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HomeMy WebLinkAboutPCD 2026-03-09 Item 1A - Resolution - Allocation from South King Housing Homelessness Partners (SKHHP) Capital FundCity of Tukwila Thomas McLeod, Mayor Marty Wine, City Administrator AGENDA BILL ITEM NO. 1.A. Agenda Item Resolution authorizing allocation from South King Housing & Homelessness Partners (SKHHP) Housing Capital Fund Sponsor Laurel Humphrey, Legislative Analyst Legislative History March 9, 2026 Planning & Community Development Committee March 23, 2026 Special Meeting Recommended Motion ❑ Discussion Only ❑x Action Requested MOVE TO approve the Resolution EXECUTIVE SUMMARY The proposed resolution will authorize the allocation of $121,530 from the City of Tukwila's contribution to the SKHHP Housing Capital Fund to finance affordable housing in South King County communities in concurrence with the SKHHP Executive Board's recommendation. This is part of the annual funding process pursuant to Tukwila's participation in interlocal agreements. DISCUSSION SKHHP was established in 2019 through an interlocal agreement (Establishing ILA) and is a unified, coordinated, and collaborative coalition funding the construction and preservation of affordable housing in South King County. SKHHP currently has 12 member jurisdictions including the cities of Auburn, Burien, Covington, Des Moines, Federal Way, Kent, Maple Valley, Normandy Park, Renton, SeaTac, and Tukwila, plus King County. SKHHP provides a meaningful opportunity to pool funds together with neighboring cities to collaboratively make an impact on the subregion's affordable housing shortage. To date, SKHHP has pooled over $15 million to house our low-income neighbors or rehabilitate deteriorating multifamily buildings. In 2019, RCW 82.14.540 (SHB 1406) became law allowing jurisdictions to enact a local sales and use tax for the purpose of supporting affordable housing. In 2021, eight of the nine SKHHP member cities entered into a second interlocal agreement for purposes of pooling sales tax receipts authorized by RCW 82.14.540 with SKHHP to create the Housing Capital Fund (Pooling ILA — SHB 1406). In 2023, two of the four SKHHP member cities who are able to collect RCW 82.14.530 (HB 1590) revenues desired to pool a portion of those funds with SKHHP for the 2023 funding round of the Housing Capital Fund to add to existing SHB 1406 pooled revenue and entered into an additional interlocal agreement (Pooling ILA — HB 1590). In 2024, an additional member city entered into the Pooling ILA — HB 1590. The Establishing ILA and Pooling ILAs established the SKHHP Housing Capital Fund, set parameters for the process for the selection of awards involving pooled funds, and determined the approval process. Pursuant to the ILAs, the SKHHP Executive Board recommends allocations for funding affordable housing projects to the participating City Councils. Even though the Council has already contributed funds to the 2025 Housing Capital Fund funding round, Council approval is needed to authorize the allocation of funds to specific projects. 2 The SKHHP Executive Board adopts annual funding guidelines and priorities for each funding round. The SKHHP Advisory Board subsequently reviewed applications and provided funding recommendations based on adopted priorities to the SKHHP Executive Board. The SKHHP Executive Board concurred with the SKHHP Advisory Board's recommendations and recommends funding three projects totaling $3,942,850 as described in the 2025 SKHHP Housing Capital Fund Recommendation memo dated January 8, 2026 (attached). The SKHHP Executive Board requests approval to use $121,530 of the total $120,642 contributed funds from 2025; $459 of the carry-over from 2024; and $470 of the 2024 SKHHP allocated interest earnings from the City of Tukwila for the following recommended projects: Project Sponsor and Project Name Location # of Units Total Development Cost 2025 SKHHP Contribution 2025 City Contribution African Community Housing & Development — African Diaspora Cultural Anchor Village SeaTac 129 $114,853,431 $1,200,000 $0 St. Stephen Housing Association — Steele House Renton 6 $3,816,135 $1,820,850 $0 Mental Health Housing Foundation — Steel Lake Federal Way 20 $11,828,066 $922,000 $121,530 As outlined in the attached memo, sales and use tax receipts from your jurisdiction have already been contributed to SKHHP's 2025 Housing Capital Fund, and with this Council approval, $121,530 of those funds may be allocated to the projects recommended by the SKHHP Executive Board. Detailed descriptions of the projects, funding requests, rationale, and recommended conditions of funding for projects by the SKHHP Executive Board are included in the attached memo. FINANCIAL IMPACT Complete for all items with fiscal implications Disclaimer: Final terms and scope of work subject to review by the City Attorney la Expenditure - Budgeted ❑ Expenditure - Unbudgeted ❑ Expenditure - Grant -Funded ❑ Revenue — One -Time (e.g. asset sale, surplus equipment) ❑ Revenue - Ongoing Expenditures: Fund Source: $121,530 Revenues(if applicable): SHB 1406 sales tax proceeds $0 ATTACHMENTS Draft resolution 2025 SKHHP Housing Capital Fund Recommendation memo dated January 8, 2026 Presentation 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AUTHORIZING THE DULY - APPOINTED ADMINISTERING AGENCY FOR SOUTH KING HOUSING AND HOMELESSNESS PARTNERS (SKHHP) TO EXECUTE ALL DOCUMENTS NECESSARY TO ENTER INTO AGREEMENTS FOR THE FUNDING OF AFFORDABLE HOUSING PROJECTS, AS RECOMMENDED BY THE SKHHP EXECUTIVE BOARD, UTILIZING FUNDS CONTRIBUTED BY THE CITY OF TUKWILA TO THE SKHHP HOUSING CAPITAL FUND. WHEREAS, on February 21, 2019, the City of Tukwila entered into an Interlocal Agreement to form the South King Housing and Homelessness Partners (SKHHP) to help coordinate the efforts of South King County cities to provide affordable housing; and WHEREAS, on May 17, 2021, the City of Tukwila entered into an Interlocal Agreement for the purposes of pooling sales tax receipts with SKHHP to administer funds through the SKHHP Housing Capital Fund; and WHEREAS, the SKHHP Executive Board has recommended that the City of Tukwila participate in the funding of certain affordable housing projects and programs hereinafter described; and WHEREAS, the SKHHP Executive Board has developed recommended conditions to ensure the City's affordable housing funds are used for their intended purpose and that projects maintain their affordability over time; and WHEREAS, pursuant to the SKHHP formation Interlocal Agreement, each legislative body participating in funding a project or program through SKHHP's Housing Capital Fund must authorize the application of a specific amount of the City's funds contributed to the SKHHP Housing Capital Fund to a specific project or program; and SKHHP Capital Fund Allocation Version: 03/03/2026 Staff: L. Humphrey Page 1 of 3 4 WHEREAS, the City Council desires to use $121,530 from funds contributed to the SKHHP Housing Capital Fund as designated below to finance the projects recommended by the SKHHP Executive Board; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Pursuant to the Interlocal Agreement, the City Council authorizes the duly -appointed administering agency of SKHHP to execute all documents and take all necessary actions to enter into agreements on behalf of the City to fund the construction of Mental Health Housing Foundations' Steel Lake and to use $121,530 from the City's SHB 1406 contribution and a portion of the interest earned on those contributions as described below. Section 2. The agreements entered into pursuant to Section 1 of this resolution shall include terms and conditions to ensure that the City's funds are used for their intended purpose and that the projects maintain affordability over time. In determining what conditions should be included in the agreements, the duly - appointed administering agency of SKHHP shall be guided by the recommendations set forth in the SKHHP Executive Board's memorandum dated January 8, 2026, a copy of which is attached hereto as Exhibit A. Section 3. This resolution shall take effect and be in full force immediately upon passage and signatures. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Special Meeting thereof this day of 2026. SKHHP Capital Fund Allocation Version: 03/03/2026 Staff: L. Humphrey Page 2 of 3 5 ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk Armen Papyan, Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Office of the City Attorney Attachment: Exhibit A — SKHHP Executive Board memorandum dated January 8, 2026 SKHHP Capital Fund Allocation Version: 03/03/2026 Staff: L. Humphrey Page 3 of 3 6 South King Housing and Homelessness Partners TO: FROM: DATE: RE: City of Auburn City Council City of Burien City Council City of Covington City Council City of Des Moines City Council City of Federal Way City Council Memorandum City of Kent City Council City of Maple Valley City Council City of Normandy Park City Council City of Renton City Council City of Tukwila City Council Claire V. Goodwin, SKHHP Executive Manager January 8, 2026 2025 SKHHP Housing Capital Fund Recommendation OVERVIEW 2025 represents the fourth annual funding round of the SKHHP Housing Capital Fund made possible by pooling resources among SKHHP member jurisdictions. Ten member cities pooled funds for the Housing Capital Fund this year and contributions totaled $3,926,340. Contributions sourced from SHB 1406 totaled $883,725 and those sourced from HB 1590 totaled $3,042,615. With the remaining unused funds from the 2024 funding round and the 2024 interest earnings from those cities pooling funds this year, SKHHP made $3,974,000 available in the 2025 funding round. SKHHP received six applications for funding representing over $11.4 million in requests to develop or preserve 262 units of housing. The SKHHP Executive Board recommends funding three projects totaling $3,942,850 (see Table 1). Of this total, the Executive Board recommends using $922,000 of the total $922,000 sourced from SHB 1406 revenue for a new construction rental project and $3,020,850 of the total $3,052,000 sourced from HB 1590 revenue for two new construction rental projects. This recommendation leaves a balance of $314 in SHB 1406 funds and $31,665 in HB 1590 funds in the Housing Capital Fund that will rollover into the next funding round in 2026 (see Tables 2 and 3). A summary of the recommended projects, funding rationale, and the conditions for funding are described in this memo. Included as an attachment are the economic summaries of the recommended projects and standard conditions for funding. Table 1: Recommended Projects and Recommended Funding Level - Scenario 1 1. African Community Housing & Development — African Diaspora Cultural Anchor Village SeaTac 129 New Construction Rental $3,500,000 $1,200,000 2. St. Stephen Housing Association — Steele House Renton 6 New Construction Rental $1,820,850 $1,820,850 3. Mental Health Housing Foundation — Steel Lake Federal 20 Way New Construction Rental $1,500,000 $922,000 Page 1 of 15 7 Table 2: Proposed HB 1590 Allocations by Jurisdiction for Recommended Projects Covington Kent Maple Valley 87,693 133,064 $ 914,654 $ 1,387,873 $ 197,653 299,913 220,387 $ 2,322,228 500,000 460 $ 2,224 $ 4,434 $ 1,075 Table 3: Proposed SHB 1406 Allocations by Jurisdiction for Recommended Projects Auburn 137,138 134,352 807 2,026 1,707 2,314 $ 24,135 5,216 47 Burien 65,453 64,134 $ 382 $ 959 22 Des Moines 31,264 30,667 199 409 11 Federal Way $ 121,813 $ 119,350 $ 770 $ 1,735 $ 42 Kent 211,663 185,561 1,150 $ 25,024 72 Normandy Park 5,636 5,554 $ 32 $ 52 2 Renton 227,503 223,465 1,343 $ 2,772 77 Tukwila $ 121,530 $ 120,642 $ 459 $ 470 41 rev BACKGROUND The SKHHP Advisory Board met on October 2, 2025 and November 6, 2025 to review each project application and develop a funding recommendation for the SKHHP Executive Board's consideration. The SKHHP Executive Board met on October 17, 2025 and November 21, 2025 to review each project and consider the recommendations of the Advisory Board. The Advisory Board adopted its recommendation on November 6, 2025 and the Executive Board took final action on November 21, 2025. PROCESS Advisory Board recommendation (November 6, 2025) ATTACHMENTS Executive Board recommendation (November 21, 2025) 1. Economic summaries of recommended projects 2. Standard conditions for funding Member Councils approve funding recommendation (January -March 2026) Page 2 of 15 8 1. African Community Housing & Development — African Diaspora Cultural Anchor Village Funding request: $3,500,000 Executive Board recommendation: $1,200,000 (deferred loan) Address: 15005 Military Road S, SeaTac, 98188 PROJECT SUMMARY The African Diaspora Cultural Anchor Village is a 129-unit new construction 4% Low -Income Housing Tax Credit rental project with a mix of studios to four -bedrooms for households earning 30-60% AMI. 55 units will be set -aside for families with children and 13 units set -aside for households with a physical disability. The project aims to respond to community members' desire for a central anchor for South King County's African Diaspora immigrant and refugee community. This project is a partnership between African Community Housing & Development (ACHD) and Mercy Housing Northwest. Four parcels represent the project across 2.2 acres acquired by ACHD in 2023. The parcels are located in SeaTac, 0.4 mile north of the Tukwila International Boulevard Link light rail station, making this a prime transit -oriented development location. Existing structures include two houses and commercial structures to be demolished. The seven -story building will house residential units on levels three through seven while the first two levels will include a community center event space, retail space, and office space for ACHD. Level two will include a childcare center and classroom space for ACHD after -school programming. Additionally, there will be outdoor gardening and recreation space. Level three will have a courtyard in addition to the residential units. Below ground parking will be provided on part of Level one. PROJECT SCHEDULE Site Control 12/1/2023 Building Permits Issued Fall 2027 Begin Construction Fall 2027 Issued Certificate of Occupancy Summer 2029 Begin Lease -Up Summer 2029 ejected Firs IHTC Year Star• Summer 2029 FUNDING RATIONALE The Advisory Board supports the intent of this application for the following reasons: • The City of SeaTac is a central hub for the African Diaspora immigrant and refugee community, who are facing increasing displacement pressures, and the project responds directly to those needs. • ACHD is considered a "By and For Organization" by the Department of Commerce's Housing Division. The Department of Commerce describes By and For Organizations as the following: "By -and -For Organizations are operated by and for the communities they serve. Their primary mission and history is serving a specific community. They are culturally based, directed, and Page 3 of 15 9 substantially controlled by individuals from the population they serve. At the core of their programs, these organizations embody the community's central cultural values. In the affordable housing context, these communities must have demonstrated disproportionate representation in homelessness, housing instability, and housing affordability."' • A primary goal of the project is to support large and intergenerational families, including specific gathering spaces requested by elders. • The proposal was driven by extensive community engagement including a series of community conversations and community cafes within the South King County African Diaspora immigrant and refugee community. • The project will include early learning classrooms, workforce training, outdoor gardening and recreation space, retail space for community businesses, and community gathering space. • The project includes a large portion of 2,3, and 4-bedroom units. • The project is located near the Tukwila International Boulevard Link light rail station, providing critical transit access. • Outreach and marketing will be conducted in multiple languages. • The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including collaboration with local community -based organizations, connections and direct experience with populations the project is proposing to serve, addressing the needs of populations most disproportionately impacted by housing costs, advancing economic opportunity due to its proximity to transit and other amenities, providing rental housing for households earning 0-30% AMI, geographic distribution, leverage of private and public investment, and racial equity. • The project is located in SeaTac which has not had a SKHHP funded project located in the city yet. • ACHD is a new developer but is partnering with the more experienced developer, Mercy Housing Northwest, for this project. • A partial award is recommended as another applicant's project was a higher priority and ready to move forward with construction. PROPOSED CONDITIONS Standard conditions apply to all projects and are included as Attachment 2 at the end of this memo. 1. SKHHP will provide project funds to the Contractor in the form of a deferred loan. Loan terms will account for various factors, including loan terms from other fund sources and available cash flow. Final loan terms shall be determined prior to release of funds and must be approved by SKHHP staff. The loan will be secured by a deed of trust recorded against the development property to ensure that Contractor maintains the project's affordability and target population. Contractor shall not be required to repay the loan so long as it maintains these project requirements. 2. Timeframe for funding commitment. The funding commitment continues for thirty-six (36) months from the date of Council approval and shall expire thereafter if all conditions are not 1 Department of Commerce's Capacity Building, Outreach, and Support Program: https://www.commerce.wa.gov/multifamily-rental- housing/cbos-team/ and hops:/laoD.smartsheet.com/b/form/06feee2dc8644602a884beb5cb4081e2 Page 4 of 15 10 satisfied. An extension may be requested to SKHHP staff no later than sixty (60) days prior to the expiration date. At that time, the Contractor will provide a status report on progress to date and expected schedule for start of construction and project completion. The SKHHP Executive Board will consider a twelve-month extension only on the basis of documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Contractor will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable period of time. 3. At least 13 of the housing units shall be set -aside for individuals with a physical disability who earn no more than 60% AMI. Use of funds and population eligibility must be in -alignment with RCW 82.14.530. Additionally, at least 55 units will be set -aside for families with children. 4. SKHHP funds shall be used solely for new construction and other development costs, unless otherwise approved by SKHHP staff. 5. A covenant is recorded ensuring affordability for at least 50 years with size and affordability distribution per the following table. Changes may be considered based on reasonable justification as approved by SKHHP. 30% 1 2 4 6 1 14 40% 1 12 4 50% 2 8 13 16 4 43 608% 1 14 4i 7 Manager Units Page 5 of 15 11 2. St. Stephen Housing Association — Steele House Funding request: $1,820,850 Executive Board recommendation: $1,820,850 (secured grant) Address: 3001 NE 16th St., Renton, 98056 PROJECT SUMMARY Steele House is proposed as a demolition and new construction rental project of six three -bedroom townhomes for families exiting homelessness or at risk of homelessness who earn up to 50% AMI. The property was purchased in 2016 and includes a duplex built in 1943 operating as transitional housing. The transitional housing program will end before the project begins so no relocation will be needed before demolition of the duplex. Most case management and supportive services will take place on -site, at the families' housing unit. St. Stephen Housing and Way Back Inn merged in December 2024 and have become a single non-profit organization under the name St. Stephen Housing Association. The boards of both organizations have combined and former Way Back Inn Board Members, who have assisted in the Steele House project's pre -development work, will remain involved to guide expansion plans. The project is located across the street from the Bezos Academy — North Highlands location, Meadow Crest Early Learning Center, and a playground. McKnight Middle School, Renton Highlands Park and Ride, multiple restaurants and retail stores along Sunset Boulevard, and a Rite Aid Pharmacy are all located within 0.5 mile radius. A grocery store is located within 0.6 mile radius. This is the second time the project sponsor has applied to the SKHHP Housing Capital Fund for the project and the City of Renton has committed $500,000 to the project since the previous application was received. PROJECT SCHEDULE Site Control 1/21/2025 Building Permits Issued 4 5/2026 Begin Construction 4/16/2026 Begin Lease -up 2/2027 Issued Certificate of Occupancy 4/16/2027 FUNDING RATIONALE The Advisory Board supports the intent of this application for the following reasons: • The project will serve families experiencing homelessness or are at -risk of homelessness. • The City of Renton has committed $500,000 of HB 1590 funds directly to the project and has not had a SKHHP funded project located in the city yet. • Pending successful awards from SKHHP and the Department of Commerce this funding round, the project is ready to begin construction in April 2026. Page 6 of 15 12 • The application was well -crafted and complete. Additionally, all underwriting benchmarks were met in the SKHHP Addendum. • The proposal has been discussed for the past eight years including at the sponsor's annual fundraisers. • The project budgets $15,745 in operating expenses per unit per year which is a generous budget ($8,000 per unit per year is the minimum benchmark). • St. Stephen Housing Association reports that the project will focus on Black, Indigenous, and People of Color (BIPOC) families, who are disproportionately impacted by homelessness due to systemic factors, and the goal will be to have four or five of the homes serving BIPOC households. • The Sponsor has a long-standing history of working with homeless families and is well - established within the local crisis housing community. The project is built on strong partnerships and deep community connections. • Close access to schools, an early learning center, grocery stores, retail, and a pharmacy. • Program design is informed by surveys and interviews with families. • The project utilizes monthly Conversation Cafes for continuous community input. • The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including connections and direct experience with populations the project is proposing to serve, addressing the needs of populations most disproportionately impacted by housing costs, advancing economic opportunity due to its proximity to transit and other amenities, environmental benefit due to its proximity to parks, providing rental housing for households earning 0-30% AMI, geographic distribution, leverage of private and public investment, and racial equity. PROPOSED CONDITIONS Standard conditions apply to all projects and are included as Attachment 2 at the end of this memo. 1. SKHHP will provide project funds to the Contractor in the form of a secured grant with no repayment. Final Contract terms shall be determined prior to release of funds and must be approved by SKHHP staff. The grant will be secured by a deed of trust recorded against the property to ensure that Contractor maintains the project's affordability and target population. Contractor shall not be required to repay the grant so long as it maintains these project requirements. 2. Timeframe for funding commitment. The funding commitment continues for thirty-six (36) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to SKHHP staff no later than sixty (60) days prior to the expiration date. At that time, the Contractor will provide a status report on progress to date and expected schedule for start of construction and project completion. The SKHHP Executive Board will consider a twelve-month extension only on the basis of documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Contractor will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable period of time. Page 7 of 15 13 3. All 6 housing units shall be set -aside for families exiting homelessness or are at -risk of homelessness who earn no more than 50% AMI. Use of funds and population eligibility must be in -alignment with RCW 82.14.530. 4. SKHHP funds shall be used solely for new construction, including demolition, and soft costs, unless otherwise approved by SKHHP staff. 5. A covenant is recorded ensuring affordability for at least 50 years with size and affordability distribution per the following table. Changes may be considered based on reasonable justification as approved by SKHHP. Page 8 of 15 14 3. Mental Health Housing Foundation — Steel Lake Funding request: $1,500,000 Executive Board recommendation: $922,000 (forgivable loan) Address: 29020 and 29026 Military Road, Federal Way, 98003 PROJECT SUMMARY Mental Health Housing Foundation's (MHHF) Steel Lake Affordable Housing is a 20-unit rental project for individuals with severe and persistent mental illness with incomes at 30% and 50% AMI. This is the first phase of a two -phased new construction project. The second phase would add an additional ten units for a total of 30 units. The first phase will construct four two -bedroom units and sixteen one - bedroom units, including one manager unit. The project will be owned, developed, and operated by MHHF. A live-in property manager will occupy one of the one -bedroom units, and all maintenance needs will be addressed through a shared superintendent and maintenance staff. Residents live independently, receiving services from community behavioral health providers offsite. The majority of tenants in the portfolio have case managers. When issues arise with tenants that may benefit from contact with the case manager, MHHF makes contact. The new building will be a two-story walk-up with ten apartments on each level. The site will include a community gathering space, shared laundry facilities, management offices, outdoor seating areas, and parking. Two large grocery stores, drugstore and other shops and amenities are located across the street, as well as access to public transit. Laurelwood Park with open space is within 0.5 mile. MHHF acquired the parcels in December 2024. MHHF was organized and incorporated as a non-profit in 1990 to support those living with mental illness in their efforts to live independently. The founders were concerned about the lack of affordable housing for individuals with serious and persistent mental illness in King County. The organization has grown to own seven housing projects, with a total of 90 housing units, that vary from single family shared homes to small apartment buildings. PROJECT SCHEDULE Site Control 12/23/2024 Building Permits Issued 2/ 2027 Begin Construction 3/15/2027 Begin Lease -up 2028 Issued Certificate of Occupancy 3/15/2028 FUNDING RATIONALE The Advisory Board supports the intent of this application for the following reasons: • The project directly addresses a critical regional need for housing dedicated to individuals with mental illness. Page 9 of 15 15 • The project will provide deep affordability for households earning up to 30% and 50% AMI. • The project provides an opportunity to ensure SKHHP funds are distributed across all of South King County as Federal Way has not had a SKHHP funded project located in the city, yet. • The scale of the project is considered appropriate for the identified need. • The construction timeline is further out, which justifies the recommendation for partial funding. • The application was strong and all underwriting benchmarks were met in the SKHHP Addendum. • MHHF has longstanding relationships with multiple behavioral health agencies in King County, including Sound Behavioral Health, Navos, and Valley Cities, and will utilize those to seek referrals for residents of Steel Lake. • Sponsor secured a $31,000 pre -development grant from Enterprise Community Partners, a commitment up to $60,000 in State funded technical assistance, an Impact Capital loan to purchase the site, and $44,000 commitment from MHHF to support the project's operating reserves to be deposited once construction is complete. • The project strongly aligns with SKHHP Housing Capital Fund adopted priorities including connections and direct experience with populations the project is proposing to serve, addressing the needs of populations most disproportionately impacted by housing costs, advancing economic opportunity due to its proximity to transit and other amenities, environmental benefit due to its proximity to a park, providing rental housing for households earning 0-30% AMI, geographic distribution, and leverage of private and public investment. PROPOSED CONDITIONS Standard conditions apply to all projects and are included as Attachment 2 at the end of this memo. 1. SKHHP will provide project funds to the Contractor in the form of a deferred, contingent, forgivable loan. Loan terms will account for various factors, including loan terms from other fund sources and available cash flow. Final loan terms shall be determined prior to release of funds and must be approved by SKHHP staff. The loan will be secured by a deed of trust recorded against the development property to ensure that Contractor maintains the project's affordability and target population. Contractor shall not be required to repay the loan so long as it maintains these project requirements. 2. Timeframe for funding commitment. The funding commitment continues for thirty-six (36) months from the date of Council approval and shall expire thereafter if all conditions are not satisfied. An extension may be requested to SKHHP staff no later than sixty (60) days prior to the expiration date. At that time, the Contractor will provide a status report on progress to date and expected schedule for start of construction and project completion. The SKHHP Executive Board will consider a twelve-month extension only on the basis of documented, meaningful progress in bringing the project to readiness or completion. At a minimum, the Contractor will demonstrate that all capital funding has been secured or is likely to be secured within a reasonable period of time. 3. All 20 housing units in Phase 1 shall be set -aside for individuals with severe and persistent mental illness who earn no more than 50% AMI. Use of funds must be in -alignment with RCW 82.14.540. Page 10 of 15 16 4. SKHHP funds shall be used solely for acquisition, new construction, softs costs, and other development costs unless otherwise approved by SKHHP staff. 5. A covenant is recorded ensuring affordability for at least 50 years with size and affordability distribution per the following table. Changes may be considered based on reasonable justification as approved by SKHHP. Page 11 of 15 17 ATTACHMENT 1: Economic Summaries of Recommended Projects Project: African Community Housing & Development — African Diaspora Cultural Anchor Village Proposed Funding Sources by Amounts and Status SKHHP (2025) $3,500,000 Recommended 4% LIHTC King County (2024) $36,191,383 $950,055 Will Apply 2027 Committed King County (2025) $9,531,499 Applied Commerce HTF $12,000,000 Applied CHIP $1,000,000 Applied Perm Debt $12,929,768 Committed State Appropriation $3,880,000 Committed Amazon $9,500,000 Will Apply Deferred Fee $2,500,000 Committed Contributed Fee ACHD Sponsor Loan (Non -Residential) $2,000,000 $18,184,525 Committed Committed 4% LIHTC (Non-Residentia Proposed Use of Funds and Total Residential Cost Per Unit Will Apply 2027 Acquisition $6,852,926 Construction $62,578,467 Soft Costs $15,097,811 Other Development Costs. $9,453,501 Non -Residential Costs $20,870,725 ASA Page 12 of 15 18 Project: St. Stephens Housing Association — Steele House Proposed Funding Sources by Amounts and Status SKHHP (2025) $1,820,850 Recommended Sponsor Seller Note $295,000 Committed City of Renton $500,000 Committed Commerce HTF Sponsor Operations and Service Agreements $1,000,000 $125,285 Committed. Committed Medina Foundation Grant $75,000 Com ted. Proposed Use of Funds and Total Residential Cost Per Unit Acquisition $295,000 Construction $2,527,168 Soft Costs $635,332 Other Development Costs. $358,635 Project: Mental Health Housing Foundation — Steel Lake Proposed Funding Sources by Amounts and Status SKHHP (2025) $922,000 Recommended Commerce AHAH $6,310,155 Committed Federal Home Loan Bank $1,700,000 Committed King County $2,393,679 Committed Sponsor Pre -Development Grants $123,749 Committed CHIP $378,483 Applied Proposed Use of Funds and Total Residential Cost Per Unit Acquisition $710,000 Construction $8,910,608 Soft Costs $1,480,283 Other Development Costs $727,175 Page 13 of 15 19 ATTACHMENT 2: Standard Conditions for Funding 1. Contractor shall provide SKHHP with development and operating budgets based upon actual funding commitments for approval by SKHHP staff. Contractor must notify SKHHP staff immediately if it is unable to adhere to these budgets and must submit new budget(s) to SKHHP staff for approval. SKHHP staff shall not unreasonably withhold its approval of these budget(s), so long as they do not materially or adversely change the Project. This shall be a continuing obligation of the Contractor, and shall survive the transfer or assignment of the Contract. Contractor's failure to adhere to budgets (either original or new/amended) may result in SKHHP's withdrawal of its funding commitment. Contractor must prepare and submit final budgets to SKHHP at the time it starts project construction and at the project's completion. 2. Contractor shall submit to SKHHP evidence of funding commitments from all proposed public and private funding sources. If Contractor cannot secure an identified commitment within an application's time frame, Contractor shall immediately notify SKHHP staff and describe its anticipated actions and time frame for securing alternative funding. 3. Contractor shall use SKHHP provided funds toward specific project costs as included in the Contract and consistent with RCW 82.14.540 and/or 82.14.530, as applicable. Contractor may not use SKHHP funds for any other purpose unless SKHHP staff authorizes such alternate use in writing. If budget line items with unexpended balances exist after completion of the project, SKHHP and other public funders shall approve adjustments to the project capital sources (including potential reductions in public fund loan balances). 4. Contractor shall evaluate and consider maximizing sustainability features for the Project (such as an efficient building envelope and heat pumps) and shall propose a plan to maximize the Project's sustainability. 5. Contractor shall use and document an open and competitive bidding process (consisting of at least three bids) for construction and related consultant services associated with the project, regardless of the source of funds used to pay their costs. 6. Contractor shall pay or cause to be paid RCW 39.12 prevailing wages in all projects funded by SKHHP that include construction activities, unless federal funds awarded to the project mandate use of federal prevailing wage rates. 7. If Contractor uses federal funds toward the Project, it must meet applicable federal guidelines, including but not limited to: contractor solicitation; bidding and selection; wage rates; and federal laws and regulations. 8. Contractor shall maintain documentation of any necessary land use approvals, permits, and licenses required by the jurisdiction in which the project is located. 9. Contractor shall submit to SKHHP project monitoring reports quarterly through its completion of the project, and annually thereafter. Contractor shall submit a final budget to SKHHP upon Page 14 of 15 20 project completion. If applicable, Contractor shall submit initial tenant information as required by SKHHP. 10. Contractor is required to provide SKHHP with quarterly status reports for projects funded through SKHHP's Housing Capital Fund during the project's development stage (from the time funds are awarded until the project's completion and occupancy). These quarterly reports must include at a minimum the status of funds expended and progress to date. SKHHP will rely on these quarterly reports to determine whether Contractor is making satisfactory progress on the project. 11. SKHHP may inspect the project site during the project's construction. 12. After occupancy, the Contractor will submit annual reports to SKHHP summarizing the number of project beneficiaries, housing expenses for the target population, and the proportion of those beneficiaries that are low- and/or moderate -income and that meet other eligibility criteria established in the Contract. The Annual Report shall be submitted through the Washington State Housing Finance Commission's Web -Based Annual Reporting System (WBARS) unless otherwise approved by SKHHP. The Annual Report shall include certifications to SKHHP that it is in compliance with the Covenant, which shall include the most current occupancy information, rent schedule (showing which Units are in each income class), a calculation justifying any increases in rents from the previous rent schedule, consistent with the Covenant and the Contract, and the actual rents being charged to each unit. SKHHP shall have the right to review rents for compliance and approve or disapprove them every year. In the event the Contractor submits annual certifications to satisfy the reporting requirements of multiple funders, Contractor will designate and report all units at the income class required by the most restrictive funder as well as the classification for purposes of the Covenant and this Contract. The Contractor shall also include with such certification any changes in the management policies for the Property and such other information covering the prior calendar year as SKHHP may request by notice at least ninety (90) days in advance of the due date, and with such accompanying documentation as SKHHP may request. The Annual Reports shall be submitted through WBARS by June 30 of each year and will be required for the full duration of the Affordability Period. SKHHP will also periodically evaluate all projects for long term sustainability. 13. For rental projects, Contractor shall maintain the project in good and habitable condition for the duration of its affordability term. 14. SKHHP shall reimburse the Contractor for satisfactory completion of the requirements specified in the Contract and upon Contractor's submission to SKHHP of invoices and supporting documentation of eligible expenses. 15. SKHHP shall retain 5% of the funding award ("retainage") and shall release the retainage only after construction is complete and all other obligations outlined in the contract have been satisfied. Page 15 of 15 21 South King Housing and Homelessness Partners (SKHHP) Housing Capital Fund Recommendations Claire V. Goodwin, SKHHP Executive Manager South ging Housing end Homelessness Partners 22 SKHHP's Housing Capital Fund Meaningful opportunity to pool funds together with neighboring cities to collaboratively make an impact on the subregion's affordable housing shortage. ■ Funds pooled from eleven member jurisdictions: Auburn Federal Way Renton Burien Kent SeaTac Covington Maple Valley Tukwila ® Des Moines Normandy Park ■ 2019: SHB 1406 (RCW 82.14.540) became law allowing jurisdictions to enact a local sales tax for the purpose of affordable housing; sales tax is a recapture of a portion of existing sales tax ■ 2020: HB 1590 (RCW 82.14.530) became law allowing jurisdictions to impose a 0.1% local sales and use tax to support affordable housing; limited window to act before County collected revenue South Ring Housing and Homelessness Partners 23 2025 Housing Capital Fund ■ The SKHHP Advisory Board reviewed and made recommendations to the SKHHP Executive Board to fund three of the six projects. ■ The SKHHP Executive Board agreed with recommendation and is seeking concurrence from each jurisdiction. ■ The recommendation totals $3,942,850 ■ $922,000 from SHB 1406 ■ $3,020,850 from HB 1590 South Ring Housing and Homelessness Partners 24 Recommended Projects African Community Housing & Development — African Diaspora Cultural Anchor Village: SeaTac • 129-unit multifamily rental TOD development • 30%-60% of area median income (AMI); 55 units set -aside for families with children and 13 units set -aside for households with a physical disability. • $1,200,000 St. Stephen Housing Association — Steele House: Renton • 6 three -bedroom rental townhomes • 50% AMI serving families exiting homelessness. City of Renton funded directly in 2025. • $1,820,850 3. Mental Health Housing Foundation — Steel Lake: Federal Way • 20-unit multifamily rental development • 30% & 50% AMI serving individuals with severe and persistent mental illness • $922,000 South Ring Housing and Homelessness Partners 25 Proposed Funding Sources for Recommended Projects - HB 1590 $ 87,693 $ 914,654 $ 197,653 $ 1,200,000 $ 133,064 $ 1,387,873 $ 299,913 $ 1,820,850 $ 220,387 $2,322,228 $ 500,000 $3,042,615 $ 460 $ 2,224 $ 2,314 $ 4,434 $ - $ 24,135 $ 1,075 $ 1,707 $ 5,216 $ 5,969 $ 3,931 $ 31,665 South Ring Housing and Homelessness Partners 26 Proposed Funding Sources for Recommended Projects - SHB 1406 137,138 65,453 31,264 121,813 211,663 5,636 227,503 121,530 922,000 $ 134,352 $ 64,134 $ 30,667 $ 119,350 $ 185,561 $ 5,554 $ 223,465 $ 120,642 $ 883,725 $ 807 382 199 770 1,150 32 1,343 459 5,142 2,026 $ 959 $ 409 $ 1,735 $ 25,024 $ 52 $ 2,772 $ 470 $ 33,447 $ 6 47 22 11 42 72 2 77 41 314 South ging Housing and Homelessness Partners 27 Thank you Claire V. Goodwin, SKHHP Executive Manager cvgoodwin@skhhp.org South Ring Housing end Homelessness Partners 28