections and benefits to the wider community. Final date of this meeting(s) will be contingent on LIFT announcements.
- Phase IV (September – April 2023) – Draft report which include findings and recommendations from the outreach process.
If LIFT funding is secured, a formal development agreement will be prepared and CDP/CCHC will apply for land use permits. Housing could be ready as early as 2025.
To receive updates about community outreach events and other project information, please email HRaffordablehousing@communitydevpartners.com with your name and preferred contact information (phone, email, etc.).
Background Information
In January of 2020 the City purchased a seven-acre parcel at 780 Rand Road in Hood River for the purpose of developing affordable housing.
In the autumn of 2020 the City contracted with Leland Consulting Group, DDV Consulting and Urbsworks to prepare a development strategy for the site and a developer solicitation. Goals were established by the city council, and the consultant team met with stakeholders before preparing four preliminary development alternatives.
In the spring of 2021 a StoryMap and a brief survey were used to obtain public feedback, and the preliminary development alternatives were refined for use in developer-solicitation documents.
In the autumn of 2021, after a competitive solicitation process, Community Development Partners (CDP) and Columbia Cascade Housing Corporation (CCHC) were selected as the City’s preferred development team to build affordable housing at 780 Rand Road. The City and CDP/CCHC completed a Purchase Option Agreement in February of 2022, needed to qualify the developer for state and federal funding sources.
City Council expects CDP and CCHC will employ their creativity and development expertise with respect to site- and building design, and financing and deal structuring, to deliver housing on the site consistent with the City’s goals.
For questions about the 780 Rand Road Housing Development Strategy, please contact Senior Planner Kevin Liburdy.