Waterand Wastewater Development Feedeferral

AffordableHousingProgram

Waterand Wastewater Development FeeDeferral

APartnershipProgrambetween:

and

City of Colorado Springs

Community DevelopmentDivision

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Contents

ExecutiveSummary 1

Overview...... 1

ProgramDefinition...... 1

ProgramQualification...... 2

ProgramGuidelines 3

Application Process...... 3

ConservationCriteria...... 4

Application Evaluation...... 5

FeeDeferral Programs...... 5

VerificationProcess...... 7

RepaymentProcess...... 8

ProgramConditions...... 9

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Executive Summary

Overview

ColoradoSprings Utilities(Utilities)andtheCityofColorado Springs (City)Community DevelopmentDivisionhave partnered to offerafee deferral program to support affordable housing development in the community. For qualifyingaffordablehousingprojects that meetspecificenergyandwater conservationcriteria,a portion oftheUtilities’water andwastewater developmentfees canbedeferred.

ForinformationregardingtheUtilities’ fee deferralprogram,callUtilities Customer Contract Administration at (719) 668-8111.

The City has other programs available to supportaffordable housingdevelopment. For more information, please contact the Community Development Division at (719) 385-5912.

Program Definitions

AffordableHousingishousingthatisdesignated forhouseholdsearning80% or lessofthe Area Median Income (AMI) annually, and rents are limited per US Department of Housing and Urban Development (HUD) guidelines. For example, in 2016, a household of fourearning$56,800 or less wouldbeconsidered eligibleforaffordablehousingprograms.Theseamountsvaryaccordingtofamilysize. For informationonthemostcurrentmedianincomelevels, rent limits,and completequalificationcriteria, applicantsfor the programshould contactthe CommunityDevelopment Division.

Applicant is the individual, corporation or partnership requesting the fee deferral. The applicant is typically the Owner or the Owner’s designee.

Owner is the individual, corporation or partnership with legal ownership of the Project.

Project is the proposed development – either new construction or rehabilitation – that includes affordable housing.

Program Qualification

• Thisprogramis availabletosingle-familyresidences or multi-familydwellingsowned byqualifyingindividuals, corporations,non-profit organizations andother similar companiesprovidingaffordablehousingasdefined bythe Community DevelopmentDivision.

• Thisprogramis limitedtohousingprograms thatmeetthe affordablehousingcriteria as definedbythe Community DevelopmentDivisionandwhich utilizeenergyand water conservationmeasures definedbyUtilities.

• Thisprogramis onafirst-come,first-serve basis definedat the timetheservicecontractpaymentis made toUtilities. Feedeferral is limitedexclusivelyto thewater and wastewater developmentcharges. Allother charges, including, butnotlimited to, water andwastewater recovery agreementsandotherfees,are NOTsubjectto thisdeferral program.

• Anycurrentyearfee deferrals shallnotin aggregate exceed5% oftheprevious year’s total water and wastewater developmentcharges. Therefore,regardlessofthenumberofapplications reviewed andpreliminarilyapproved, deferrals will beissuedonan annual basis uptobutnotexceedingthesefinancial guidelines.

• Thisprogramis developedinresponsetoExecutive LimitationEL-14(Revision 4,January22,2003). Atanytime this limitationcouldbemodified affectingtheprogram, includingcancellationofthe programwithoutnotice.

Program Guidelines

ApplicationProcess

TheApplicantinitiatestheprocess bysubmittinganapplicationto the Community Development Division forreviewand certificationincluding details regardingtheproposed energyand water conservationmeasures compliantwiththe program. Community Development staffevaluates theapplicationon two principal criteria:

1)Doesthe projectqualifyas affordablehousing per CommunityDevelopmentdefinitions;and

2)Does the project meettheenergyand water conservationcriteria definedbyUtilities?

Projects which do notmeetbothcriteriaintheir entiretyare disqualified fromthis program.

Project applications meeting the selectioncriteria are forwarded to Utilities. Applications must be processed prior to the time ofUtilities’ ServiceContract(obtainedby Applicant prior toissuanceofbuildingpermit).Atanytimethe ApplicantmaycontactUtilities, at719-668-8111for anestimate ofdevelopmentcharges – boththosethatwill be paid andthose thatcanbedeferredunder theprogram.

In additiontothe ServiceContract,the Applicantwill signacontractual agreement withUtilities,which defines thetermsandconditionsfor repaymentofthe deferredfees basedontheprogram for which theApplicantqualifies. Utilitieswill collectallapplicable developmentcharges/fees attime ofissuance oftheServiceContract.A lienis then placedon the propertyin theform ofadeed oftrust executedbythe Applicant,whichremainsuntil such time thatall deferredcharges(plusanyapplicableinterest) are paidinfull.

Conservation Criteria

To qualifyforafeedeferral, theApplicant’sprojectmust meeta minimum level ofenergyandwater conservation asdescribed below.TheApplicantselectsfromtheconservationcriterialist elements oftheirprojectthey will improve uponbasedontheir economicanalysis. Each typeofconservationcriteria hasa minimum ratingthat mustbemetor exceeded toreceive the correspondingpointvalue.Theintentis thatthesecriteria exceed theminimum requirementsspecifiedbythe PikesPeak Regional BuildingDepartment.For aprojecttoqualifyfor a deferral,thesumofqualifyingprojectconservationmeasures mustachieveaminimumrating of7points,whichmustinclude pointsfrombothEnergyConservation andWater Conservation improvements.All affordablehousingunits withintheproject mustindividuallymeetor exceedtheselectedcriteria toqualify. For mixed projects whereinaportionoftheunitsareaffordable andaportionare traditional,onlytheaffordable unitsmayapply for thefeedeferral. Conservationmeasuresexclusive to the traditional unitsdonot affector influence theratingfor the affordableunits.

Conservation Criteria:The followingcriteria andminimum ratings (which exceedRegional BuildingDepartmentminimum requirements)are usedtodetermineiftheApplicant’s projectis eligibleforthefeedeferral:

ApplicationEvaluation

CommunityDevelopmentandUtilitiesstaffwill evaluate allinformationsubmittedbyApplicant.Applications that meetthe qualificationsofthis programwillbe approved andapplicants mayrequestadeferral ofUtilities’ water andwastewater developmentchargesas definedbythis program,notexceeding availabilityofprogram funding,service availabilityor other constraintsasdefinedin the tariffs,executivelimitations or other governingpolicies. Projectapplications thatdonotqualifyare not eligible for this program.The staff decisionisfinal.

Additionally,for anyprojectinitiatedas qualifiedaffordable housing,butover time,throughchanges in use,owners or other events,nolonger qualifies,Utilitiesretains therighttorequest andreceive fullpaymentof all deferredchargesfromthe projectowner.

FeeDeferral Programs

There aretwo definedprogramsforfeedeferral basedon targetedincomelevelforthe affordablehousingproject. Projectswhich areamixofaffordableandmarket rateunitsare eligible toreceiveadeferral onlyfortheportionoftheproject thatisaffordableandqualifiesper thisprogram.

Anydeferredchargesshall be securedby alienonthe propertyin the form ofaDeedofTrust executed byApplicant until such time thattheyarepaidinfull.

PROGRAMA–AffordableHousingprojectstargeting individuals whoseincomeis greater than50%, butnot exceeding80%oftheareamedianincome.

A1–OwnerOccupied

• 25% oftotal water andwastewater developmentcharge–dueatapplicationfor utilities
• 75% oftotal water andwastewater developmentcharge plusanyapplicableinterest–due atfirstsubsequentsale ofproperty, or payableatanytimeprior tothat date,at Owner’s option,infive annual paymentsasfollows:

1styear -20%

2ndyear -20%

3rdyear -20%

4thyear -20%

5thyear -20%.Final Payment.

A2–Allothers,including ownership byCorporations/Partnerships/etc.

• 25% oftotal water andwastewater developmentcharge–dueatapplicationfor utilities.
• 75% oftotal water andwastewater developmentcharge plusanyapplicableinterest–duebeginningin the 6th year after deferral (or payable atanytimeprior to that dateatOwner’s option) andfor 4years thereafter. Repaymentofthe75%feedeferral is collected annually asfollows:

6thyear - 20%

7thyear - 20%

8thyear - 20%

9thyear - 20%

10thyear - 20%. Final Payment

PROGRAMB–AffordableHousingprojectstargetingindividuals whoseincomeis equalto or lessthan50%oftheareamedian income.

B1–OwnerOccupied

• 0% oftotal water and wastewater developmentcharge–dueatapplicationfor utilities.
• 100%oftotal water andwastewater developmentcharge plusanyapplicableinterest–due atfirstsubsequentsale ofproperty, or payableatanytimeprior tothat date,at Owner’s option,infive annual paymentsasfollows.

1styear -20%

2ndyear -20%

3rdyear -20%

4thyear -20%

5thyear -20%.Final Payment.

B2–Allothers,including ownership byCorporations/Partnerships/etc.

• 0% oftotal water and wastewater developmentcharge–dueatapplicationfor utilities.
• 100%oftotal water andwastewater developmentcharge plusanyapplicableinterest–duebeginningin the 6th year after deferral (or at anytimeprior tothatdateat Owner’s option) andfor 4years thereafter. Repaymentof100%offeedeferral is collectedonanannual basis asfollows :

6thyear - 20%

7thyear - 20%

8thyear - 20%

9thyear - 20%

10thyear - 20%. Final Payment

VerificationProcess

Utilitieswillverifythatthese conservationmeasures as appliedfor eachqualifyingproject were successfullymet.As apartofthis process,theApplicant, willberequired toprovide proofoftheircompliancewhichmay includereceiptsforfurnace, water heaters, etc.;copyof insulationcertificatefor theproject,confirmationof equipment fromtheirinstallationsubcontractorsandother information required byUtilities. This requirementmust bemetbeforeany meters will beinstalled. Utilities mayrequestthattheCertificate ofOccupancyor connectiontoandprovisionofutilities be withheld until compliance. Ifrequirementsare notmetall deferredchargesshallbecomedueandpayabletoUtilities within30days ofnoticefrom Utilities.

Repayment Process

Thelienattachedto the propertyatthe time offeedeferral shall requirerepaymentofthedeferredwater andwastewater developmentchargesbased uponthecharges thatareactually ineffectatthe timeinitial repaymentismade.For informational purposes,thelienwill includeestimates oftherepayment amountsbaseduponUtilities’ currentwater andwastewater developmentcharges.Over time,theamountrequired to discharge thelienmightincrease ordecreasecorresponding to changes tothewater andwastewater developmentcharges. At the timerepayment ofwater andwastewater development charges occurs,thethencurrentapplicablewater and wastewater developmentcharges (subjecttotheconditions statedbelow) shallbeusedtodeterminetheamountsrequired tobepaidinorder torelease thelien.For example:

A)5years afterfeedeferral, anon-owner-occupied affordablehousingprojectbeginsrepaymentper theprogramschedule. Theamounttoberepaid willbecalculatedatthe timeofthefirstpayment andbebasedonthethencurrentfees (subjectto theconditions statedbelow).Havingestablished therepaymentamount,thefeeamountisthen fixedandusedasabasis ofcalculationfor the paymentschedule; or

B)An owner occupiedhomeis resoldfor the 1sttime10years afterfeedeferral. Per the program,upon this salethefee deferral is due andpayableat or beforeclosingand transfer of ownership.The amountoftherepaymentis calculatedbasedon thewater andwastewater developmentcharges in placeatthe time ofsale(subjecttotheconditions statedbelow):

Program Conditions

• Theamountstoberepaidunderanyoftheabove programs shallbebasedonthecharges that areactuallyin effectat the timethefirstrepaymentismade,butshall notexceed thedeferredamountplus interestcharges calculatedfrom thedateof deferral to thedate offirstrepaymentinaccordancewith thepublished10-yearTreasurynoteratein effectonthedate of deferral, compoundedannually(subject to thetermsandconditions ofthedeferral agreement).

• If thedeferredchargesarenotpaidinfullatthetime oftheinitial payment,such asbyusinga5-year repaymentschedule, theninterestshallbechargedon theoutstandingbalance duringtherepaymentperiodbasedonthepublished10-year Treasurynoteratein effectonthedateofdeferral, compoundedannually.

• In the eventthere is asubsequentsaleof anOwner- occupiedunit after selection ofthefive-year repayment option, allremaining unpaidamountsrelatedto thatunitare dueandpayableat orbeforethe time ofthesubsequent sale.

• Failure tomakepaymentsinaccordancewiththeprogram shallbesubjecttoapplicableUtilities’ tariffs,policies and procedures.

• Owner has therighttoprepaytheprincipalamount,plusany applicableinterest,outstandingunder the program,inwhole or in part, atanytimewithout penalty.

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