Title
RESOLUTION APPROVING A FIRST AMENDMENT TO THE DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DULUTH AND CENTER CITY HOUSING CORP. FOR THE WADENA WEST RESIDENTIAL PROJECT
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CITY PROPOSAL:
WHEREAS, Resolution No. 23-0267R authorized the proper city officials to enter into a development agreement (“Development Agreement”) with Center City Housing Corp. (“CCHC”) for development of the Wadena West affordable housing project and city expenditure in a total amount not to exceed $1,750,000.
NOW, THEREFORE BE IT RESOLVED, that the proper city officials are hereby authorized to execute a first amendment to the Development Agreement, substantially in the form attached as Exhibit A, increasing project support by $1,000,000 for a total amount not to exceed $2,750,000, payable from fund 226-125-5000-6003-5458 (Local Fiscal Recovery Funds, Finance, Affordable Housing, Wadena West, Payments to Developers) and extending the construction commencement deadline to June 30, 2024.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution approves a first amendment to the development agreement with Center City Housing Corp. (“CCHC”) for construction of the Wadena West residential project located near the intersection of N 52nd Avenue West and Wadena Street in Duluth, Minnesota.
On July 19, 2021, pursuant to Resolution 21-0515R, the City Council identified eligible priority uses for $58 million of federal funds from the American Rescue Plan Act. The Council identified affordable housing as a priority and preliminarily allocated $19.2 million of ARPA funds for that purpose. City staff issued a request for proposals on November 29, 2021 for multifamily affordable housing projects and selected Center City’s Wadena West proposal to fund.
Due to unforeseen construction overages associated with geotechnical concerns related to poor soil conditions, the Developer sought additional gap funding to continue the project and an extension of the construction commencement deadline to June 30, 2024. CCHC is also seeking additional gap financing from Minnesota Housing Finance Agency to address these overages.
The agreement provides for the development of a 60-unit multi-family residential structure consisting of efficiency and one-bedroom units, all of which will be leased to individuals earning 60% or less of the area median income. All 60 units will be supportive housing units serving tenants at 30-60% of area median income with at least 30 units reserved for individuals facing or at risk of homelessness. The agreement term runs twenty (20) years from after the date of the issuance of Certification of Completion. Building construction is anticipated to begin in spring 2024. Completion is scheduled to be completed by December 31, 2025.