100HOMESBOA Communication - 5 13 15 — File 199255

1 CITY OF SOMERVILLE, MASSACHUSETTS MAYOR’S OFFICE OF STRATEGIC PLANNING & COMMUNITY DEVELOPMENT JOSEPH A. CURTATONE MAYOR MICHAEL F. GLAVIN EXECUTIVE DIRECTOR COMMUNICATION TO: Board of Aldermen FROM: Michael Feloney, Director of Housing Mayor’s Office of Strategic Planning & Community Development (OSPCD) Michael F. Glavin, Executive Director Mayor’s Office of Strategic Planning & Community Development (OSPCD) DATE: May 13, 2015 RE: Sustainable Neighborhoods Housing Initiative – 100 Homes Program CC: Mayor Joseph A. Curtatone; Emily Monea, Community Preservation Act Manager Please be informed that the 100 Homes Program, a major component of Somerville’s Sustainable Neighborhoods Housing Initiative, is quickly approaching a critical point in its implementation that will ultimately necessitate a formal vote of the Board of Aldermen with respect to city funding. The goal of the program is to provide housing affordability on a sustainable basis through the efforts of the Somerville Community Corporation (SCC). SCC would buy, rehabilitate and own existing residential property with financing that combined loan proceeds from third party lenders and $6.1 Million in subsidies provided under the Community Preservation Act (CPA) program. This project has been approved by the Somerville Affordable Housing Trust and will be before the Community Preservation Committee for their review and endorsement at the CPC’s meeting of May 27th. Pending the actions of the CPC, we respectfully request the BOA to approve the commitment of CPA funds for the 100 Homes Program. Further, for program efficiency and leveraging purposes we propose that the city provide interim financing for the project through the use of municipal bonds that would be retired in their entirety with the use of CPA funds. We respectfully request the opportunity to present the proposed project to the Board of Aldermen at your earliest opportunity.

2 Background: On May 27, 2015 members of OSPCD’s Housing staff, Treasurer Peter K. Forcellese Jr., and representatives of Somerville Community Corporation (SCC) will be appearing before Somerville’s Community Preservation Committee (CPC) to request that the CPC pledge a portion of Community Preservation Act-housing designated funding ($6.1) toward repayment of City bond issuances that would enable the 100 Homes strategy to leverage resources in the interest of maximizing its impact over the next 3 years. In general terms, the program concept is as follows: City of Somerville bond proceeds would be made available to Somerville Community Corporation (SCC) to serve as a subsidy toward the total development costs incurred by SCC in its purchase and rehabilitation of properties that would be owned by SCC and rented to income eligible tenants at below market rents. The goal of the program would be to substantially complete the 100 homes under the program within three years. The total cost of the program is estimated to be $ Million. The bonds would be retired with funding from the Community Preservation Act, over a 20 year period. The subsidy funds would be provided to SCC in accordance with a funding agreement that would set the terms and conditions for the use of the funding. The funds would also be secured under a subordination agreement/mortgage that would allow SCC to obtain other financing from private and quasi-public lenders necessary for the implementation of the program. SCC would not be obligated to repay the subsidy funds unless the terms and conditions of the funding agreement were breached.