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Disabled Homless Q&A.pdfIndependent Housing Solutions – Housing the Disabled Homeless CPA Questions & Answers Q. Since the project proposes acquisition of an affordable housing resource, and is also a significant request, an affordability restriction held by the City, and senior to all other private financing ensuring that the units will remain affordable to individuals or families earning less than 100% AMI will be required. Please see the attached letter from Director of Planning and Sustainability Wayne Feiden, and provide additional information as to how this requirement will be met. A. An affordable housing restriction for 99 years comes with multiple concerns, enumerated below: 1) This restriction is quoted to lead to a “drastic depreciation in property value. This business does not generate any significant profit, so the only real value is the investment in the property itself. There is close to 1 million dollars of private funding going into this project, so immediately devaluing the only investment of this money is not a sound business decision. 2) This project has already been met with some concerns from neighbors. A specific concern was that their property values would be affected. Their financial concerns are valid, if this project would decrease their property values for the rest of their lives. 3) IHS, EMS, and NPD, have offered assurances to the neighborhood that this project will not cause an increase in disruptive behaviors or crime. Due to issues with life expectancy, Independent Housing Solutions cannot stand by this assurance for 99 years. We do not feel comfortable adding this type of project to a neighborhood if we cannot control the outcome To overcome these issues, Independent Housing Solutions is in active conversation with Greenfield Savings Bank (GSB) and the CPA committee about the CPA funding being given as a loan with 2.5% interest. This loan would be in place for 20 years and attached to an affordable housing restriction. As long as Independent Housing Solutions continues to operate this project and serve low-income individuals, as outlined in our proposal, the 5% of the loan principal and the accumulated interest would be forgiven each year. After 20 years the loan would be forgiven and the Affordable housing restriction would be lifted. Q. Why is this being structured as a joint venture? If the role of Reliance Holdings Corporation is simply to obtain the financing and acquire the financing, why is that not being done directly by IHS? Structuring it as a joint venture makes it a taxable entity -- and according to the submitted materials, results in income tax liability each year of over $20,000. Additionally, the property will be subject to full real estate tax payments, estimated to start at $12,000 per year. A. Our initial loan discussion with GSB was regarding a SBA 504 loan, which only requires 10% down. Non-profit organizations are not eligible for this loan. We discussed with GSB on 10/12/21 we have decided to take out a conventional loan (20% down) under the name of the non-profit, with Reliance Holdings Corporation as the guarantor. GSB is aware of the CPA “Junior Mortgage mentioned above. GSB remains concerned about the housing restriction and the resulting depreciation leading to issues with appraisal. GSB is only able to lend 80% of the appraised value, and if the property appraises below the price listed on the P&S, the non-profit would have to come up with this difference. This continues to be an ongoing discussion. Recent information from Community Action of Pioneer Valley (CAPV) stated that if the Nonprofit owned the property, they could not control both the property and still be eligible to receive housing vouchers from DHCD. In short, per DHCD, a non-profit that owns a property cannot be the same non-profit controlling the housing vouchers. See below. Q. Have any attempts been made to raise other capital funds for the project? A. This question was asked a few times, so we are addressing all attempts to raise funding in this answer. Yes. Extensive efforts have been made, outlines below: Independent Housing Solutions has reached out to the insurance companies (specifically Commonwealth Care Alliance and MassHealth C3) who will benefit greatly from housing these extreme high-utilizers. We are discussing charitable gifts and/or stipends to assist with their housing. We are engaging in discussions with B’nai Israel and Cooley Dickinson Hospital for possible private donations and/or gifts. We have already obtained a generous gift from The Friends of the Hampshire County Homeless Individual who have agreed to supply bedroom furniture, office furniture, washers & dryers and a dishwasher for the entire facility. This is a value of approximately $40,000. Independent Housing Solutions is applying for 8 housing vouchers through DHCDs current CoC Open Competition. This application was not open at the time of the CPA submission. These 8 housing vouchers are worth $53,664 and would provide rental assistance to half of the building. The other half of rooms would be a mixture of private pay and housing vouchers from the surrounding Housing Authorities. In addition, we are requesting $93,000 in operating costs from DCHD listed below: Eligible Costs Description Annual Request Maintenance & Repair Snow Removal, Landscaping, Facility Cleaning, General Maintenance, and Elevator Maintenance $20,000 Property Taxes and Insurance Property tax and Liability Insurance $24,000 Replacement Reserve Replace needed items in 9 bathrooms, laundry room, kitchen, and common spaces $5000 Building Security Installation on Key Fob system Video Surveillance of the exterior surroundings of the building and entrances. Security in Summer Months to enforce noise curfew, as needed $10,000 Electricity, Gas, and Water (common spaces, only) For 1st floor of common space & support staff offices $4000 Furniture Furniture for common spaces & support staff offices $5000 Equipment (lease, buy) Medical equipment purchased for individuals with complex medical needs $25,000 The funds above, will cover property taxes, which was a concern noted in another question. Our Grant application is due to CAPVs, who is facilitating the competition for this region, on Friday, October 15th. Because of the potential funding from DHCD, we are significantly altering our request for funding from the CPA Committee. What is needed from the CPA committee is help with improvements to the building that will restore it to its historic purpose of housing individuals who need support. We are requesting the amount below:  $ 520,000 (needed building renovations and possible roof/solar)  $ 43,000 (update fire suppression system)  $ 20, 000 (paving and driveway redesign for ambulance entry on Franklin Street)  $ 15, 000 (fencing) This is a total of $608,000, instead of our prior request of over $950,000. Our requested funds from CPA is now only 35% of our total project budget. In regards to Wayne Fiden’s comment in his CPA Recommendation noting that the “cost per affordable unit provided is extremely high, probably the highest CPA match per unit ever requested.” The reason for this is: We are housing some of the most complicated and expensive individuals in the city. We have picked the best suited building and are creating something completed novel. When we look at other SRO housing models, most buildings cram as many people as possible on the upper floors or in the back of the lot and use the front or lower areas as rental space for commercial real estate. This model makes sense financially but does not actually make sense for the people living there. The Lumber Yard, for example, racked up 136 police calls and 48 ambulance transfers in 2020. The SRO where we currently implement support had only 1 ambulance response and 16 police responses in 2020. There was no violence or crime. The police calls were due to fire alarms, 911 hang-ups, and a lost pet. Instead of a shoe store / insurance company / massage parlor / etc (real examples) we are replacing this space with support services. Eliminating the commercial piece sacrifices potential income to this project, however. We are attempting to overcome that by providing all services essentially free with grant funded and non-profit organizations. This includes medical and case management services from Health Services for The Homeless, meals from MANNA Community Kitchen, office supplies and cleaning supplies donated by Friends of the Hampshire County Homeless Individual, and case managers from Elliot services. These in-kind services value at $99,060 per year. Creating a model for individuals that nearly eliminates health and behavioral issues due to lack of support, makes it possible to place these residences in residential neighborhoods, instead of commercial areas, where they are all currently located. Q. Is Independent Housing Solutions a brand-new organization? I fail to find any info about it on Google. A. Yes, it is a 501c3 that was created by 5 experts in housing and confirmed by the Secretary of State on August 27th, 2021. We are in the process of building a website. The board members include:  Dr. Jessica Bossie, Health Services for the homeless  Lee Anderson, MANNA Community Kitchen  Durai Rajasekar, River Valley Rest Home  Katie Miernecki, former Director of Shelter of Housing for Service Net, currently working at HMR properties managing multiple SROs  Sami Cunningham, Community Action of Pioneer Valley In addition, we have two board member spaces: One for a neighbor and one for a person who has lived experience with homelessness. Q. When you stated you are a 503c, did you mean 501c3? A. Yes, our apologies. This was a type-o. Q. Is Reliance Holdings Company a for-profit corporation? A. Yes. Independent Housing Solutions will pay rent to the Reliance Holdings Corporation at a fixed rate for 5 years-time. After five years, rent will be renegotiated, but cannot be increased beyond 5% of the original value. Reliance Holding Corporation is investing approximately $780,000 (Property $760 plus land surveyors, appraisals, etc) in their own capital and private lending to make this project possible. Q. Organizations are having an extremely difficult time recruiting direct service staff recently. How will you hire and retain qualified support staff? A. Our Board of Directors include experienced people that serve all prongs of the support system that serve houseless individuals. As a group we have an extensive network. We have multiple persons currently experiencing homelessness and individuals that have previously experienced homeless who are interested in being hired as cleaning staff, maintence workers, etc. This will provide jobs to homeless. Aside from these individuals, our support services come from outside organizations Health Services for The Homeless, MANNA Community Kitchen, Elliot Services. These entities are not having issues with staffing at this time. Q. How was the $750,000 for building renovations for 16 units determined? A. Based on the quotes we received from Barron and Jacobs. We are attempting to find a lower quote. Q. Can you explain your efforts to secure additional funding from other entities? A. Please see above Q. What would partial funding of the project mean for the project viability? A. This would make it extremely difficult to complete the needed renovations. Therefore, partial funding for the updated request of $608,000 would significantly delay the project and would leave 16 complex homeless individuals unhoused. Q. Is there any assurance that the housing vouchers will be project-based rather than mobile vouchers? A. As noted above we are applying to DHCD for 8 project-based vouchers. Q. The budget materials need further explanation and refinement. A. Our organization is working as quickly as possible get a more concrete quote for the build-out. Due to COVID, builders are overwhelmed. We will have this information prior to our presentation on October 27th. Q. The architect fee of $2,500 seems wholly inadequate, and does not seem to provide for any construction supervision services. Legal fees of $3,000 also appear low. A The request for legal and administration fees in our initial CPA submission was 20,000. This included the real estate attorney and the corporate attorney to draft the partnership agreement between IHS and Reliance Holdings Corp. The $3000 mentioned in the question above was for the creation of the non-profit. This process is complete and only cost the amounts below. This included all government processing, drafting of the articles of incorporation. This also included a 30 min discussion with an attorney to discuss a business partnership between Independent Housing Solutions, Inc. and Reliance Holdings Corporation, that would ensure the preservation of the non- profit. AUG 31 IHS -$230.00 AUG 28 IHS -$249.00 AUG 18 IHS -$943.00 In regards to the Architect, this is IHS contribution only. Jody Barker, our architect, has graciously offered a reduced fee for his services of $100 per hour. He quoted that he would need 20 hours for design and 20 to 30 hours during the construction period. This is a total of $5000. As noted above, we are currently requesting $520,000 to cover building, contracting, and architectural costs. Q. The narrative indicates that rent payments will be made by IHS, but the budgets reflect interest payments rather than rental payments (which would almost certainly include the principal payments in addition to the interest payments.) A. The initial Excel sheet included numbers from both Reliance Holdings Corporation. This was confusing. An updated spreadsheet has been attached here and only shows the budget for Independent Housing Solutions. Q. It is unclear if there will be dedicated property management staff to oversee the property -- repairs, tenant behaviors, tenant selection, possible eviction, and so forth. (The budget reflects unspecified wages of $2,000 per month, with no allowance for benefits.) A. No SRO in the city is staffed. They do not have doormen, security, case managers, medical staff, etc. There is no SRO with dedicated space for support to even visit. This leads to crime, mental health crises, medical events, and deaths. This is the problem we are attempting to solve. Our building will have outside supports visiting and providing services in the building nearly everyday. This includes individuals from MANNA, Health Services for the Homeless, visiting nurses that will communicate with Dr. Bossie, and case managers from Elliot services. We have added a budget line for security in our DHCD grant request, listed above, and will implement if needed (but our pilot project demonstrates this will be The $2000 in the budget is for cleaning services and maintenance worker, both of which will be paid per-job and not salaried. Q. The budget also assumes full occupancy at the outset, with no subsequent vacancy loss. There is no replacement reserve for future capital items. A. Dr. Bossie and the local agencies running the Coordinated Entry Lists have already identified 20 individuals that appropriate for this facility. There are 240 individuals on the lists, and many more unaccounted for. These individuals are all on the top 1/3rd of the lists and are all eligible for housing vouchers. We have already begun the process of organizing the needed paperwork for these individuals (Verification of income, birth certificates, certification of homelessness, medical documentation of disability, etc). The funds for first, last, and security has also been allocated for multiple potential tenants. These are come from a variety of organizations (Catholic Charities, Craigs Door, etc). Two potential clients are able to pay in full for a year up front due to accumulation of money in poorly managed Repayee accounts. Rooms with housing vouchers must be “turned over” with in 21 days, or the facility can be penalized. Rooms in this building will not be empty. Q. The attached draft Purchase and Sale Agreement requires a deposit of $31,000 rather than the $76,000 requested in the application. (And the application seems to indicate that the deposit will be paid by Reliance in any event.) A. Our request for $76,000 was to pay half of the 20% down payment for commercial real estate loan (10% of 760,000). Reliance Holdings Corporation has already paid the $31,000. We are no longer asking CPA for any acquisition costs. Q. The primary cost estimate, by Barron & Jacobs, is very preliminary. Is this what the renovation cost is based on? A. Yes. We are doing our best to get a more comprehensive quote. Q The timeline seems unrealistic. What is it based on? A. We agree that the proposed timeline is unrealistic. Q. Has the Franklin Street neighborhood offered support for the project? A. Yes. We have worked extensively with all three abutters and all three are satisfied with our current proposal to redesign the lot, add fencing, eliminate problematic easements, and increase the size of their land. Karen Foster is fully supportive and has arranged another neighborhood meeting, which is occurring immediately prior to our CPA presentation on the 27th. As expected, we have received some upsetting word from other neighbors including “If you want to help these individuals place them somewhere else. Place them in Holyoke or Springfield, both cities full of empty buildings. Better yet, place them in your backyard on a property that abuts yours. Let your children feel the weight of risk in the shadow of your ambition.” The quote above is not only heartless, but also completely unrealistic. We wonder about how our neighboring cities would feel about such a comment. Another neighbor (from the same household as the commenter above) wrote: “It has been years since I and many people I know have bothered to walk downtown due to the insistent panhandlers and for the past few years the increasing filth on the street.” Again, creating a model for individuals that nearly eliminates health and behavioral issues due to lack of support, makes it possible to place these residences in residential neighborhoods, instead of downtown, where they are all currently located. We are pleased to say that many neighbors spoke out against the words written above (which were sent to the entire neighborhood and Karen Foster) and have offered much support for our project. A. How will the equity created by the CPA-funded renovations be determined, and then captured in the Right of First Refusal? Will any credit be given for the loan amortization attributable to IHS rent payments? Q. Greenfield Savings Bank is already requested an “as-is” appraisal and an “as- completed” appraisal. This difference in value will be written into the partnership agreement. A. Where does the $50,000 "cash on hand" come from? Q. Please see updated spread sheet. First, last and security for 16 tenants (SRO rate of $680) which includes all utilities equals $32,640. That is the number we are starting with. Thank you for reading these responses. We greatly appreciate being considered for CPA Funding. -Independent Housing Solutions Starting cash on hand 32,640.00$ Starting date Mar 2022 Cash minimum balance alert 2,000.00$ Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 Cash on hand (beginning of month) 32,640.00$ 20,350.00$ 23,190.00$ 24,280.00$ 29,320.00$ 30,960.00$ 30,600.00$ 35,240.00$ 36,880.00$ 37,270.00$ 50,860.00$ 53,700.00$ Income Rent / Voucher -$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 10,880.00$ 119,680.00$ Grant 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 7,750.00$ 93,000.00$ Stipends from insurance cp 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 7,200.00$ Laundry 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 60.00$ 720.00$ Air Conditioners / Mini Fridge 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 600.00$ 7,200.00$ Fundraising 7,500.00$ 7,500.00$ Other receipts -$ Total Cash Receipts 9,010.00$ 19,890.00$ 19,890.00$ 19,890.00$ 19,890.00$ 19,890.00$ 19,890.00$ 19,890.00$ 19,890.00$ 27,390.00$ 19,890.00$ 19,890.00$ 235,300.00$ Total Cash Available 41,650.00$ 40,240.00$ 43,080.00$ 44,170.00$ 49,210.00$ 50,850.00$ 50,490.00$ 55,130.00$ 56,770.00$ 64,660.00$ 70,750.00$ 73,590.00$ Expenses Lanscaping 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 4,000.00$ Cleaning 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 1,000.00$ 12,000.00$ Insurance (other than health)3,000.00$ 3,000.00$ 3,000.00$ 3,000.00$ 12,000.00$ Interest expense -$ Materials and supplies (in COGS) 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 250.00$ 3,000.00$ Meals and entertainment 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 100.00$ 1,200.00$ Mortgage for construction loan -$ Mortgage on the building -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Security 750.00$ 750.00$ 750.00$ 750.00$ 750.00$ 3,750.00$ Medical Supports for Occupants 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$ 30,000.00$ Rent or lease 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 8,000.00$ 96,000.00$ Rent or lease: vehicles, equipment -$ Repairs and maintenance 1,500.00$ 1,500.00$ 1,500.00$ 1,500.00$ 6,000.00$ Office Supplies 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ 600.00$ Real Estate Taxes 3,500.00$ 3,500.00$ 3,500.00$ 3,500.00$ 14,000.00$ Utilities - Gas 500.00$ 500.00$ 500.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 500.00$ 500.00$ 500.00$ 4,200.00$ Utilities - Electricity 500.00$ 500.00$ 500.00$ 800.00$ 1,200.00$ 1,200.00$ 1,200.00$ 1,200.00$ 1,200.00$ 500.00$ 500.00$ 500.00$ 9,800.00$ Utilities - Trash Removal 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 200.00$ 2,400.00$ Utilities - Water / Sewer 200.00$ 200.00$ 200.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 500.00$ 200.00$ 200.00$ 200.00$ 4,200.00$ Wages (less emp. credits) -$ Snow removal 1,000.00$ 750.00$ 750.00$ 1,000.00$ 3,500.00$ Payroll expenses and Tax 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 24,000.00$ Install Key Fob and Cameras 5,000.00$ 5,000.00$ Miscellaneous -$ Subtotal 21,300.00$ 19,050.00$ 20,800.00$ 16,850.00$ 20,250.00$ 22,250.00$ 17,250.00$ 20,250.00$ 21,500.00$ 15,800.00$ 19,050.00$ 21,300.00$ 235,650.00$ Loan principal payment -$ Capital purchases -$ Other startup costs -$ To reserve and/or escrow -$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 2,000.00$ 22,000.00$ Owners' withdrawal -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Total Cash Paid Out 21,300.00$ 17,050.00$ 18,800.00$ 14,850.00$ 18,250.00$ 20,250.00$ 15,250.00$ 18,250.00$ 19,500.00$ 13,800.00$ 17,050.00$ 19,300.00$ 257,650.00$ Cash on hand (end of month)20,350.00$ 23,190.00$ 24,280.00$ 29,320.00$ 30,960.00$ 30,600.00$ 35,240.00$ 36,880.00$ 37,270.00$ 50,860.00$ 53,700.00$ 54,290.00$ Total Other Operating Data Sales volume (dollars) Accounts receivable balance Bad debt balance Inventory on hand Accounts payable balance Depreciation     October 4, 2021 Community Preservation Committee c/o Planning & Sustainability 210 Main St Northampton, MA 01060 RE: Housing for the Disabled Homeless Dear Community Preservation Committee, As director of the City office charged with affordable housing, I would like to add my comments to the Housing the Disabled Homeless CPA application. Support: This project serves a desperate need among our population experiencing houselessness and the concept has the whole-hearted support of Planning & Sustainability. Likewise, the location of the site, under a mile from downtown, makes it walkable (albeit a long walk), which is important for the population being served. I cannot comment on whether the proposed support services are adequate, but clearly the applicant has thought about that and has included some focus in their work. Cautions: While we have no reservations about the project, we have three concerns: First, the CPA cost per affordable unit provided is extremely high, probably the highest CPA match per unit ever requested. Traditionally, we think of both CPA and CDBG as being used for gap financing, financing that leverages as much money from other sources as possible. It is not clear from this application that the applicant is searching for and finding as much other funding as potentially is out there, which would tax CPA support more than needed. Second, the application does not discuss either affordability restrictions or energy performance.  CPA requires that such housing does provide an affordability restriction. We would urge that the restriction be a minimum of 99 years, which has become practice for most CPA and CDBG funded projects. Such a restriction must be senior to all other private financing (although it could be junior to any state contribution).  We would urge that in return for this large investment, the building get an extreme energy conservation makeover and a commitment to no new investments in fossil fuel heating. This is consistent with our recent Climate Resilience and Regeneration Plan and with our recent CPA and CDBG practices.     Finally, the proposed matching funds for the project are in the form of a private investment and private shareholders. It is not clear if those investors understand that their investment would be junior to the affordability restriction, which would dramatically reduce the value of the property and, perhaps, make investors less like to make this investment. One approach, if that is a concern, is that the affordability restriction could be, in part, in the form of a first mortgage that could be released if the CPA funds were paid back (principal and simple interest, such as 2.5%) None of our concerns undercut our support for the project, but they could require a significant reworking of the project parameters and financing. Thank you for your consideration. Sincerely, Wayne Feiden, FAICP Director of Planning and Sustainability Cc: Keith Benoit and the Northampton Housing Partnership