Economic Development Authority Meeting   6/30/2021

One minute after, and I think we have everybody?

I know we have a quorum.

So let's go ahead and get started.

I'll call the meeting to order, and I will read our preamble here.

Notwithstanding any provision in the EDA bylaws to the contrary as permitted under Albemarle County's continuity of government ordinance,

Chapter 1283 of the 2020 Acts of the General Assembly and the resolution of this body adopted on April 21, 2020.

We are holding this meeting by real time electronic means with no authority member physically present at a single central location.

All authority members are participating electronically.

This meeting is being held in accordance with Section 6 of the county's continuity of government ordinance.

All authority members will identify themselves and state

Their general physical location by electronic means during the roll call, which we will hold next.

This meeting is being recorded and will be uploaded to the county's website.

The public has real time audio visual access to the meeting over Zoom and real time audio access over telephone, both as provided in the lawfully posted meeting notice.

The public is invited to offer live comment during the meeting's public comment period.

Comments are limited to three minutes and must be germane to the matters on today's agenda.

Public is also invited to send questions, comments, and suggestions to the authority through the county's Economic Development Office at any time.

I will do that.

And Director McNaughton.

Present in Troy, Virginia.

Mr.

All right.

We do not have anybody that has signed up.

If anybody in the audience would like to speak, you can indicate now by raising your hand.

All right, then on to new business.

I am.

I understand that Mr. Childress is in the, I don't know what we call it, the audience.

And he's involved.

He's from Scott Kroner.

OK.

Tara Boyd indicated that she may join, but I didn't see her in the audience.

She should be promoted also.

All right, and Tara's with, she's with the law firm Avoidance Site.

They're both, they represent Habitat and the Piedmont Housing Alliance, and I will rely on them.

They have greater expertise in terms of the determination certificate, and so I will, they will be available to correct any errors that I make, and also to answer any questions that the board members may have.

But I'll just start.

I'll start right off with kind of a recap of the, this involves the Habitat for Humanity's redevelopment of the Southwood neighborhood.

The Board of Supervisors and the EDA, they have both entered into a performance agreement, a multi-year performance agreement with Habitat for the redevelopment.

Just by way of update, the Southwood neighborhood, it's 120 acres off of Old Lynchburg Road.

I think what's attractive for the Economic Development Authority is that it does lie in an opportunity zone.

It was reported there are 80 developable acres.

Right now, it involves 341 mobile homes and 1,500 residents.

The redevelopment plan is going to work towards 700 to 800 new dwelling units.

400 of those units will be affordable dwelling units.

We're looking at about $100 to $250 million total investment in that neighborhood development.

and it's in two phases.

Phase one involves 32 and a half acres.

Phase two involves what you will recognize as kind of the mobile home park at this point in time.

The plan is to develop phase one first because then that won't displace the residents who are now in the mobile homes.

So there are, I say phase one, but there's also two, the project is divided into two areas.

And I don't know if it's called block B or part B, but in any event, part B is gonna include apartments, commercial development, and oh, you've got the block B there is gonna involve apartments, commercial and community center.

And then part A down to your left is going to be attached housing units.

I don't know the exact location of the four acres.

I believe it's to the left of, I don't know if that Hickory Road coming up there, which is going to be apartments.

The development is looking to develop at least 80 affordable dwelling units.

In terms of the performance agreement, this does involve the early stages of the performance agreement.

In terms of the full length of it,

The county is looking at $3.2 million investment.

I will note that none of the EDA's funds are going to be put up.

The EDA is serving as a conduit.

All grants and all tax rebates will be channeled from the county of Albemarle.

So that just kind of gives a background on it.

The agreement does have several milestones.

Again, I indicated this was the early stages of the performance agreement.

One of the milestones that was contemplated

was that Habitat would either develop these 80 plus affordable dwelling units or actually have a third party that would come in and do that.

And as I understand it, this is from my recollection of discussions before the planning commission and before this board is that in order for this project to be viable, Habitat would sell a portion of it to a third party who would develop

the property.

I understand this is part of that.

I'll let the attorneys correct me if I'm wrong.

But regardless, it was it was it was contemplated that this would happen.

And so Piedmont Housing Alliance is that third party that's coming in to purchase the four plus acres and to apply for the low income housing tax credits for those residences and then develop them.

So that is a milestone in terms of the performance agreement.

Let's see.

So this is somewhat foreign to me.

So a lot of what I do is more learning than anything.

So we've been presented with a determination certificate that has been shared with the board members.

And so Mr.

Bowling may be able to comment on this or the attorneys as to the necessity of it.

We presume, as Mr.

Bowling explained to me,

that is in terms of federal tax regulations or federal housing regulations.

This is necessary in order to close on the sale and the development.

So that's why we're being asked because we're a party, even though we're serving as a conduit, we are a party to the agreement.

And so our endorsement would be necessary.

What we have developed and I think as Jennifer has shared with the board are essentially two resolutions.

One resolution indicates that this board will authorize the chair to endorse the letter once the board of supervisors has approved it and once the county attorney has approved the letter as to form.

The second resolution which was offered as a suggestion and counsel of Mr.

Bowling is that it kind of presents a reservation in the sense that the EDA would go ahead and authorize Don to sign the letter, but it would include a reservation indicating that the EDA

has not made an independent determination or verification of the contents of the letter.

but instead is relying upon the board of supervisors and county staff to do that.

So essentially we're following in the footsteps of the board of supervisors.

To some extent, I think that's more accurate.

So I think that's the way to go if Mr. Childress and Ms. Boyd don't have any objection.

I think that's the most conservative approach but I'll let them address that.

I will say in terms of the information we've received from county staff as to the contents of the letter, Stacey Pethia is the housing director.

I'm not going to swear by her title, but she does housing for the community development department.

She has indicated to me by email that she has no issues with the letter.

I will say that the attorney for the planning commission has had

some comments on it.

And the significant comment is on page two, the first clause number two that indicates the 30 year minimum period of affordability may be shortened in the event of the sale of the properties acquired by foreclosure and other circumstances.

I can't confirm, but I suspect that that is consistent with federal law and federal regulation.

It is not entirely consistent with the agreement so that the Board of Supervisors would have to make a concession in terms of the agreement.

The performance agreement just states 30 years outright as a minimum period.

It doesn't discuss the federal regulations.

But that's one thing that has been pointed out.

I looked at this and contacted Richard and as soon as I saw this I represent other conduit entities and when I've seen this language in the past I've consistently said for the board who I represent here of EDA members

that you really don't want to be certifying to facts when you don't have any independent verification of those facts.

And so Richie made the change in the resolution, but I also suggested to him, and I think actually I pretty much insist if you all want to avoid any exposure in this case, that the board should ask that the determination certificate be changed to indicate that only the county is certifying as to the various factual allegations that are set forth in the letter.

and the board accepts those certifications as a conduit entity relying solely on the correctness of those certifications by the county having made no independent verification.

The reason for that is you want it both places.

You never know where these letters are going to end up or when it's going to become a problem and

I'm just guessing, I'm assuming this is for financing or tax credits or such as that, but if a dispute arises in the future, my role is to ensure that the board members don't become entangled in any future disputes.

The easiest way to do that is to make sure you stick to your conduit role in anything that you sign.

And the second resolution indicated that the approval would be conditioned on that change being made in the letter.

And so just in terms of closing, this follows up with Mr.

Bowling's comments in terms of exposure.

So he's right in terms of limiting the exposure.

I will say also that we're just a conduit and a pass through.

So that limits our exposure to some extent.

We haven't put an EDA funds at risk in this project.

All the funds and all the rebates are coming from the county.

And finally, I'll add that Habitat, through their director, I know when we approved the performance agreement, Mr. Ray and the board insisted that there be a hold harmless addendum made to that performance agreement that was done and Habitat executed that.

So they had indicated they would hold us harmless and identify for anything that arises out of this performance agreement.

All that being said, I agree with Mr.

So, Tara and Connor, welcome to the meeting.

Yeah, well, I don't get to do much, so I should at least get to invite people and thank them for coming to the meeting.

Sure.

And my internet's a little unstable, so I apologize if I come across as being digital.

First of all, I wanted to thank you all for taking this up so quickly.

I know that it sort of just hit your plate, and it's important to us that you get a chance to look at it and consider it.

From Habitat's standpoint, Southwood's obviously a very big involved development.

We've appreciated having the EDA support us through it.

And one of the main points of this letter, honestly, is to make sure we're not doing anything right now that upsets the EDA or damages this performance agreement, which Habitat worked so hard, the county and the EDA, to put in place.

The second thing that we're trying to do is to make sure that our partner PHA has what they need in the letter to be able to do their project.

I think everyone's intent is that low-income housing tax credit units be put at the beginning of this development and PHA, I think it's fair for them to be able to step in and not have any unknown liabilities they're stepping into.

Yeah, thanks, Connor.

So I'm counsel for PHA, the purchaser of this parcel right up at the entrance on Hickory Street, where a multifamily low income housing rental project is going to be developed using federal low income housing tax credits.

So PHA has already applied for those tax credits and they should get notice of final approval of the allocation.

I'm not sure I'm using the right terminology.

Probably mid next month.

depending on when Virginia Housing publishes those results but they are very much in the running for those credits and are pretty confident that they're going to get them which is great because the performance agreement that Habitat signed with the county and county EDA

contemplates a chunk of the affordable housing being provided as quote, LIHTC units, low income housing tax credit union units.

And so PHA is in a position to build all of those units.

Your performance agreement requires at least 80 LIHTC units.

PHA is currently tracking at about 120 light tech units.

So we'll be able to go above and beyond the minimum, which is good.

So as the council for the purchaser of this property, I have to help PHA do its due diligence and PHA is a stranger to the performance agreement, right?

It's between habitat or rather habitats

Affiliate, Southwood Charlottesville, and the county and the county EDA.

So we reviewed this and we saw some things that we wanted to get comfort on to make sure that we weren't stepping into liabilities that either we weren't intended to have or that didn't make sense for us.

And one of the things that jumped out was this description of the LIHTC ADUs, the AD, LIHTC ADUs.

and this 30-year requirement.

Well, in order to get the low-income housing tax credits for these 80 units, the federal regs governing those credits only, they provide a 15-year point during the affordability period when the

that ownership can turn over.

And they also provide that foreclosure potentially can shorten the period of affordability.

But assuming no foreclosure and assuming PHA remains in control of the project, which is the plan, the affordability period would be 30 plus years.

So we kind of read this as just almost more of a drafting conflict.

The plan is a 30-year affordability period.

Using the LIHTC, there are a couple of technicalities where it could be shortened.

That's just kind of part of the landscape.

So I think both Habitat and PHA would like the comfort that what we're doing is consistent with the performance agreement.

The other stuff in there is really just kind of like making sure that we're not missing anything, that the performance agreement is still in effect, that some of the terminology used in the performance agreement that was a little bit different from what's in the county rezoning approval, that they're talking about the same stuff.

I have a question.

Can you hear me?

Yeah.

Yeah.

Okay.

Yeah.

When you say you're tracking at 120 units, does that mean you have a commitment to build that many from a developer, a builder who will ultimately receive the tax credit?

No.

I don't believe PHA has started yet the site planning process.

The total number of units also is going to depend on county approvals and entitlements.

And we are way at the beginning of the process here.

That'll be somewhat up to you guys.

Well, that's why I asked that question, because as you probably know well, the 2017 Revenue Act changed the desirability of the tax credits quite dramatically.

Yeah, I'm going to leave that to smarter heads than mine.

I'm not a tax counsel and I'm not a credit broker.

Tara, how are you today, Jim Bowling?

What I proposed, you understand what I'm saying, is that the EDA is merely a conduit.

They don't know really squat about any of the things the county is certifying to.

That's why we have the county staff and that's their job.

So what I want to do is change the determination certificate so that it reads that the county certifies to all those things and then

The EDA joins in to accept the county's certification as may be necessary, but with the understanding they've made no independent, have no knowledge of and made no independent verification of the facts that are set out therein.

Something to that effect.

I've done it before with other federal funding, tax credit funding devices where I have conduit entities and hasn't caused any problems.

And that's what I'm proposing in this case.

It's just for PHA's confirmation.

I mean, it's possible that in the course of our financing and tax credit,

I mean, I guess my question is, does the EDA really just need to say we're agreeing to whatever the county says?

I mean, do we even need to sign onto the letter other than just to say, you know, the county is saying that they agree with all these things and we're agreeing that they can do it or we agree, we're consenting to the change, but

Because it's really, all of these issues are really their issues, not the ADA's issues.

Which is what I'm saying.

That's what we're trying to do with the second resolution, correct?

Well, it is, but you need to make sure that whoever signs this determination certificate signs a change certification certificate.

You don't want it.

I wouldn't put my John Henry on it the way it's written now.

Just relying upon the resolution, the document itself is going to have to be changed before

I would want, if I was a board member, to be signing the thing.

And this is not a high risk item, but the goal here is to keep whoever signs this thing from ending up in some kind of legal proceeding four years from now, sitting there and having this thing waved in front of their face and say, well, why did you sign this thing, sir, if you didn't know anything about it?

So Jennifer has shared the second resolution with the board members I know with a and you've been hit with a lot of documents but the resolution as it's written

It says that the chair will be authorized to execute the determination certificate on behalf of the authority.

Once it has been amended to reflect, the authority relies on the Board of Supervisors and its staff to determine the appropriateness of the certificate and to independently verify the contents thereof.

The authority has not independently determined the appropriateness of the certificate or verified its contents.

and once it has been approved by the Board of Supervisors and approved as to form and content by the county attorney.

So that's the second resolution.

It authorizes Don to sign if the letter is amended to reflect that.

And I think that captured what Mr.

That should do it.

Yeah, I mean, I'm totally fine with that.

I guess what I was suggesting is we can take an even further step back and I don't want to mess things up anymore.

May I ask, maybe it's more of a comment than a question, but I would just want the county to get a little bit more assurance on both the number of units, because what I was seeing listed in the state ranking

was for only phase one, it was like 62 units.

So I'm hearing different unit numbers, which is a little worrying.

And the 30 year, yeah, the 30 year really, I really like to pin that down because 15 and 30 is a big difference for it to suddenly leave potentially low income housing support and go out into the open market.

So has the board approved this yet?

No, they have not.

Okay, that's fine.

I understand what Kat's saying, but I also think those are really not our issues.

Those are the board's issues to deal with.

I mean, our issue is just what are we

I just made the minutes reflect.

Yeah, so I had the same question because I went on BHDA's site and looked at the rankings and was like, oh my God, there were only 60 units.

And so I got in touch with my client and he

Here's what he explained.

Southwood Apartments project is planning to have a total of 121 units.

So we'll be in compliance with the performance agreement.

The deal is what's called a 9-4 split deal, where a portion of the units, 70, are developed under a 9% LIHTC award.

And the remaining units, 51, are developed concurrently under a 4% LIHTC award.

The recent award, the one that we're seeing on BHDA's or Virginia Housing's website,

is only for the 9% Southwood A portion of the project.

The 4% Southwood B project will be submitted later this year.

Since the 4% credits are non-competitive, we are assured to have this portion of the deal funded.

You guys don't have access to it, but in PHA's purchase and sale agreement with Habitat, we have a kick out if we don't receive the allocation of the competitive credits this summer next month, which is why the July deadline is important to us.

but we're comfortable enough going forward knowing that we'll get the other chunk of credits in the non-competitive process if that gives you some comfort.

What does the 4% LIHTC award reflect?

Less stringent?

It's the same affordability requirements.

But again, I'm getting a bit out of my real house here.

Well, yeah, it is clear that the the amount of the credit is different, but in compensation for a smaller credit, what does the

That I do not know.

Right.

Are you interested in buying some tax credits?

Well, I guess it's only a big deal because the performance agreement has a different term.

That's right.

I think the board's either got to tell us, yeah, we meant these to be lie tech units.

So the 30 year period is subject to the lie tech regs.

Or no, we didn't really mean these to be lie tech units.

And they are hard and fast, 30 year, no kick out or, you know, no ifs, ands or buts.

Yeah.

Right.

And that's going to be tough.

That maybe means these units don't get built.

Well, you know, the other thing, too, is when you're I've been a critic of tax credit programs for many years that go beyond housing and into many other areas.

And one of the the, you know, unavoidable problems is that they're all they're often pinned on wishful thinking and hopes and dreams, you know, so

To some extent, when you play this game, you've got to cast your fate to the wind a little bit and hope that there is no foreclosure or that there's no incentive for PHA to turn around and sell it to somebody else.

Yeah, and for what it's worth, I mean, PHA's reputation in this community, I think speaks for itself.

It's developed a number of LIHTC projects.

It's actually come in and been a 15 year buyer on a LIHTC project that I worked on a couple of years ago that kept the project affordable.

And this is sort of beside the point, but Taro or Connor, could you tell me when we look

at the various phases in the prospective plans here.

What percentage do you see being say section eight rental property and or single family dwellings that might qualify for PHA down payment assistant programs or the VITA program or something like that?

So I'm probably the best to speak to that.

And I honestly don't have a good answer for it.

I know Habitat is doing a significant number of Habitat built units.

That'll be, you know, long term affordability as Habitat houses.

I can't speak to the question about Section 8.

Yeah.

I don't have any intel on that either.

All right.

Anything else?

Anybody else have any questions about this?

I just have a quick comment to follow up on Tara's comments and looking at the performance agreement.

It indicates on page 12, the LIHTC-ADU shall qualify as affordable housing for a minimum of 30 years.

I guess in terms of playing lawyer, if they apply and everything qualifies at that point, then they may satisfy that.

In terms of drafting, does it mean qualify and remain or just qualify under federal regs?

So I think there might be some wiggle room there and the board may determine that, yeah, we just meant that

It has to qualify under the federal program for a minimum of 30 years.

Or add a clause that's, you know, something like subject to LIHTC regulations.

But others will have to clarify what the board's intention was and the party's intention in that.

So is there a motion on the, was there a motion on any resolution, but specifically on the amended resolution that

So I have worked fairly extensively with PHA and to a lesser extent with Habitat, and both of those organizations are very respectable and fill a huge public need and

You know, all of my interactions with them have been extremely favorable.

So, can I see the resolution again?

Sorry.

So, I would like to move that the Economic Development Authority of County of Albemarle, Virginia adopt the recited resolution and authorize the chair to execute the determination certificate

All right, second.

So is there any discussion on the motion?

I guess that's a no on further discussion.

I'll do it.

I'll do it.

Let's see.

Director Long?

Aye.

Director Imhoff?

Aye.

And Director McNaughton?

All right.

All in favor?

Thanks to Connor and Tara for coming today and explaining what's going on along with Richie for that.

I appreciate everybody getting together to do this.

So what I'm going to suggest, Richie, is that probably the best way to do this might be just a certificate from the county once the board has approved it that just says we certified all these things.

And then our our letter can say in reliance on the certificate

along with the language that Jim has proposed, that's what we can put in the letter.

So after the board acts, then we'll have a document for you to sign.

Yeah.

Okay.

Yeah, thank you.

If I may.

Having had the pleasure of working with both of these boards, oftentimes the board relies on the EDA and subject matter experts to advise them in certain ways.

So as a result, Don, I think myself, Richie, and Jennifer will somehow compile the minutes or notes from this, try to take the salient points out and share those with the board of supervisor in some way, shape, or form if it's the will of the EDA.

Sure.

Thank you.

Good idea.

So I have two other, I don't know if we have any unfinished business.

I do have two items.

One, I was going to see if Richie can give us an update on what we know about future meetings in terms of Zoom and the change in the ordinance.

And then the other piece is we may have another potential

need for a special meeting, and I wanted to raise that and see what people's schedules were if we need to schedule another special meeting related to a bond.

So why don't we go ahead and do that.

I don't know, what are people's schedules for the next two weeks?

Are people around, not around?

Every day is a different day, but I'm in Virginia until 2019.

Okay.

Okay.

All right.

Okay, great.

And are we having a July meeting?

Yeah, yeah, we canceled the July meeting, because I am, I'm gone too.

So, but apparently, there was a bond that they wanted to put on the

July meeting and just discovered that it wasn't on and it shouldn't take, it's a refunding issue so it shouldn't take long to resolve but I wanted to go ahead and cooperate if people are around to have a quick meeting.

So Jennifer will follow up and we'll try to schedule something if we need to.

In terms of the county's willingness to support public meetings, it's my understanding that although the governor's declaration of an emergency or disaster is expiring as of midnight tonight, the county still has authority

to maintain its disaster declaration for six more months.

The FOIA electronic meeting statute which goes into effect tomorrow has been amended to allow virtual meetings for local boards and local authorities.

So the plan is for July and for August, the expectation is to continue with the status quo that we'll be doing Zoom meetings.

My understanding is that the incident management team for the county has its eye to opening things up after Labor Day, but we don't have specifics on that.

So the one comment I will say is that we will continue virtually until at least after Labor Day.

I don't know if our disaster declaration continues if the county will be opening up and allowing public meetings in its county office building.

That's just an unknown at this time.

Richard, do you have any other insight just in terms of thought process?

I mean, the world's never going back to where we were.

And I do think that some form of virtual meetings from the standpoint of work life, environment, community engagement,

is an important thing.

So that question was raised as to whether the General Assembly would take that up during the special session that they're going to meet in August.

And the answer I received was that there's no indication that they're going to address that again.

But I mean, I hear you loud and clear.

My understanding is that public participation has increased dramatically.

I do know that there are difficulties in terms of

in terms of conducting hybrid meetings.

But the electronic participation is really, it's on the members of the board.

So public participation by electronic means, again, I'm not a tech expert, but that's something that can continue indefinitely.

So there's nothing that prohibits us from receiving public comment electronically.

or by some form of Zoom or Teams meeting format.

We just have to hash that out somehow.

Great.

Anything else, Roger, Jennifer, anything?

All right.

Thanks everybody.

I appreciate it.

Thanks, Jim.