City Council Meeting   10/19/2020

Yes, just one second.

I hear my kids yelling at each other.

I move this council certified by recorded vote, to the best of each council member's knowledge, only public business matters lawfully accepted

All right, Ms.

Ms.

Walker?

Yes.

Ms.

Magill?

Yes.

Ms.

Hill?

Okay, thank you.

So I call the regular meeting to order.

We'll have a brief moment of silence.

Okay.

Next, we have the roll call.

Ms.

Ms.

Walker.

Here.

Ms.

Magill.

Here.

Ms.

Here.

All right.

I move to approve the agenda.

All right, Ms.

Thomas.

Yes, Mr. Snook.

Mr. Snook.

I know, I thought I did the hit the space bar thing.

Walker?

Yes.

Ms.

Ms.

Hill?

As Halloween, the city encourages families to plan for a safe observation of Halloween and trick-or-treating activities.

Due to COVID-19, the health district recommends that everyone celebrate safely this year by hosting activities inside with household members or outside with social distancing.

People shouldn't participate in celebrations this year if they are sick or have been exposed to someone with COVID-19.

If you do plan to participate in Halloween activities with people outside of your household, we've posted some tips or trick-or-treaters on our website at charlottesville.gov.

The City also is sponsoring a fun and safe alternative to trick-or-treating by hosting Charlottesville's Halloween Night Out in partnership with the Charlottesville Police Department and the Charlottesville Police Foundation.

Charlottesville Halloween Night Out will be held October 31st from 2 to 4 p.m.

at Charlottesville High School.

This year's event is 100% drive-thru.

Community partners and local businesses will be distributing candy, goodies, and t-shirts for the kids, and there will be a Spooky Car Contest for the Best Decorated Vehicle.

Event details can be found on the City's website calendar.

Second, our Skate Park Council would like to congratulate our Parks and Recreation Department for having

The Charlottesville Skate Park named the best new facility by the Virginia Recreation and Parks Society.

Judged by a jury of its peers, our skate park, which opened in 2019, received an award in this category of best new facility, parks, playgrounds, blue ways, greenways, and trails.

Congratulations to Director Todd Brown, Deputy Director Vic Garber, and their staff supporting this project, especially to our skate park manager, Matt Moffett.

And lastly, in case our citizens haven't noticed, that leaf season is here.

The leaves are falling from the trees and our public service crews will begin residential loose leaf collection on Monday, November second.

And each neighborhood will be visited by a vacuum truck three times during the season on a set rotating schedule.

So this is an increase from two times last year.

Residents may sign up to receive text alerts on their phone reminding them of when their leaf collection week is approaching.

Please also remember that bagged leaves are no longer collected.

More information is available on our website at www.Charlottesville.gov.

And I also I texted for my reminder today and it worked seamlessly so they can be reminded of those three different rotations in which you can get your leaves picked up curbside on bagged.

I have two announcements.

Just a reminder to the community.

that we have boards and commission applications that are being accepted through December 11, 2020.

Just keep that in mind and we encourage you to take a look at online at the boards and commissions site on the website and apply and encourage others to apply.

and council has decided to attempt to shorten the meeting length by having meetings starting maybe at 4 p.m.

on council meeting evenings.

We don't have to be here for the entire meeting to get those reports done earlier in the day.

We will have one or two reports if we have reports to schedule earlier in the day.

And so hopefully we will help shorten these 12 o'clock, 1 o'clock, 1130.

We're probably pushing it before then, but we'll see meetings.

So we'll see how it works.

We don't have to change.

We don't have to vote to change anything.

As we stated, there was a big push from the community to make sure that we didn't start our regular meetings any earlier, so they will still start at 6.30, so we're not changing that part.

And you'll be able to go back and watch the work session

that and watch the reports at a later time and hopefully it'll be easier to find too.

So we'll try that out.

It won't be every week.

It may not be every month, but and we'll notice it in advance when we do make that decision.

Just a quick announcement.

November 10th and 11th, there will be an event commemorating the African American military experience telling the untold history.

Again, that's November 10th and 11th at 7 p.m.

Okay, thank you.

We don't have any recognitions or proclamations.

Yes, I move that council appoint the following to the Human Rights Commission.

All right.

Ms.

Payne?

Yes.

Ms.

Walker?

Yes.

Ms.

Magill?

Yes.

Okay.

So that carries 5-0.

Next, we have the consent agenda.

Ms.

Ms.

Thomas, we don't hear you.

Sorry, I actually had it pulled up on my screen, and it's disappeared.

OK.

Minutes, September 8, regular and closed meetings.

September 11, special meeting with corrections.

September 29, special meeting.

Appropriation, battalion chief vehicle insurance reimbursement, $36,649.68.

Second reading,

Appropriation, Virginia Department of Social Services Temporary Aid to Needy Families Grants, $257,479.76 Second reading.

Appropriation, Red Light Management Funds for Home to Hope for Reentry Services Programming, $20,000.00 Second reading.

Appropriation, Victim Witness Assistance Program Grant,

$265,024, first of two readings.

Appropriation, Annie E. Casey Foundation Grant Award, $10,000, first of two readings.

Appropriation, Housing Opportunities for People with AIDS, HIV, COVID Supplement, $20,050, first of two readings.

Report,

All right, thank you.

If you'd like to speak to council at this time, click the raise hand icon.

If you're joining us via telephone, press star nine to get in line to comment again on the consent agenda.

Is there a motion?

All right, Ms.

Ms.

Walker?

Yes.

Ms.

Magill?

Yes.

Ms.

Hill?

Yes.

Good evening, Mayor Walker and Councillors.

I do want to address a few things brought up from community matters at the last meeting.

First is there was a question about the 400 drug court graduates, whether that was cumulative or annual.

And I spoke to the Commonwealth's Attorney, Mr. Platania, and he said it was a cumulative number over the entirety of the program.

and he wanted me to emphasize that even non-graduates do receive counseling services and other services during this program.

Second, we had a couple of comments last week or two weeks ago about the Climate Action Plan.

As you've seen tonight, we will have a report on the Climate Action Plan as well as two other speakers addressing climate change.

Third, there is a question about source of funds discrimination, perhaps occurring in the city.

I spoke to Mr. Niemeyer of the Office of Human Rights.

He encouraged anybody with a complaint about that form of discrimination to contact his office and he would work with them to try to, he couldn't address their problem or to guide them to the appropriate venue.

Also wanted to inform the council that the Human Rights Commission is considering proposing some amendments to the ordinance for council.

So that may be coming to you soon.

I spoke with Mr. Moyer this week or this past week about the reports and asked that maybe at the next report that he is here personally, and we do it perhaps as Mayor Walker described,

at one of those four o'clock sessions so that you all have a chance to question him rather than just have the written report in case you need any further information.

And next up we have Community Matters.

So we have five speakers and

that have signed up beforehand.

And so that'll give the opportunity for 11 people to raise their hands and speak, you know, during the community matters.

Thank you, Mayor Walker.

Our first speaker who signed up in advance is Chris Meyer, who would be followed by Roy Van Doren, who I don't see on the webinar yet.

And after Roy is Andres Clarins,

But first we'll go to Chris Meyer.

Chris, you're on with city council and you have three minutes.

Yes, thank you.

Go ahead.

Councilors, mayor and city staff, I live at 124 Oaklawn Court, and I'm speaking as a resident and not in my capacity as the director of a local nonprofit tonight.

A couple observations for you this evening.

On the topic of finding and contracting a new city manager,

I would hope that you can all pledge to not include any option for severance pay in the new city manager's contract.

At this moment, I think we are paying for three city managers between former and interim ones, including Mr. Blair, Dr. Richardson, and Mr. Murphy.

Since 2018, and with Dr. Richardson's severance package, the city will have spent more than $500,000 on executive severances.

Next item.

Awarding of the city school's reconfiguration consultation and design contract has been extensively delayed for some undetermined reason.

It was to be awarded in late March.

I understand the delay of a couple of months because of COVID, but we're now past six months since when the contract should have been awarded.

I do ask the interim city manager to explain why the delay and when we can expect the contract to be awarded.

I emphasize this as the consultation should take place a couple of months, at least should take a couple of months, and I do think the public should be aware of the cost and potential impact to the city finances when making their votes for city councilors next year.

Finally, UVA did publish their new sustainability goals today, and one of them is to be carbon neutral by 2030.

that likely means limiting the use of their coal-fired thermal plant and curtailing their natural gas use.

Relatedly, one first step the city might consider for its climate plan would be for Charlottesville Gas to stop giving away for free installations and use that money revenue generated from people paying for those installations to help the low-income residents of this community.

Is Mr. Murphy's contract up now, or Ms.

I believe Mr. Murphy's contract will end at the end of this month, October 31st.

Thank you.

Mayor Walker, I don't see Roy Van Doren, so I'll skip him at this point.

Next up will be Andres Clarins.

Thanks so much.

Thank you, Council.

Thank you, Mayor Walker, for giving me the opportunity to speak.

My name is Andres Clarence.

I'm a professor of environmental engineering at UVA.

When I sat down to prepare my remarks, I thought about the fact that Mayor Walker, before she was mayor, was a pre-K teacher for my daughter, Lucy, who's now 11.

And I thought about

reflected on the changes that have taken place in my area of research, which is decarbonization and carbon management over the past six years.

And it's truly breathtaking.

And one of the changes that you all are probably aware of is the number of institutions that are making commitments to decarbonize, whether it's Charlottesville, D.C., California, or most recently, China.

Or corporations such as Amazon and Shell are committing to their carbon neutrality goals, which is really

really exciting and impressive.

And so thinking about why China is making commitments like this, I think about their desire to remain economically competitive.

And I think about what Charlottesville needs to do to do so as well into the coming decades.

And so with that in mind, I have three recommendations that I'd like to leave counsel with.

The first is that we're in the business of selling fossil fuels, and we need to develop a plan to get out of that business as soon as possible.

If Shell is doing it, we can't too.

If we wait, it's going to be too late.

As the previous speaker described with the infrastructure decisions that are being made right now, we can be making better choices.

California just mandated that all new homes be solar ready, and we need to be moving these choices or we'll be at a disadvantage.

Second recommendation is that we need to provide the resources to our staff to work much more closely with UVA and Albemarle and outside counties as well because a lot is getting left, is falling between the cracks of jurisdiction.

So UVA's decarbonization goals don't include transportation.

Commuting because it's outside of their control.

These are real futures and working across jurisdictional boundaries is going to be critical to ensuring that these transitions happen in as smooth a way as possible.

Much deeper integration than we have today.

And third,

On the subject of regulatory and economic landscapes that are changing, we have the Virginia Clean Economy Act as well as RGGI, both set to take place and the larger landscape within which Charlottesville operates is changing very quickly and there's going to be competing objectives and the plans that we develop over the coming months really need to consider.

Mayor Walker, next up will be Michelle Mattioli.

Michelle, you're on the City Council.

Good evening, Mayor Walker, Councillors and staff.

I'm Michelle Magioli.

I live at 1304 Wellford Street, and I'm here to speak about climate action.

I have a degree in environmental science from long ago, which converges with my spiritual beliefs in that all of creation is connected and sacred, including us.

We only have one planet and it's not theoretical that clean air and clean water and vital ecosystems and clean energy sources are really a matter of survival for all beings, including us.

and justice for everyone in our community needs to be an important part of that.

And so for my little grandchildren, for whom I hope they have a clean and healthy community to grow up in, a just community, I ask that council take three actions.

The first is that we have a climate action plan by March 31st of next year without delay.

Secondly, that we conduct a greenhouse gas inventory every two years.

We need the science and the data to help us make these decisions that the previous speakers have pointed to as well.

And the third is that climate be prioritized in our comprehensive plan and in all strategic planning.

And the last of our speakers who signed up in advance is Jonathan Blank.

If you'd like to get in line to speak to council during community matters, just click the raise hand icon in the Zoom webinar.

Mayor, vice mayor, council members, thank you for letting me and my daughters speak with you tonight.

Our comments are titled for the children.

I loathe special interests and politicians who utilize children for political props.

This speech and comments, my daughters are not for that purpose, for I didn't bring them here tonight.

Rather, they asked me to come with them.

I am their prop.

I'm their prop because they've asked me to ask you to plan for them, their children, and their fellow children.

Mayor, I know you from your bio that you have three children who have worked for the betterment of children throughout our city.

specifically as the two speakers ago talked as a teacher.

I worked on political campaigns with Lloyd's son.

I've been on the soccer fields with Heather and her children.

I grew up with Sena's husband and so my connection with her family is a time when I was a child in high school.

And Counselor Payne, you're closer generationally to my children than I am to them.

We're here because we need a plan.

We need a plan for all of us.

We needed a plan when Sena's husband and I were in high school, but the elected officials then chose not to do so.

We can't make that mistake now.

You must ask yourselves, what are my children and my children's children going to ask when they are my age?

Why did my parents and grandparents not put in a plan?

Why did they not dream big and try to reach those dreams?

I tell that to my children.

I know you tell it to your children.

Think big, dream big, make a plan, execute a plan, and your dreams will become reality.

Today, the future is now.

We need a plan.

I yield to my daughters, Alex and Maddie.

They wanted to read a poem that hit home after visiting a glacier that is melting away.

I saw the glaciers weep.

They stare down in their once massive domain and see a landscape of retreat.

I saw the glaciers weep.

A year before, they stood 60 feet longer, now a stream of tears.

I saw the glaciers weep.

A year before, they stood 20 feet taller, but now a river of tears.

I saw the glaciers weep.

A hundred and fifty years before, those before could not pass.

Each score, the glaciers were a pain, and now a pool of tears, I saw the glaciers weep.

Like a giving tree, the glaciers gave and protected, but soon no more, I saw the glaciers weep.

In forty years, this glacier will not exist, and then it will be I who will weep.

We do not want to weep.

My generation and I want a plan.

We ask you to plan, if not for yourselves, then for your children, your children's children, and all the children of this city, the commonwealth, and this great country.

If not now, when?

If not you, who?

Please make your plans.

Mayor Walker, I see Roy Van Doren has joined us.

We'll go to him next.

You'll be followed by Brandon Collins and then Tanisha Hudson.

Roy, you're on the City Council.

Thank you.

I'm Roy Vandorn.

I live in Rugby Avenue.

Thank you, City Council and Mayor.

This year, I serve as the hospitality industry chair of the Virginia Restaurant, Lodging, and Travel Association.

I'm the elected chairman.

The consensus is that the absence of live music, weddings, in-person conferences, festivals, events, city market, UVA restrictions, online shopping,

and almost no daytime office population.

Well, I could go on, but the fact is there without a viable restaurant community, there would be really no spark plug for retail commerce, especially downtown.

There is a reluctance by many to dine inside too.

We can understand that since the media has anointed restaurants as the primary cause for COVID transmission.

But I have something I want you to consider.

Restaurateurs, their families, and staff work every day, all day, with guests.

And if the environment were as toxic as believed, we would have extremely high percentage of restaurant staff testing positive.

But we don't.

But in reality, the restaurant community has adopted strong indoor safety standards and guidelines to ensure the safety of all.

and it is working and I think the numbers today prove that that is the case.

There is a perception that the answer to indoor dining reluctance is a temporary tent and heat the outdoors.

While conceptually that is great for October, in a meeting I had last week with the restaurant community,

The consensus is that the vast majority believe outdoor tenting and heaters is not a viable wintertime solution for most restaurants in the city.

Seems to me that the community has two choices.

Let restaurants fail, then over time, a long time, new restaurateurs might take their place.

In the meantime, we as a community lose significant tax revenue and properties are devalued

due to the tidal wave of lost revenue for property owners.

The alternative is to help hardworking, tax-paying restaurateurs who have a proven track record of safety, performance, and demonstrated capacity to boost our visitor economy.

It's my opinion it's less costly for so many reasons to preserve our culinary culture rather than the alternative of just let them fail

and wait for a potential rebuild.

Start with survival and then recovery.

The local industry has asked me to ask the City Council for four things.

Significant funds to restaurants so they can survive into March.

Use the funds to go to what is appropriate for each restaurant.

Sometimes it's outdoor dining, sometimes it's rent, sometimes it's indoor dining ventilation

could be a recalibration of the CARES funding percentage.

But we're in really a dangerous situation.

Number two, cafes and various taxes that the restaurant industry collects be forgiven or some form of plan be developed.

Thank you.

And timing can be worked out favorably.

And if you want to send us the other or the

Just email us the other two items or the total four.

I don't know if you had.

I'll just comment again.

And Counselor Magill posted a Facebook post earlier this week about some of the steps that the owner management at the local were taking to try to keep people safe.

And it seemed like a thorough process in attempting to do everything within their control.

Since I was the one that posted that link and have posted a lot of links, it was alerting people to the fact of what scientists say are high-risk situations and just wanting people to figure out ways to protect themselves.

And I did, you know, tell the public about, you know, take out delivery and temp well.

And I understand that that wasn't received well.

It's just an attempt to make sure that people understand what the science is saying at this point and so that they could be future patrons of restaurants, how best to take care of themselves and their family.

Mayor Walker, our next speaker is Brandon Collins who will be followed by Tanisha Hudson and then Gloria Beard.

Thank you.

Good evening, city council.

I'm Brandon Collins.

I work for the Public Housing Association of Residents, known as FAR, which is the federally recognized resident council and resident advisory board for public housing here in Charlottesville.

And I'm speaking on behalf of FAR this evening.

You have a historic night yet again.

uh

with funding and these ordinances to make sure that redevelopment gets a great solid start and living up to your commitment for affordable housing.

It's really amazing to think back previous to 2016 when our organization was at war with the housing authority and got past that and developed a positive vision based on interactions with

Hundreds of residents about what redevelopment should look like from a resident perspective.

And then went out and made it happen.

And we've really done that with the Housing Authority, which has really changed its relationship.

And it hasn't been smooth always.

But we're in an amazing spot right now.

with redevelopment right around the corner to begin in earnest with construction starting and at the end of phase one and phase two you're basically doubling the amount of housing on South First Street without overwhelming residents and both Crescent Halls and South First Street

their futures being determined by the residents in an amazing process, messy at times.

We ask you to look at these ordinances and really strongly urge you to remove

the requirement for housing authority to produce the sustainability study in order to have funds released.

We know you want that sustainability study.

It's the smart thing to do for everybody.

I think Mr. Sales has some options that you might be able to address your concerns about the sustainability study separate from the ordinances.

But we have a grave concern that having that in the ordinances

is going to jeopardize the ability to close everything for phase one and could jeopardize tens of millions of dollars in tax credits if that were to happen.

So I really urge you to consider a different way to address those concerns.

And then the other is I hope you will consider

Something a little more concrete when it comes to payment in lieu of taxes or how to deal with the tax situation.

It's a little complicated to explain to the general public in just a couple minutes, but I think if you could look at that issue as a 15-year loan or a 15-year grant

And Mayor Walker, our seventh speaker is Tanisha Hudson.

She'll be followed by Gloria Beard and then Robin Hoffman.

Tanisha, you're on with council.

You've got three minutes.

Tanisha, can you hear us?

Yes, I can hear you.

OK, so I want to follow up to the first speaker.

I don't know his name right off the top of my head because I was doing something.

But I want to just add on that the new city manager should not be friends of friends.

You know that was going to happen before when we were looking for interim city managers.

So if you have some friends, don't be telling them to apply for this job.

We will shut it down.

No friends of friends.

Tired of that.

because there's too much bullying going on and there's too many people picking and choosing who they want to support and who they don't want to support on council.

I agree.

No more extended contracts.

Y'all love giving money out until somebody sue y'all and then y'all want to pinch pennies.

So no more no more loan contracts, no more half a million dollar contracts once these people leave the city.

Get rid of all of that.

and this should all all of this work should really be about the people and not your personal feelings but clearly your personal feelings are getting in the way instead of you just getting and giving people what they need now I made a request early in September when school started because parents were reaching out to me via Facebook they were also me reaching out to the mayor someone showed me a message they sent to the mayor she did not respond asking on

who would assist with tutoring for the children doing virtual learning.

Now, I never asked you guys for a dime of money.

I basically asked for a space that I know you manage, which technically didn't even need to ask you all for that space, but did it anyway, wanted to dot my I's and cross my T's.

But instead, you neglect my request for space, screaming coronavirus, right?

But then I see on page 233 of your packet that Kochis Capitalist Foundation is asking for $20,000.

The original request was $50,000 and they wanted to tutor 10 children for $20,000.

Now where is this space going to happen?

Where is the space for this to go on?

Then again, this wasn't even a request that a normal person would request for the Vibrant Community Fund.

Your payer pushed this agenda.

We know that.

I know that.

I'm letting the world know that.

But you, Mayor Heather, other people on council, publicly neglected my request for space.

But you're willing to take taxpayers' money for $20,000 for 10 children.

over a span of nine weeks.

And there's hundreds of children, hundreds failing right now because I'm connected with the school system.

I had teachers that were willing to do this for free.

They are certified to deal with students.

You could have took that money and paid your teachers more because they're already overworking and they're underpaid.

It is ridiculous that everything is personal with you guys, everything.

Everything.

Just a quick comment.

I think we talked about this last week, but I discussed publicly that attempting to find, to link this mentorship opportunity for kids who have been identified by the school system with mentors from the community that they could connect with was something that I have been working on.

So that is no secret.

It was stated

publicly.

This is also, which we'll discuss a little bit later, a collaboration that the superintendent has been a part of these discussions.

And so they weren't done in any kind of underhanded way.

And I have talked to Mr. Gray and Mr. Rush, the two who I've talked to many people about this project, but those are the two who submitted the proposals for us to consider.

and

Our next speaker is Gloria Beard.

Gloria, you're on the City Council and you've got three minutes.

It looks like you're still muted.

Gloria, can you hear us?

We're going to come back to Gloria in just a minute.

Next up is Nancy Carpenter.

Yes, as long as I can get my mouse to work, to the button.

Thank you all for allowing me to have a few minutes of your time this evening.

I want to give some shout out to the members, all the members of the original PCRB because we've had a historic piece of legislation

voted on by the General Assembly and waiting on the governor's signature to enact some additional powers that the statewide civilian review boards can perhaps

I know now that at some point here pretty soon, I guess after the governor signs off on it, the board, you know, I will look forward to working with

the City Council to, you know, revise our ordinance.

It looks like we've got some meaty work cut out for us.

And I just want to thank all the advocates from this area that, you know, moved the General Assembly, the committees and the individuals on the committees, those who didn't, you know, that were convinced to see things that way, that it was a historic vote, I think, when it comes to Virginia.

And I just wanted to make sure that

All those folks on that original committee got some public recognition of their work and hopefully we can carry on with what they left for us and improve it and make it stronger.

Mayor Walker, we'll try on Gloria Beard again.

Gloria, you're back on with council.

Can you hear us?

Looks like you're unmuted now, but we can't hear you.

Gloria, one thing you could try is using the telephone number at the bottom of the confirmation email if you want to try reaching the meeting a different way.

Right now, we cannot hear you.

I know that's frustrating for people.

If you want to speak to council, we've got one other hand raised right now, but you can click the raise hand icon in the Zoom webinar.

If you're on via telephone, you can press star nine to get in line.

Hi everybody.

I hope everybody is doing well.

Unfortunately, a lot of people are not doing well.

I'm a very social person on Zoom.

and ride my bike every day and talk to people, social distancing.

One of the things that I've been recommending is the air quality control for restaurants, for everybody to consider.

Like if the waiters and staff are wearing masks, people who are eating are not.

So that's how this is happening.

in restaurants so that the air quality can be changed by using proper antiviral filters that are available.

Secondly, one in five children do not have computers, I find out.

NOAA, which is National Organization of Art and Health.

I belong to that.

I signed up the membership and they have a lot of organizations throughout the country that are going through telehealth and online to help children and adults who are going through terrible depression because of the COVID isolation.

Also, Netflix

is giving a film documentary called Social Distancing, which I'm watching.

And it's very well done.

It also describes a lot of problems for families at this time.

So I recommend that you watch that.

But I was also wondering how this happened, that the attendance officers in the schools are not calling up for absenteeism or people not participating in their classes.

to please document for the governor or for monies if people, one in five children, do not have computers or adults.

And then lastly, I'm volunteering on my street.

I acquired the Rivanna River Company bus.

They gave it to me.

It's in my driveway.

And every Saturday, I'm going to open up

social distancing in the bus and outside of my property, art innovation hubs, workshops, and I was hoping that maybe other people would get that idea, do it on your street.

to open up some social distancing workshops of your craft or your specialty, whether to give a supplemental teaching to the kids and also ask them to participate in something that might help the climate or whatever.

And so I just want to say that

I'm continuing with my TV show and we're using Zoom.

It's open and available for everybody to take cameras out if you become a member and it's very cheap.

It's a year fee.

I'm sure you can collectively get some money for the year fee and then use the cameras going outside and maybe talking about problems and using it for people to see on CPA TV.

Mayor Walker, that was our ninth speaker.

We have one hand raised at the moment, Gloria Beard, and I'll go back to her in just a moment for one last try.

But if anyone else wants to speak to council, you can click the raise hand icon.

Gloria, we're going to try again with you.

And if you unmute, we'll see if we can hear you.

and nothing yet.

All right.

Sorry about that, Gloria.

Next up, Don Gathers.

Don, you're on the city council.

Evening, council.

Just want to piggyback the words of Nancy Carpenter.

I'm looking forward to the work and the efforts of the current iteration of the Civilian Review Board and also a lessening of some of the restrictions and handcuffing that have been placed on them initially and previously, especially with the legislation that has just recently been enacted and waiting on the governor's signature.

Now's the time to be working in concert with that body, that appointed body,

and also I heard just a brief report just in passing about the police chief apparently having some issue or some comments with the Black Lives Matter movement or some of the individuals involved in BLM here locally.

I'll reserve comment on it because I haven't heard the entire report, but I hope that it's not anything obtrusive or negative.

because now is not the time to be taking shots at an organization that has been trying to work for racial justice and equality.

I would like to think that now would be the time to open up some doors that have been previously closed and try to work together.

We have some wonderful people here who have done some incredible work under the banner of BLM.

So I would certainly hope that that is not the case, but again, I'll reserve comment until I've heard the full report.

And Ms.

She has not raised her hand again.

We'll try number four.

Ms.

Beard, can you hear us?

You probably can.

The question is, can we hear you?

And right now you're muted.

She's on via computer or smartphone, not telephone.

OK.

And she just lowered her hand.

So that closes the community matters section.

Listen, we're early.

So I want you all to understand.

Do what you jinx us.

I just feel like we should celebrate.

OK, so we'll go on to item 10 and still try to break at 8.

And I guess it won't be a way to pick up if Ms.

Deer tries to come back on next, but I hope maybe we can get her at the end of the end early enough.

All right.

All right.

Good evening, Mayor Walker and members of council.

This is Chris Engle, Director of Economic Development.

So I'll be presenting this item for you tonight.

Everybody hear me okay?

Yes.

Oh, good.

Okay.

Earlier speaker mentioned restaurants and their survival and the challenges that they're facing based upon COVID.

We know that is the case not only here but elsewhere throughout the Commonwealth and the country.

This item before you seeks to lessen that burden slightly by waiving and reducing the cafe space rental fee.

Many restaurants on the mall and a couple elsewhere throughout the city rent space.

from the city on an annual basis to conduct outdoor dining activities.

Given that March and April were months that this was not permitted by the state, the proposal is to waive the fee completely for those two months, and the remaining months of this year and up until the cycle starts again in March of next year, reduce the fee by 50 percent.

So, waived for two months, reduced for the remainder of the year is the primary item.

The secondary item is to reduce the parking space rental fee for any restaurant that has an adjacent restaurant to a city parking space in which they would like to activate that space for table seating.

This has been done by at least one restaurant and attempted or considered by one or two others.

and in the interest of trying to encourage outdoor dining while the season permits, we felt it was useful to reduce the fee for that rental space for these restaurants for the same period of time.

So throughout the remainder of this calendar year and also January, February of 2021.

So essentially, that's the item before you.

It is a one reading resolution.

and would be effective immediately upon your consideration.

My only comment is that I think this

Um, letter that went out to the restaurant community that I don't think any of the counselors were aware of.

I wasn't aware of it, but I don't want to speak for everybody, but I don't

For my knowledge, we were not aware of coincided with the Facebook post of the indoor dining.

And I think these two things together was something that got the restaurant community up in arms.

And I just want to say they were not intentional.

And in terms of the letter that went out about having to resume paying fees that we were on, council was unaware that that letter would be sent out.

Any other questions or comments?

All right.

Second.

All right.

Ms.

Thomas?

Ms.

Walker?

Yes.

Ms.

Magill?

Yes.

Ms.

Hill?

All right.

But thank you, Mr. Engle.

That carries.

5-0.

Thank you.

Appreciate that.

And so it's not 8 yet, but we will break because the next everything will take quite a bit of time.

Music playing...

Thanks for watching!

you

I'm

Next up, we have the ordinance authorizing the grant of public funds to subsidize construction for

rent affordable housing to be occupied by persons of low or moderate income as part of redevelopment of public housing.

It's the first of two readings, South First Street Phase 1 redevelopment and Crescent Hall's redevelopment.

And Ms.

Good evening.

OK.

For the record, I'm Brenda Kelly.

I'm the redevelopment manager for the city.

As most of you are aware, CRHA, which is the Charlottesville Redevelopment and Housing Authority, will soon be starting on redevelopment or modernization of many of their properties that will be occurring over many years.

CRHA is a separate entity from the city that has purposes and authority as set forth within state law.

actually known as the Housing Authorities Law.

CRHA currently owns and manages 376 public housing units, issues HUD-funded housing choice vouchers, and also administers the city-funded Supplemental Rental Assistance Program.

The first public housing units were built around 1965 and, as you can imagine,

Many have reached or passed their useful life.

Ms.

Kelly, just a quick question.

No, I'll tell Mr. Cooper when he can go ahead.

So with the next slide, not yet.

CRHA and its partners have been engaged in robust resident-led redevelopment planning efforts.

Of primary concern during these redevelopment efforts has been the knowledge that, in addition to knowing there is very little available temporary and affordable housing in the city, more importantly, the need to relocate or move current residents needs to be minimized.

That has been taken into serious consideration during their planning efforts.

In early 2019, the CRHA development team submitted applications for low-income housing tax credits, also called the LIHTC, for renovation of all the 105 rental units in Crescent Halls, and for new construction of 62 units on the vacant land at the South First Street property.

This is a very competitive process at the state level, and both projects were awarded a commitment to funding in June 2019.

Due to the complex nature of the LIHTC funding, several entities need to be created to own manage and distribute funding for the project.

In addition, there are multiple funding sources for both of these projects.

Next slide, please.

So let me tell you a little about these two proposed projects.

The rendering you see on the slide is the proposed improvements for the exterior of Crescent Halls.

Crescent Halls is an existing 105 unit building.

It includes 98 one bedroom units and seven two bedroom units, community resident spaces, and CRHA staff and maintenance areas.

The redevelopment plans call for complete renovation of every rental unit, common area and staff offices in the building, upgrade or replacement of all building systems, and some exterior improvements.

The overall project cost is about $15.4 million.

All of these rental units will be at or below 60% area median income, or AMI.

Next slide, please.

South First Street Phase 1 will be new construction of three residential buildings containing a total of 62 residential units and a community resource space and resident storage, as well as the parking areas and infrastructure.

The overall project cost is approximately $17 million.

All of these rental units will be at or below 60% AMI.

Next slide, please.

This is a conceptual site plan of the proposed new construction on the site.

Next slide, please.

This is a conceptual elevation of the new buildings proposed on the site.

Next slide, please.

This shows the location of the phase one project on the South First Street site that's in the red circle.

CRHA has also received a commitment of LIHTC funding earlier this year for the future phase of redevelopment.

This future phase is not included in tonight's discussion.

We'll be addressing the phase one.

Next slide, please.

Through the city's capital improvement plan, a total of $3 million was allocated in fiscal year 1920.

towards public housing redevelopment.

Of that, $1.875 million will be going towards the Crescent Halls renovation and $1.125 million will be going towards the South First Street new construction.

There are two ordinance or agreements in front of you tonight, one separately for each, Crescent Halls and South First Street phase one.

These agreements spell out the terms and conditions for allocating the city funding to CRHA.

Generally, these terms and conditions are similar for both projects, so I will just give you an overview.

Next slide, please.

The funding will be dispersed as a grant to CRHA.

CRHA will provide the funds to the CCDC, whereby the CCDC will lend the funds to the project as an interest-free 30-year loan.

100% of the units constructed will be provided for rental by low and moderate income persons having household income at or below 60% AMI.

No fewer than 13 units will be public housing units at South First Street phase one.

And no fewer than 53 units will be public housing units at Crescent Halls.

A maximum amount of the total funding will be allowed to go towards soft costs.

Virginia Housing requires a deed of trust to ensure an affordability term for 30 years.

However, the investor member in the LIHTC has a right to sell the property to an entity who will not be subject to these use restrictions prior to the end of the 30-year LIHTC term.

This could result in the termination of an extended use agreement after year 15.

HUD requires 10, 20, or 40-year affordability period restrictions requiring units to be operated in accordance with public housing requirements.

Next slide, please.

While CRHA will not be the project owner, they will continue to own the land and be responsible for property management.

We continue to hear CRHA say publicly that their goal is to have as seamless a process as possible, primarily for the benefit of the residents.

CRHA is requesting that City Council approve an annual recurring subsidy equal to the dollar amount of the real estate taxes.

The proposed ordinance suggests the subsidy for 15 tax years.

CRHA has concerns with the requirement to provide a sustainability plan prior to submitting for the third payment request.

Next slide, please.

So, as again, we mentioned previously, here are some items you might want to take into consideration on approving the items in front of you.

CRHA is not a member of the new LLC that will be the project owner.

This is a requirement due to the LIHTC funding structure.

However, CRHA will continue to own the land and CRHA will continue to provide property management services, which includes the leasing and staffing services that they currently provide.

The CCDC, which the City Council previously authorized CRHA to create, is officially the developer of the project.

The CCDC will be receiving a $1 million developer fee upon completion of the project.

Next slide, please.

A private sector project owner has an investment member, and the investment member has a right to sell its interest in the project prior to the end of the 30-year LIHTC term.

If the investor member's interest cannot be bought out by CRHA, this could potentially result in termination of an extended use agreement after year 15.

So year 15 may be a significant milestone whereby CRHA has an option to purchase the project.

This raises unknowns also, including how much this purchase price may be and where will CRHA obtain the funding.

CRHA is requesting that City Council approve an annual recurring subsidy equal to the dollar amount of the real estate taxes.

and CRHA has concerns with the timing associated with the requirement to provide a sustainability plan prior to submitting for payment request number three.

With that, I am happy to answer any questions you may have.

And also we have available John Sales as the Executive Director of CRHA.

Dave Norris is the Redevelopment Coordinator with CRHA and Jeff Myers is with ECDC.

I think Ms.

Kelly highlighted some of our concerns with the current ordinance to include the sustainability requirement before draw number three.

It's going to be really hard for us to close on both loans with that requirement in there because we won't be able to show a bank that we've satisfied that requirement in order to close.

So that could really put both projects at a point where they will not go forward.

So that's one of the concerns that we have.

We have a concern with the property tax, the way it's currently written.

There's no protection from future council members deciding not to fund.

the subsidy for the property taxes.

Without that funding, both projects could be deemed non-sustainable because the property taxes do weigh a lot.

So we currently pay about $85,000 in property taxes for all of our properties for the public housing units.

With these two projects going forward, the first year property taxes will be more than what we pay for the rest of our sites.

So that's really a big concern for not only CRHA, but also the investors as well, which it was not budgeted in their budget to pay full property taxes on the site.

because they will continue to house public housing units which we house some of the lowest wealth members in the community and provide a vital role and play a big role in affordable housing for the city.

And I'll just say while we're waiting for him.

No, you can go ahead.

Can't hear him.

He's frozen for me.

So we can get started while he figures that out.

We had, we've been having a lot of conversation since just a long time.

Just don't even know but spent, it was quite a busy day too.

And I'm interested to hear more feedback about the, you know, property tax.

This is something that even on the next item with PHA that I've expressed, and I sent you an email this morning along with counsel, Mr. Sales, about just concern about us starting down this kind of structure.

which is being requested in the next section as a TIF and whatever CRHA becomes, you know, request becomes.

I think it's just important what I told, you know, council, counselors when we talk today, I just think it's important for whatever we decide that we understand that we can't do everything.

moving forward and that if we are going to essentially add dollars to both of these major requests that are going to take over a decade of funding for both,

then it's important for us to understand what we're setting future council, councilors up for and that when you talk about commitment to housing, then we have to say that this is our commitment to housing.

It's going to be hard to align these requests and then still fulfill everything that the housing fund, all the additional requests that come through city council for.

So, and I,

I don't know about the other counselors, but I've had more questions about this came up late today with, you know, later, I mean, today and later in the day, we've been trying to figure this out from a CRHA perspective.

And so, you know, interested in hearing from staff and Jeff to see what and other counselors what they think about that part.

So I guess until he comes back on, we can move to the other item.

Counselors

One question that I had was if we're talking about the timing of request number one, request number two, request number three, and the concern about whether the sustainability plan could be done in time for request number three, when do we expect request number three to be dispersed?

Those would be the first.

So it really depends on construction date.

So we're slated to start closer to the end of the year for both products.

So you're talking

December 401, early January, February for request number two.

So the

The sustainability plan, we saw a scope of work proposal that was rather ambitious.

It calls for doing a lot of work.

When I did one in Chesapeake, it took about a year and it was not as extensive when it comes to community engagement.

So I'm projecting this one's going to take at least a year.

and I think that's a lofty goal.

The good thing about Charlottesville, we've already started redevelopment, so we've taken care of two sites which won't be included in the entire process.

So in February of 2019,

2019, I think I read the city had withheld as about $180,000, I think it was, with the idea that that would go toward the sustainability plan.

Am I stating that correctly?

Correct.

It's $191,000.

Okay, $191,000.

Yes, I do think that.

My only concern is currently the discussion is that money cannot be utilized or used until the city council has approved the plan, which I don't know a lot of firms who would be willing to wait a year and a half to get paid.

But I think the way it's currently written is it could be misleading and make it feel like it's not until council has approved the end plan

The end result.

And the plan that they actually create, which is causing the concern.

I just want to get a little clarification, it might be for Ms.

Kelly, in terms of the amount that we allocated.

I'm just trying to go back because I know we talked about a little bit earlier today.

So it's very confusing but it was money that was basically due to the city that the city said let's waive those if we are provided the sustainability plan so the money is actually deducted currently from funding to go to the housing authority

that can be basically allowed to be used and provided to them.

So basically if the housing authority does not do a sustainability plan, this money that was deducted from funding that could go to them, they won't get.

So there is money.

It's not that they owe us a bunch of, they owed us that chunk of money and we said now you owe us less.

and that they're holding the money.

This is money that we have that they can draw from.

That's what I want to clarify.

Okay.

Okay.

So I guess so that's our probably first discussion point is their agreement to allow us, allow the housing authority to submit a plan with us with a payment schedule.

and that we will release those funds once we receive that payment schedule.

And examples that were given to me today was that they may request half the money when half the work is done and the other half at the end.

So in an example like that, but we don't know what it will be, but in an example like that, that we would allow them to request half of the funds from us or whatever the payment schedule is.

I'm comfortable with that part of it.

The more part I want to talk about, I think you're probably going to get to next, is just how we tie it, have some accountability for this actually getting done, given that we asked for this in the spring of 2019.

I'm fine with what you just proposed and us, when we get to that point or they actually have an engaged consultant that we do allow them to move forward and pay them along with that payment schedule with these funds.

Okay.

What is the sort of standard?

I mean, is there some sort of an initial payment to get started?

You know, the activation fee, so to speak?

Or is it they don't get paid until a certain amount of work is done and there's a deliverable?

So it really depends.

So at Chesapeake, we set up payment standards based upon the task orders.

So we had several tasks and each task was assigned a dollar value based upon the total contract amount.

And then there was another payment at the final delivery and draft delivery and final delivery.

So no upfront payment?

No upfront payment, no mobilization payment.

Okay, so Councilor Hill, do you have questions about what that

What the accountability measures need to be?

Well, I hear that there's a concern that if we have this requirement in the ordinance that it could be inhibitive of them being able to press forward with the LIHTC application process.

We don't want to do that at the same time.

I'm just trying to understand, is there an opinion maybe among our staff on ways that we can ensure that, like, I just want to know that by the time we get to that third draw, which is our intention,

that we're seeing real progress made towards a reasonable end to the sustainability study because I just think that the longer this goes on, it's not to our advantage.

I mean, I just feel like we need to understand what this whole holistic approach is gonna look like.

That's why we asked for it from the onset, trying to make it part of, some of us wanted to have it to be done in the first phase, just to understand what does this look like holistically?

How are you going to make sure that you can continue to maintain these units?

What does the build-out plan look like that comes along with it?

How do residents feel about that?

So I feel like we just have to have something that is committed by the time we get to that third payment that we're going to be well on our way to having a sustainability plan underway and that work done.

I'm guessing I'm less optimistic that March is when the third draw will be happening, but I mean, who am I to say?

But I just think that by the time we even, you know, six months from now, we should really have a better understanding of the scope of this being worked on in earnest and having a deadline within a 12-month period of start.

So the first two projects have gone through the VHDA, the banks, National Housing Trust Fund, Federal Home Loan Bank of Atlanta, to ensure that it's feasible.

So the first two projects, they've cleared all of those hurdles.

And those are some major funders that are also a part of the group to fund the entire two projects.

So they have cleared the feasibility and sustainability hurdle.

And we are prepared to lock in the requirement that we cannot move forward with the third project, which will be phase two of South First Street, which we've already received a low income housing tax credit allocation for.

So they have also approved how we have budgeted.

and the feasibility of that project as well.

But we're willing to lock in on that project, ensure that we're going to have a sustainability plan.

We agree that we need one.

We support the idea.

I've been working on a scope of work the last month.

I've met with FAR.

I've met with the Redevelopment Committee.

It's been in front of the board.

I've heard their advice, feedback.

We've changed some things.

And we were prepared to send it to the council.

But there was some discussion about

the study in general where there was needed.

So we agreed that we need it, we want it, but we don't want to tie it to these first two projects because we're not going to close.

What is the timeline in which you foresee getting into that second phase of South First Street that would then coincide if you're requesting for us to move it from

So what you're saying is that before you close on that project?

Put it in that agreement, which will hold us to the sustainability plan and not receiving the funding.

And I think that's everyone's goal, at least when I started hearing the conversations about whether a sustainability plan was needed or not.

I spoke with counselors.

I've talked to you, Mr. Sills, about the fact that that was something that was agreed upon, that it hasn't, you know, people, no one has said that we don't need it.

It's something that I think based on all the conversations that I've been a part of that, and even Mr. Norris, we've talked about, you know,

this.

And so I don't think that anyone, that it would be very helpful to just understanding long term the direction that we're going and, you know, for the housing authority.

All that seems reasonable to me.

I think my goal and probably everyone's goal is, you know, like the information you sent a few days ago that's now on the website as well as looking at the sustainability plan, you know, somewhat in that context in terms of if we're able to get greater

Assurance and stability there that ultimately more people will be able to get housing.

There'll be a greater assurance that long-term units are able to be maintained and remain high quality and affordable and livable and avoid as much as possible the situation in the past with public housing where there's an upfront initial investment in 30, 40 years from now.

not maintained and not in a sustainable place.

And the goal is certainly not a sustainability plan in the context of trying to have a housing authority try to operate more profitably necessarily.

I know that's maybe

I think our intention is not at all to have this jeopardize any funding or jeopardize these projects.

If you feel confident that it can be tied to closing on the beginning of the second phase without it sacrificing or jeopardizing any of that funding, that's something that I'm open to.

I agree with Councilor Payne.

I mean, I don't think anyone here is, everyone is very much on board with wanting this project to go forward.

But I do think

You know, seeing as this is, this was originally asked for a year and a half ago, and I understand this was not something, there's been a lot of reasons as to why.

And again, it's something you have inherited.

But I do think we do need to tie that firmly with the second, if we're going to move it to that second phase, it needs to be tied very firmly to that and a clear understanding and a clear understanding in the community that

You know, this isn't about trying to stop affordable housing.

This is to make sure that the affordable housing continue and not be utilized for its unintended purposes down the roads in some way because it hasn't been sustainable.

And I'm in the same position.

I will say I think I'm not sure it ever made a lot of sense to tie a sustainability plan to the third payment out of a project as though we were going to tell everybody to stop work until on the project that's already under construction.

Okay.

Okay.

And he was also going to talk about the property tax increase issue?

Yes.

I'm just trying to remember, I'm gonna go back to what the list was from this morning to make sure that we've covered our bases, but the tax thing was new to me

in a way too.

That was something that I was just still working through in my head.

Thank you city councilors and Mayor Walker.

So I think you're asking me to address the issue of the property tax.

If you were unaware, the CRHA, going back to 1965, I believe, has a cooperation agreement with the city whereby

They do not pay property taxes for the property that they own and operate as housing.

But they do make a payment in lieu of taxes, a pilot that's mentioned in the ordinances.

And it averages about $8,000 per property.

I think Mr. Sells said they pay annually about $80,000 or $85,000 a year for all the properties.

We did a little bit of research on what the proposed improvements to these two particular properties would generate in terms of an assessment with the city assessor.

and what that would result in terms of tax liability.

And just for those two projects alone, it would run about the $85,000.

And when we underwrote these projects originally with an eye toward making an investment through the low income housing tax credit program, we underwrote them as pilot projects.

In other words, that the taxes would be

Wade or that the properties would continue to make the pilot payments to the city.

So obviously the difference between what the assessed tax liability for these properties would be and the pilot

is all the difference in the world in terms of economic feasibility.

So no one is going to go forward with lending money or investing money into the project if we understand from the very beginning that they're not going to be economically feasible because they have to pay the full liability for property tax.

and I think that's why the city staff has made an effort to try and accommodate that dysfunction, I guess, in terms of their ordinance and how we can overcome the difference between the property tax liability and the pilot.

And so the only concern that I have in reading through the document is that there is a bit of a contradiction where it asks the city to provide the subsidy to each property, to pay the property taxes, but then it says in the next paragraph that the city council, future city councils can't be held to whatever this city council

So I think the concern would be that a future city council could overturn what's written in the ordinance here.

and I don't know what mechanism other than the City Council funding the entire tax liability for the initial compliance period of 15 years.

This is Lisa Robertson.

I'll address that issue.

The reason that the language is in these ordinances, as well as the arrangement that you'll see with Piedmont Housing,

is that there's a provision of law in Virginia, and I believe it's even a function of the Virginia Constitution, that says that a locality can't do what they call pledge its full faith and credit to the funding of private obligations.

You can budget for payment of your obligations from one fiscal year to the next, but you

enter into binding obligations over a long term that aren't subject to what we call a non-appropriations clause.

So these types of arrangements, it is very normal for them to have this language.

We've built in as much wording as we can to talk about making promises that budget for it, that you consider it.

there just is not a way that you can make this type of ongoing obligation a long-term binding one.

It is correct that, for example, if you wanted to take someone I think today shared a number of roughly 1.5 million dollars as being the anticipated tax liability

over the course of the next 15 years.

You could fund it up front as people have suggested, and you could take that money out of your use and place it into something like an escrow agreement and establish terms and conditions that would have to be satisfied on an annual basis in order for the private project owner to be able to draw down those funds.

And so we would

That would be sort of a separate parallel agreement that would have to be undertaken.

But if you do that, all of that money comes out of your current fiscal year funds, whether it's from a CIP or your operating budget.

And it would be placed in that escrow agreement now.

and you would not have the use of that money over the next 15 years.

So that is an alternative way to do it if you are willing to add sort of that additional 1.5 million to the upfront commitment that you're interested in making.

The other thing that I'll just note is we did have a meeting with

Mr. Meyer and Mr. Norris and Mr. Sales to talk through the tax issues.

And the Housing Authority had its legal counsel on that meeting as well.

And it is a very complicated situation, but it's just not one that's easily resolved under Virginia law.

Virginia law has very specific provisions that state

that when property is transferred from a tax-exempt entity to a non-exempt entity, those taxes become chargeable to the non-exempt owner.

And while the LITE-C program offers federal income tax benefits to the investors, those investors are not nonprofit entities.

And even when

An entity is nonprofit that doesn't necessarily make them exempt from local real estate taxation.

And so there are a lot of 501 C3 organizations that wouldn't necessarily even that even in that situation be exempt from real estate taxes.

There's also not a statutory waiver process and there just isn't really an easy way to solve the problem, but we have used this type of

There's a clause in other arrangements that the city has entered into, particularly performance agreements used through CEDA in the past.

So this is not something new.

We didn't pull this out of CENAIR.

It's very similar to what's being proposed for PHA.

But if you don't have a comfort level with that for these housing authority projects,

And I think we should also talk to Ms.

Shelton maybe about this because part of my concern, I didn't, you know, not thinking, talking to Sunshine over the weekend and counsel about the TIF, which I have been concerned about the, you know, since it was presented.

And in that case, we're going to get to it.

But I feel like, you know, in his case, he's taken a loan out at a 4.5 percent interest rate because we never considered in terms of staff another alternative.

and so then it's projected that you'll pay two to three million more dollars and so the request for that is a six million dollar total and then we're here talking about additional 1.5 million and I have questions about whether that was bondable.

Is this something that we could have included for this particular project in the dollars that we just have and if not,

which it doesn't matter now because we already submitted that.

I know you can do it at other times of the year, but just what staff thoughts about because we're going to have this discussion back to back.

And so it's just at least for us to know where this potential

I guess $4 million.

And we also need to have a broader conversation about the fact that we're doing these two major projects at one time.

And this isn't the only request that's going to come from CRHA or PHA.

And I just think if there's a vote in favor of this, which I think that both of these projects are very important.

Well, I see Ms.

Yeah, so I think the question was regarding whether or not we could actually bond for the property taxes.

That is, I'm going to defer to our bond counsel for the specific answer, but my first brush at that would probably be no, that we probably could not bond, you know, issue a bond to pay ourselves back for taxes.

And if not, I think there's just some questions surrounding where is the possible funding for additional dollars for these large projects.

No, and not in terms of bonds, in terms of is there dollars that the city currently has

So, you're correct.

The PHA project is cash funded.

The CRHA was contemplated with bonds.

There's no, I mean, you have a little bit of money in your contingency, but strictly speaking, there's not a pot of money that would be available for this.

It would be an idea of where we would need to go and actually set priorities and probably reprogram from something else or try to find money from the general fund to put more money into the CIP.

I'm speaking for the lump sum.

Typically, if we were going to do this over an annual amount, that's something that's a little bit more reasonable to try to build into a budget.

And that's what we've done with several other performance agreements.

Right.

I guess a question for

relating to the investors in the project is a concern for investors in the project, uncertainty around, you know, if it passes in terms of, you know, we can't lock in spending for future councils, but we have it as that goal.

Yeah, it's the uncertainty.

And in most cases,

In other communities, in most other communities, there's one notable exception, you know, that kind of spoiled the milk, so to speak.

Most other communities with housing authorities that have done projects like these, the

the city has, their localities have continued to waive the taxes and whether they actually could do that or not under state law, no one has ever really questioned it.

So that kind of turned their head and that's sort of what we're trying to address today is the uncertainty that comes around that in some,

So let's say these projects both get built and three years from now they're finished.

Do we have an expectation of what their value would be at that point, what their market value would be, what the tax base would be?

Okay, so $12 million, that's going to be about $110,000 a year at the current tax rate?

Right.

Right.

Yeah.

Okay, so 95,000.

And what are the pilot payments right now?

Or did I understand there is a pilot payment being made now?

Yeah, I think the pilot payment for Crescent Halls right now is $8,000.

And of course, South First Street phase one is vacant land.

But I'm hearing like, so let's just, I don't think that we have $1.5 million that we can put aside right now to sit in escrow for that period of time.

to be tied up.

And what's been proposed is giving some angst.

Is it possible that the city will portion of this year and a portion of it next year to make the $1.5 million?

I'm not in a position to say yes to that right now.

Is there any way that the developer fee could be used for some of that?

That's one of my questions I had was that $1 million developer fee.

Half of it is going to fill the gap from, to fill the funding gap for the project.

I mean, again, I think a major challenge is going to be if the approach is either this year over two years in escrow, our budget picture is

Pretty brutal, and there's still substantial uncertainty about what the impact of COVID will be this budget cycle.

And as was mentioned, I mean, that approach requires explicitly identifying where those cuts are going to come from, and those are going to be very substantial and connect to a lot of very important programs in

I don't think there's any way around that being an enormous challenge for this budget cycle, particularly at this time in the context of what the coronavirus has done to tax revenues.

I would also just real quickly sort of like to weigh in.

There was some earlier discussion about

why staff structured these agreements one way for PHA and another for the Housing Authority.

And I'd just like to remind everyone that prior city councils specified to us that the funding for CRHA needed to come from bond proceeds and that

As we got closer to doing the agreements, what our bond counsel told us is that a loan transaction would, in the CRHA project, preclude the use of bonded funds.

So if both projects had been anticipated to come out of your cash or your operating funds or your CIF

We most likely would have structured both of them as loans.

But you would still have the same tax issues for each of them, because the issue is that the money someone's saving in income taxes, they don't want to have to pay in real estate taxes.

And that's under the Light Seat Program and the way that those projects are funded.

That's for those investors and project owners, the trade-offs.

I do want to remind everyone that very specifically the reason why we structured these things differently is because city council told us that the funding for the CRHA projects needed to come from bond proceeds and as we got further and further along the loan transaction either from the city to CRHA or the

CRHA's desire or CCDC's desire to loan funds to the project could not, we couldn't use the type of bond proceeds that, at least not for tax-exempt bonds for those projects.

Ms.

Robertson, why I guess what maybe many of us was thinking that CRHA would have been able to continue under the current parameters that they're operating under and that the transfer to the nonprofit or the tax

The low income tax credit, that transfer is making it now not able to file under that same structure.

So would you speak to that a bit?

For the financing?

Yes.

The taxes are no different depending on how it's structured.

We'd still have the taxes.

So CRHA currently owns all of its public housing units.

And since the 1950s, under HUD regulations, there's an agreement called a cooperation agreement whereby because the housing authority is tax exempt and it doesn't actually have to pay local resources

real estate taxes.

The housing authority, much like other public housing authorities in other places, has made a payment in lieu of taxes to the city each year, which is called a pilot.

What CRHA's attorney has told us is that because the redeveloped units are not going to be owned by CRHA, we can't keep receiving the pilot.

So for the

The new units we won't be able to get the pilot.

And because the project owner is a for-profit private entity that's not exempt from local real estate taxes, under state law, in my opinion, in the opinion of the city attorney's office, a private entity such as the project owner

is responsible for the taxes.

But that being said, we have on occasion over any number of years facilitated economic development through the use of performance agreements that reimburse people their taxes in this very same type of arrangement.

We've done it

for non-housing projects.

We had no problem approving it, setting up an arrangement for the PHA Lightsey project.

There's no problem using this arrangement for housing.

It is scary to people to see that non-appropriations clause type language, which is you have to acknowledge in your documents that this isn't necessarily a binding obligation

but we've done it before and as long as everyone recognizes that funding as a priority to the point where you may lose a key component of your affordable housing strategy if you don't make budget provisions for that subsidy every year.

You may lose

the housing that you're trying to obtain, which is the housing for the lowest segments of income, household income.

So there's this very strong incentive for you all to fund it every year.

And that's the easier way for you to fund it is on an annual basis.

It's just we just can't tell you that it is a legally binding obligation over

for 15 years.

The law doesn't allow us to do that.

And I know, you know, I don't challenge Mr. Meyers' assertion that other communities with housing authorities have done this.

But once somebody asks the legal question, we have to give you our best legal answer.

And I just can't tell you that the private sector project owner is tax exempt.

And if they're not tax exempt, there's just no provision in state law that allows you to just waive those taxes.

And that's very specifically why we've used these performance agreements over the years for other economic development projects.

And another question in terms of, so if,

It would be as best I can tell.

Mayor Walker, if I may, and I'll just ask Lisa to address this.

It is also worth noting that, you know, we're talking taxes here and the non-appropriation clause, but the city for multi-year contracts through the procurement process also includes this non-appropriation clause.

That's correct.

Any time the city enters into a contract that's going to require some sort of performance over more than one full fiscal year, we're required to put what we call this non appropriations clause in.

So, Mr. Sales, you don't know yet if this is going to be a problem.

Well, I think it really depends on what the NICS Council is willing to do when it's time to pay property taxes again.

I think we'll make every effort to go forward with the project.

I can't say that something will come up once the language that's in the ordinance

becomes something that our other partners, the other funders are going to read.

Everyone is going to review all the documents.

So the last piece of this or one of the last pieces is the cities agreeing to make the funds available.

for the development of the property, but it also contains the clause about the property taxes.

Well, you at least have three council members on here who are just in their first year.

So they will be here for at least another three years.

And so that's

And I 100% get the uncertainty in it.

I mean, certainly all of us three new counselors are 100% committed to it.

I would evaluate future councils being, again, there's always uncertainty, but like 100% committed to it and wanting to keep it.

And we've kept that commitment in the past with all similar arrangements, at least to my knowledge.

And it's just obviously the challenge is

It's not difficult fiscally for us to fund that each year and maintain that, but to put it all up front in one year, especially at this time, is a challenge.

It's really appreciated.

And on behalf of all the folks that have been involved in this development, I think we certainly appreciate the cities in both of these developments, the city's approach and their willingness to cooperate.

Let me just ask a question.

Is there a mechanism, and I guess it's to Ms.

Robertson, but is there a mechanism where, since these properties never paid taxes before, this would be new revenue to the city, essentially?

In the first year when the taxes are paid, is it possible for the city to set aside those funds in a fashion that would be self-generating?

In other words, that would be in kind of an escrow account that future city council couldn't necessarily tamper with.

easily, but could be available only to support the operations, namely the property tax payment for these properties in the next year.

and then it could kind of be like a round robin where they grant the funds from that escrow account to the properties, they pay the taxes with it, it goes back into the lockbox or the escrow or whatever and then continues to be paid so that it would only be one year's worth of subsidy but it would somehow guarantee that that money is going to be there in future years.

I suppose so.

I mean, I think that if you can put $1.5 million in an escrow fund up front, you can put a much smaller amount.

You can put $85,000 in an escrow account up front.

But again, I think that

That is something that the city council in that budget cycle could make the decision about once that happens.

Does the assessor send you a tax bill before the, you might get one for Crescent Halls.

I don't know if you'll get one for phase one until there's actually something built.

But yeah, I think there's

I think there are some possibilities, but the bottom line is that, at least at the outset, tonight, if we want to move forward with getting your funding squared away, getting it approved, I think that either what's written into the ordinance or an upfront escrow of the entire amount are really the two concrete possibilities

So what you should understand is that the arrangements with PHA, we believe you can do directly for the housing authority under the statutory provisions

that govern these ordinances.

We think you can do directly what in the past for in particular economic development projects, the city has not been able to do directly and had to do through CEDA.

And so it's the same arrangement and your arrangements with CEDA are that CEDA pays it, but you have to fund that CEDA payment.

So in both cases,

that subsidy is coming from the city.

So in the arrangement with PHA, it's a subsidy coming through a performance agreement entered into with CETA, but that subsidy is being funded by city council.

And I just ask because I don't think that that's clear for everyone.

I guess not relevant necessarily in that case to this decision that would be made tonight.

But would that arrangement that you mentioned, Mr. Meyer, operate similar to like a TIF or something like that?

Or am I off there?

So I was just saying that we

Right.

So the question, the question has always been the reason that we've used CEDA in the past for these types of agreements is that the law is very restrictive about whether or not the city council can use its general fund monies to give directly to a private entity

for either economic development or other private purposes.

There has to be a public purpose.

And under state law, the economic development authorities are allowed to make those types of agreements or loans or grants.

And so in the past, for a number of private entities, we've always used that

passed through as a mechanism for getting that City Council subsidy into the hands of a private developer.

But there are statutes now that allow City Council to fund the rehabilitation or the new construction of affordable dwelling units.

And you are allowed to provide that funding directly to a private entity

If you'd like to do that.

This is Chris Angle.

I would just add, Ms.

Robertson explained it well.

I can't add much more to that other than the fact that Mr. Meyer could potentially benefit from the reference to the performance agreements that have been done in the past, have been fulfilled.

One has been completely fulfilled.

It was a five-year agreement.

It was paid annually.

It was worked into the budget immediately upon passing, and there was never any question about its payment.

The second one is about three quarters of the way through of its process and has not had any hiccups either.

I feel like we're at a point where I think we're all aligned that.

So did we

comes to some kind of agreement.

So we have to change some language, I guess, around the timing of the sustainability plan.

So I guess it's going now to be with the beginning of the phase two of the South First Street.

So that's one change.

And then at this point, it just seems like the language around the taxing we have to stick with.

Well, I think for a possibility to explore.

What was that?

I don't know that I did.

I think that I was trying to offer some comfort to the fact that if this is structured in such a way that the funds are set aside annually, that there's never been an issue with that passed.

Yeah, our track record.

I think it's essentially the same.

Ms.

Hamel could probably weigh in, but I think from a city budgetary perspective, it's the same mechanism annually to set some money aside for

Yeah, and I'll just draw your attention.

When we were talking about the budget and setting aside the reserve from the CIP, there was a portion of that reserve that we actually pulled out separately.

It was $250,000 for performance agreements.

Those are the dollars that we're referencing here for the existing transfers that go to CETA for the

So this would be a similar thing.

Both the CRHA money for the subsidy would go there as well as the PHA.

The only difference would be that the PHA subsidy amount would be transferred to CETA for CETA to pay to PHA and the city would then pay this to CRHA.

as just a performance agreement.

Or some other arrangement.

What we've written into this ordinance is that when the project owner receives the tax bill, they should contact

the city manager's office immediately and the city manager in consultation with the assessor and the treasurer will determine whether that has to be paid first and reimbursed or whether there's some internal mechanism by which the credit can be given or something.

We haven't

really gotten down into the weeds on how this direct subsidy would work.

I think so.

Certainly the language that's in this ordinance and any possibility that would facilitate

the city's planning and provide a source of funding for this payment.

So once that first tax bill came in and that subsidy was authorized to cover the tax bill, where that gets set aside, you know, that money is just your money.

So the taxes

get paid and they go into the general fund and that subsidy comes out of the general fund.

So it's just moving around, you know, your own money.

But if you put that dollar amount, once you knew the amount of that first tax, you chose to set up an escrow at that time.

And you thought that the easiest after talking with Chrissy or Ryan, if you thought that

going forward in escrow was the best situation.

You could have that conversation at that time under the language in this ordinance.

The only thing I want to say here is another option.

And again, there's a level of trust here, but

I would think we could also just set up a capital line item for this and here's the only reason I want to say this is that escrow, I mean you pay a fee, right, to the escrow agent and I don't, you know, I'm sure CRHA, Mr. Meyer and his group, I mean if you can avoid paying the fee to escrow

I would say, I mean, it's usually what, one or two percent.

But still, I mean, it's still I think you don't want to pay that money if you don't have to.

Yeah, I think anything that avoid fees, we talked about that a lot today.

If that can be explored is so over the next two weeks,

Based on your conversation, the only thing we would need to amend in both of these ordinance would be delete the sustainability plan reference from the requirements for drawdown number three.

So we would delete that.

Unless I'm missing something, the conversation about how might we plan to make provisions on an ongoing basis, if you look in both of these ordinances, it basically leaves open the possibility for staff to work with the project owner to figure out how the subsidy can be delivered in a way that potentially might not even require them to have to pay it upfront.

But is this something that we could state that we would be including year one tax payments after the city makes that payment?

We would

create this capital line item and add those dollars to that.

Suppose, Lisa, we could look at a resolution of intent, something of that nature.

Yeah, we could.

That's typically not something you would

necessarily do in an agreement with an outside party, but you could adopt your own sort of fiscal policy that talks about setting up a capital line item to provide a source of funding.

Yeah, I mean, we could add something to the CIP, you know, that would become part of the five year plan that would say, you know, performance agreement or whatever you want to call it.

And it would become an expenditure line item.

And then that would just be part of something that would have to be funded via cash or whatever.

It would just become part of the funding plan of the CIP.

I would think not because I think we already have an established, you know, methodology for the others.

We could.

It's just a transfer from, you know, transfer from the General Fund to the CIP, then to CEDA for some of the others.

Is this a two reading ordinance?

Yes.

So if we vote on it tonight with a few of those... We're not voting.

Oh, we're not.

We're just going to recommend maybe for the consent agenda.

With this change that we've just said around the sustainability study, because the only other thing that Mr. Sales mentioned this morning, which I think I do think that we did address, was the payments of the lump sums that he could draw from.

No, he said concern number two, reimbursement of funding instead of providing a lump sum at a time.

And I thought that our last our latest versions reflected this lump sum agreement.

We can edit that word out.

The intention is that each of the payments has a set of documents that need to be demonstrated

in order to draw it down.

But it's not necessarily reimbursement.

That first payment, for example, just requires proof that HUD has approved the projects and some other things.

And so each drawdown has its own collection of things to be demonstrated.

Okay.

Okay.

Thank you.

Thank you, everybody.

Are there any other?

Okay.

So this is, there's agreement to move this to the consent agenda with those changes.

Yes.

Next up, it's the recovery agreement, which was mentioned

Some here, but I'll turn it over.

Yes, so I think that's mine to present.

So the recovery agreement is between HUD, the City of Charlottesville, and the Housing Authority, and it was created to address the troubled status that the Housing Authority received during the audit.

that audit found physical deficiencies, accounting errors with the collection of rent, tenant accounts receivables.

So we were not collecting rent for units that were filled.

We do believe in not evicting families.

because that just puts out the stress on other services that the city has to fund as we try not to evict any family for non-payment of rent.

We've worked with families with recovery, repayment agreements, I'm sorry, and we try to work with our repayment agreements that they can actually afford.

So we go over their budget, we try to figure out where there's some extra money to cover late payments.

So we've been doing that and we've actually created a eviction diversion program

that we've asked to be funded through CDBG CV so that we'll come in front of you guys hopefully and it will get funded and that will allow us to work more with the families to address non-payment of rent.

The other issue, mass vacancies.

So when I got to the housing authority in August, we were severely understaffed in the maintenance department, which caused some issues with turning vacant units, addressing work orders, addressing physical deficiencies inside the units and exterior.

If you drive through the sites, they look a thousand percent better.

We've taken care of the outside.

We're taking care of vacancies.

We've done a large number of vacancies.

We're working with partners like Habitat, who we've reached an agreement with, to help assist us with turning vacant units.

They've pledged to complete at least seven vacancies.

We have hired a contractor, which is not the most feasible way to address the issue.

A contractor typically charges about $25,000 to turn a vacant unit.

It costs us around $11,000 to turn a vacant unit.

So it's much easier and feasible financially for us to turn a vacant unit than pay a contractor.

But we have hired a contractor to do three units.

But like I said, it's not the most feasible, but we need to turn the units as fast as we can to get them filled.

We have a wait list of individuals that need housing.

So we really just have an issue with turning the unit, so we're addressing that, working through that issue.

Another issue we had was the mismanagement of the HCV program.

That program had, I believe, about $625,000 in reserves for vouchers to be filled.

Thus far, since August the 1st, we've filled 42 vouchers.

We have an additional 55 on the street.

with 16 expected to be leased up this month.

So we are really doing a number on that program.

We have applied for additional funding for 40 more vouchers.

We submitted the application last week.

We hope to get that approved.

We received a grant to address some of the vacancy issues, which assisted us with hiring additional employees.

That grant was for about $658,000.

So that's really going to assist us with sustaining the vacancies and keeping them low.

HUD expects us to have a 3% vacancy, which means we would only have about 10 units vacant.

We are projected to clear all our vacancies by the end of the year.

At our current rate, we're averaging about three to four vacancies a week.

which is really good compared to what it was before.

Our work orders were averaging about 10 open work orders at any given time and that includes work orders that required ordered parts or parts that own back order or some other issue that we just can't resolve.

So we try our best to get to them and

I think if you ask the residents, they would say we've done a much better job with addressing their concerns.

I mean, over the weekends, I keep going back to this one incident where resident Crescent Halls reached out to me on a Saturday, and it was a holiday weekend, so no one was going to be in office on Monday, and the trash compactor was backed up.

We were able to address it in hours.

when previously it had taken days to address.

So the residents are starting to see that, and I think we're really getting some good buy-in and we're addressing all their concerns.

So I think we're heading in the right direction.

We still have a long way to go, but I think we see the light at the end of the tunnel.

No, I'm just in awe right now.

That's all.

Yeah, I just really want to say I appreciate because you sent us a summary last week and it just the candidates and just like laying this out there and in such a clear and concise way is just so appreciated.

I just feel like some of these things have come up

in the past and just been kind of put to the side or just not really answered or addressed.

And I just really appreciate the transparency by which you presented this information and the leadership that you're bringing forward to this.

And I think it certainly gives Council a lot of confidence in getting out of the status that the organization is currently in under your leadership.

Thank you.

Likewise, I think, you know, what was gone over covered a lot of

The intent of council looking for a sustainability plan is recognizing that a lot of the actions you've already taken are able to provide more housing to people and provide residents with a higher quality of life and the kind of standards of service that anybody should be able to expect and have access to.

So they're definitely very positive developments.

And I'll say as well, I think the terms of the recovery agreement, I think,

And of course, I feel the same way.

I think in terms of being someone who has had family members live in housing, friends live in housing, people who are still there.

There was a lot of conversation about whether you had the ability because there were some people who resume had more of the things that you look for in this position.

But it took you no time to get in and show that even people who had been hired in the past and had all of those things listed and that previous experience that you've done things that they in just a short window of time.

that they were unable to do in, you know, doing their tenure and that some of those were a lot of years.

Well, I will say I appreciate the support.

We have a long way to go and we can definitely get there together.

And like I said, the staff is really excited about where we're going.

There's been a lot of stress relieved off the maintenance team.

Can you imagine working on 96 units with this vacancy log?

That's massive work orders for just four employees.

So they are super excited.

We've more than doubled the staff, and I mean, they're rocking and rolling now.

So we are definitely hitting things, and we're in the stride.

Redevelopment.

Second.

Okay.

Ms.

Thomas?

Ms.

Walker?

Yes.

Ms.

Magill?

Yes.

Ms.

Hill?

Okay, that carries 5-0.

Mayor Walker, if I may, I'd also like to also compliment Mr. Sales and also put in a plug for Ms.

Roberts.

Thank you.

Yes, thank you.

Thank you very much, Ms.

All right.

Next up, we have the ordinance, authorization of a forgivable loan to Piedmont Housing Alliance to support redevelopment of Friendship Court for the purpose of producing new housing for low to moderate income persons.

So good evening again, and Mr. Wheeler, we have a presentation for this item.

So as most of you are aware, Friendship Court will be starting construction on a phased redevelopment that will be occurring over many years.

Piedmont Housing Alliance is the nonprofit that is planning and overseeing this redevelopment effort.

In early 2019, Piedmont Housing Alliance submitted an application for low-income housing tax credits

also called LIHTC for new construction of 106 rental affordable units on the Friendship Court site.

This is a very competitive process and the project was awarded a commitment of LIHTC funding in June 2019.

Next slide please.

Friendship Court is currently a 150 unit rental development built in 1978.

Resident-led redevelopment efforts propose a four-phase approach to replace all of the existing units and add additional residential units over the next eight to nine years.

Phase one will include new construction and the rest of the phases will require demolition of and new construction of all of the existing units on site.

In total, the overall redevelopment proposes to construct approximately 450 new affordable units.

More details for each phase will come before city council in the future.

This approach allows current residents to move directly into newly constructed units each phase so that there is only one move associated with the relocation of residents.

Next slide, please.

This illustrative site plan shows the proposed phase one in conjunction with the proposed conceptual future phases.

Phase one will be built on the current vacant land that is now where the community garden and play fields are located.

Next slide, please.

Phase 1 includes the construction of 106 affordable units, including a one-to-one replacement of 46 project-based Section 8 rental affordable units.

All units will have affordability restrictions with a 99-year required affordability period.

The item in front of you tonight provides for a master covenant that spells out the overall master plan requirements and also more specifically provides a separate phase one covenant that identifies the terms and the conditions for allocating a forgivable loan to support phase one of the redevelopment.

In addition, there is a separate item that comes right after this item to discuss an arrangement with the Charlottesville Economic Development Authority associated with redevelopment of Friendship Court.

Next slide, please.

Through the city's capital improvement plan, a total of $5,545,159 was allocated in fiscal year 1920 towards redevelopment of Phase 1 of Friendship Court.

This funding can be used for the construction of public streets and infrastructure, utilities, affordable units for rental by low and moderate income persons or households, and resident relocation assistance.

A maximum amount of the funding is specified that can go towards soft costs.

Next slide, please.

So let me give you an overview of the terms and conditions that are in the Master Covenant.

These terms will ultimately apply to redevelopment of the entire property.

Also included as an exhibit is a master site requirement table that outlines the proposed development on phase one and the future phases.

That's in your agenda package.

The master affordable housing covenant will be recorded in the public records to provide assurances of affordability for the entire site.

However, in the event of foreclosure, the affordability restrictions will terminate.

The Phase 1 Affordable Housing Covenant, this is separate document from the Master Covenant, only covers Phase 1.

Each future phase of redevelopment that receives public funding will come back in front of you with a separate covenant.

Next slide, please.

PHA will be required to provide an annual report to the city with information documenting the compliance with the affordability requirements.

Following the expiration of the LIHTC extended use period, if required to maintain affordability of the units, the city will have the exclusive right to lease up to 20% of the rental affordable units for 40 years at a rental rate not to exceed 80% AMI.

The city may designate another agency or other third party to take title to the unit.

Please keep in mind that if these opportunities become available to the city, there will be a cost associated with taking control of these units.

Next slide, please.

Now as to the terms and conditions specific to phase one, all 106 affordable rental units will be at or below a range of affordability, which is 30% to 80% AMI.

46 of these units will be provided as a one-to-one replacement of 46 existing units that are currently receiving project-based Section 8 operating subsidy.

30 of these units will be at or below 60% AMI,

and 30% of these units will be at or below 80% AMI.

All of the units will have a required affordability period of 99 years.

However, again, if the project is foreclosed upon, these affordability restrictions will terminate.

Next slide, please.

The city funding will be dispersed as a 40-year deferred payment forgivable loan.

If PHA breaches the terms of the loan in years 1 through 40, then the entire amount of the loan would become payable to the city in full plus interest.

If the 40-year loan period expires and the covenant has been complied with throughout that entire time, the entire amount of the loan will be forgiven.

If after the deferred loan has been forgiven and the project does not comply with the affordability restrictions, the city will have the ability to file an action in court to ensure compliance.

Each request for disbursement of funding is basically a reimbursement request.

That means certain milestones of construction or resident relocation need to be completed prior to payments being released.

Next slide, please.

And again, as mentioned previously, just some items that you should take into consideration on improving the items in front of you.

In the event the project is foreclosed upon, the affordability restrictions will terminate.

The city may have the opportunity to control affordable units in the project, either rental or for sale units.

However, there will be a cost to the city associated with taking control of those units.

With that, I'm happy to try to answer any questions you may have.

Thank you, Mayor Walker and the rest of City Council.

Just very quickly, I just want to say

It has been, I think, over four years getting to this point, and with a tremendous amount of work from, in particular, the residents at Friendship Court, and in particular, the advisory committee at Friendship Court.

They have put blood, sweat, and tears into this development, and we're on the verge of breaking ground, and I'm just really excited for the next steps.

I have a couple.

In terms of the affordability period being cut at the 40 years versus the 99 years, could you talk a little bit about that?

Yeah, my memory is, and Lisa, feel free to jump in on this if you have a different memory.

In the negotiations and discussion with the LIHTC attorney and the investors' attorneys, the general feeling was that anything beyond 40 years, particularly in a situation where we are going to potentially have to recapitalize a project, and what that means is that

Most LIHTC projects, any affordable housing, any development at a certain point in its future life has to either do a deep rehab in some way.

Even though things have been maintained over that period of time, you typically have to go in and replace all the appliances and you have to replace the HVAC.

Some of those are regular routine things

But you hit kind of a tipping point, usually around 30 to 40 years.

So just thinking back to the last rehab, that was

It was in 2002, as I understand it, actually.

Yeah.

The conversations around the property sale and that was a combination of also charitable efforts and the organization and National Housing Trust.

So even with that kind of collaboration, you still would

So that rehab that happened 18 years ago was actually a LIHTC rehab.

It was LIHTC funded.

And it's not so much the affordability period that's the issue, which is why the 99 year is OK.

It's the fact that the loan would not have been forgiven by that point.

OK.

The only other question I had was, Mr. Blair, is this a good time to talk about?

Because I guess this goes into the resolution, but the total loan on this, PHA having to take the loan out is in this section too.

So we spoke and we talked before about my concerns around the TIF and the request.

I just wish the city had had a better conversation, you know, been more, I guess, diligent in their efforts to try to resolve

which we just discussed with CRHA, but essentially you're taking out a $3 million loan for the gap funding for this.

And the request of the TIF would mean that the city would then forgive taxes up to the amount of the initial loan plus the interest that would accrue over a 30-year period.

and my question to you and to Chrissy and Ryan and Ms.

Shelton, you all were not apart.

You know, we were discussing this over the weekend and today some, but is there, and I understand this is happening pretty rapidly too, but is there a better option

then this arrangement where they are taken out a loan that we all eventually pay back anyway.

And if there's not, I would just hope that we would be more proactive in the future.

Because even if we're talking about 20 years, 30 years, we are having projects that are going to run 10 years.

We just had a project that talked about where we discussed that at year 15, something would need to happen with CRHA.

And we now have a project that

There is additional monies that we didn't factor into the initial equation that will have an impact on taxes that are not paid or returned to them to pay this loan off.

And my question and the comments that I've made to the counselors and

you know to sunshine over we spoke on Saturday about this was just that if this was going to be approved I didn't understand why there wasn't a better kind of collaboration to try to figure out where to get the additional dollars from and if we didn't have those additional dollars immediately then was there a shorter loan period

that we could potentially cover at some point that wouldn't require additional $3 million or up to $3 million when the request was only for $3 million.

I just wanted to clarify a timeline though, because I remember that obviously we obviously made decisions on what capital outlays that we were going to find as a city, but it seemed like at some point you approached us because

Things change.

I mean, there's a lot of moving parts.

There's some inflationary costs in terms of the construction.

And that's what I remember being like, you know what?

Things were covered.

Things are now not coming like we thought.

I remember sitting around a table with staff and another counselor.

And that's kind of where I remember that precipitating.

And then a lot of brainstorming going on to feel like, what are some ways that we can get through this?

Because we knew the city wasn't going to be in a position to just outlay that capital outright.

No, and I understand that how and when this discussion came up.

I also think that once we knew that we would attempt to cover that $3 million, then we should have had different conversations as a city.

We're talking about three to four phases for this project.

that's going to run nine years, maybe, pandemic, who knows how many years.

And we don't know what the request in the future is going to be.

I think these are two very important projects.

So all the projects that I have voted on or not voted on or that have been in front of us and that I, I'm just speaking for myself, have looked at, I think these are

going to take us places and help us in ways that none of those other projects could do.

And so it's very important, but I don't think that we're looking at any of these projects in a fiscally sustainable way.

And I don't think we're taking the whole picture into account the way we should take them into account.

And I understand we are at crunch time now, and there may not be another resolution

but I hope that we don't continue to make these investments where just because we may not have the cash in that moment that it isn't explored how to come up with it if that is what ultimately we are going

to do instead of having the organization take a loan out which we are going to end up paying back and doubling the amount over the period of time that we would pay.

But I'll stop.

So maybe I'll initially speak my memory of the process and then Chris Angle or whoever, if you have anything else that I feel like I missed.

I don't remember the exact timing of when I approached.

I don't remember if it was first Chris Angle or a city council member.

Honestly, it's been quite a while.

Or maybe it was the city manager.

But I think that was about a year and a half ago, maybe a little bit longer, somewhere in that time frame.

As Heather characterized it, it was a situation where, in particular, the site costs for doing the work on Friendship Court continued to go in the wrong direction because of the soil conditions there ended up being far worse than we originally anticipated.

And the proximity to the underground creek has just caused site work to go to increase significantly.

And so we were trying to search for some additional source that would cover that delta.

and if memory serves, I was the one who initially suggested the idea of potentially a TIF, although when I suggested that, it was in the context of assuming what I had seen in TIFs in other jurisdictions outside the state of Virginia where essentially the tax increment would be set aside and the city itself would do the bonding based on that tax increment and then essentially

do its own sort of bonding loan and just pass through the dollars at one time to us, to the organization to get the work done.

I was, if memory serves, and Chris correct me if I'm wrong on this, when we talked about it, that was initially the path we started going down, but then after conversations internally amongst the staff, the city staff, it was determined that the bond capacity, there was some issue with either the bond capacity being close to the maximum before compromising the city's

Bond Rating or some other situation that basically set that opportunity aside.

And so the path we then started to move down was to create the TIF and have the dollars come back to us and then us leverage a private loan based on those dollars.

I don't remember, to address your particular comment, Mayor Walker, I don't remember there being a particular discussion around

The City just trying to find that additional $3 million somewhere.

I don't know if that was because I didn't ask the question or if we just assumed that the City didn't have it.

I honestly don't remember that sequence.

That's my general memory of it over about a year and a half ago, initial conversations.

I don't know if specifically there was an attempt to look for an additional three million in capital that could happen to avoid this.

That would have happened kind of

during Mike Murphy's tenure, I believe.

I know he was involved in some of these conversations.

But you're correct in stating that tax increment financing in Virginia is different than tax increment financing elsewhere.

And in Virginia, the state statute requires that you include it in your capacity.

So if we were to

If we had additional capacity, we could do a tax increment financing and pass it through, but we always use our capacity on an annual basis, so that's typically not an option for a city like us.

It's why you don't see a lot of tax increment finance in Virginia, in the traditional sense of using the increment to pay for borrowing.

What you're going to hear about next in the performance agreement is a way to use the increment without the borrowing.

And it's a mechanism that works.

And then we've used it in a couple of cases.

This case is a little different in that it involves not a commercial interest, but commercial and residential, primarily residential.

But it can be helpful in helping fund something.

Well, that has to do with our financial policies and bonding capacity to maintain bond ratings and whatnot.

Then is this essentially back to the discussion about while we may be able to do a lot of things, we can't do everything.

Yeah, I don't recall specifically, I think basically what we built into the budget was basically the requests.

And so I too don't recall the different, you know, a conversation about a loan for the additional $3 million or an additional $3 million request.

You know, as Chris commented as well, in addition to the

The capacity, there's also the issue that, you know, PHA is a nonprofit, whether or not we could actually issue bonds for that project.

So moving forward for the other phases for this project, we would have to think about the cash basis for this project.

What are your thoughts about the long-term projections of whatever the total requests may be in the future?

Is it better to explore this route that we have in front of us now and spend double the potential gap funding over a course of a 30-year period?

Or is it better for us to try to figure out that request and prioritize?

Are you asking me?

I would say that if it's a project that you're interested in, I would say set your priorities and figure out how I think it's totally the preference of counsel how you choose to move forward.

Obviously, you know, you have to work those dollars in.

and we've talked about bond capacity, we've talked about cash issues, we've talked, you know, we're going to talk later about revenues and the impact of COVID and so certainly all those things weigh into those decisions.

The one thing I would offer is that the way that we currently have the funding for PHA structured in the CIP, there are some big payments

that come in, you know, like 22 and 24, whether there's options to sort of even that out and spread that out a little bit or if the funding plan is currently set forth is where we are.

So I can just respond to that quickly, which is just to say that in conversations with various city staff over the last year, year and a half, you know, yes, there are these peaks that we've talked about that are corresponding to each phase of construction, but recognizing that the city is working in difficult times to manage cash flow and projecting deficits.

I have explicitly said that if there is value to the city in, for example, phase two commitment, having that commitment up front, but the CIP budget being split over two calendar years or two fiscal years because construction will span two fiscal years, that is viable from our perspective if that helps kind of flatten the curve.

Now, I might be simplifying this some, but basically in my head, this kind of works out to being like a mortgage is being taken out and being paid for with the property tax.

I mean, I don't want to speak for city staff, but I will say that I've thought about it in a similar way, which is the city has prioritized in terms of how it uses dollars on an annual basis out of its general revenue fund to pay for its priorities and

It bonds a whole number of different items for infrastructure, et cetera, schools, to be able to pay for things it can't afford in the short term.

And it's common practice.

So whether that money that is paying for interest goes into a school bond or goes into effectively helping us leverage a loan, it's kind of a half dozen, one, six, and the other.

And I know people are tired of hearing me say this because I've been saying it every conversation for a week, but what I don't understand about this is that I understand mortgage

I have one.

I also don't want to pay more in interest or principal, because if I don't do that, then I can use those dollars for something else.

I would have preferred if this is the route that we're going to take, even if it's over a longer period of time, for us to look at all the numbers and say, what do you need?

Because essentially, when we thought we were voting on $5.5 million, we were essentially voting on $11.5 million.

And that just needs to be clear that that is the commitment that this council is making and what that means long term for future projects.

And I just hope we get all the numbers up front, which I don't think it's anything that PHA could have done differently.

I hope in the future that staff and council look at ways that if we're going to support these projects because we're understanding that we can't do everything, because I can think of some millions that we've spent on things that are not as worthwhile as this project, that we would have prioritized this additional $3 million to avoid spending $6 million.

That's all I've been saying.

and then if he needed 6 million, we could have given 6 million to do something other than pay a bank loan.

So those were my thoughts and every time we get to this discussion of what we're gonna fund versus what we're not gonna fund, almost all of you have a very hard time saying no.

Can I suggest the language change, roughly speaking?

Mayor Walker is referring to the language and I don't actually have the section in front of me, but it's the section that essentially allows...

Thank you.

It allows the city manager and city attorney to make non-substantive changes to the agreement.

The reason that that is important—and I have spoken with each of the city council members about this—is that there is one set of attorneys at the lender's side that is possible, not necessarily likely, but possible.

They will have

So my hope is if there are changes, those are minor and non-substantive and I don't want to have a situation where we have to come back to council to necessarily approve non-substantive changes.

But Mayor Walker pointed out that it's a little bit of a slippery slope or a fuzzy line about what's considered substantive and not.

It's fine.

And the reason that I think that it's important is that we've had some things happen that people are saying they were unaware that were happening.

And these are major projects.

And so we end up in a situation where people can just say, oh, I didn't know.

Then this avoids that for projects that we will be trying to figure out how to fund over the course of the next decade.

So just to be clear, Mayor, when you contemplate, so the purpose of having the language that's in there now, and as you all may have noticed,

The provision allows the city manager, subject to approval as to format by the city attorney, allows the city manager to make certain modifications.

But there's a list of five material things that cannot be changed without council's approval.

So the things that are really motivating you to fund this project, such as the length of the affordability period or the total dollar amount or that sort of thing.