City considers improvement district
Staff reporter
Hillsboro City Council heard reports Tuesday from the developer, the city's financial adviser, and bond counsel regarding the financing of improvements for Windover of Hillsboro housing addition.
Craig White, representing the developers for the project, requested the city approve an improvement district for the new housing subdivision.
White presented information about the cost of the houses and the income required to afford the homes.
Homes will range in price from $80s to low $100,000s.
The first example White had of a lower priced home will be approximately 1,200 square feet, with a crawl space, and one-car attached garage. The sale price for it would be $89,900.
White broke down the expenses to include special assessments and taxes into the monthly mortgage payment.
"To qualify for this home, the total income for that family would need to be $13 per hour," White said.
A 1,400-square-foot home with a full basement and two-car garage would sell for $111,100. The family's income would need to be a minimum of $15.50 per hour.
White pointed out the homes would not only be affordable but desirable.
"The goal has always been to produce an attractive and affordable housing development," White said.
Traditionally, a developer sells home sites to a builder at market price.
"The key piece to make it affordable," said White, "is to be both developer and builder."
By eliminating the extra expense, the developer will keep the price down.
However, the developer's fees need to be added in to the improvement costs, White said.
Jerry Rayl, the city's financial adviser of Gold Capital Management, and J.T. Klaus of Triplett, Woolf, and Garretson, the city's bond counsel, presented their concerns to the council regarding the developer's plans for improvements.
Klaus reminded the council of the city's past practices regarding reserve space being privately-owned and whether they wanted to deviate from what has been done in the past.
"There is significant reserve space which is not public space," explained Klaus. "Reserve space will be owned by a homeowners' association. The good news is the association will take care of the reserve areas. However, since it's not public lands, public use can be restricted."
Klaus advised the council to get a written agreement with the homeowners' association regarding the maintenance of the reserve spaces. If the association does not properly maintain the areas, the city will do it and charge the costs back to the association.
One of the decisions the council must, said Klaus, is whether or not to allow the privately-owned reserve space.
Delores Dalke, mayor, said this was not unusual for Hillsboro. She sited other developments in town that had a homeowners' association and reserve spaces.
"In the past, the council has turned down previous requests for the city to take over ownership of the reserve spaces," Dalke said. She added she would like to see the policy followed.
There are three areas of cost: infrastructure, landscaping, and developer's fees.
Klaus said bond money can only be used for improvements to public property. The developer's plans include privately owned reserve spaces for drainage and a playground. Bond money cannot be used for those areas.
Infrastructure costs for sewer, water, electricity, streets, and sidewalks are traditionally assessed through special assessments and paid by the property owners.
Landscaping mostly will be done on public property at the subdivision entryway and along the street. Street lights will be on public property.
Klaus questioned street signage expense that was included both the developer's estimates and the engineer's estimates.
The location of the fence for landscaping will need to be determined, said Klaus, to make sure it is on public property.
Improvements planned for a commons area which include a play structure and basketball area will be owned by the home owners' association.
"Those improvements cannot be legitimately placed on an assessment," Klaus said.
The $75,000 development fee cannot be paid straight out.
"Financing a set of fees has not been done in the past," Klaus said. "It is legal to do so but needs to be assigned as a cost to a specific improvement."
The developer was asked to provide additional information to Rayl and Klaus to include allocation of development fees, statement from engineer explaining the reason for landscape costs applied more to the first 31 lots and not as much to the remaining 65 lots, and additional legal descriptions from engineer.
White explained that $62,000 for landscaping will be assessed against the first 31 lots with the balance of the landscaping expense that will be assessed to the second phase.
All lots will be assessed equally, White said.
Len Coryea, council member, asked the advisers the city's liability with the project.
"What if the project falls apart? What does the city assume?" asked Coryea.
Rayl responded the city would assume 100 percent of the debt.
"You'll tax everyone in the city to pay for it," Klaus said.
Klaus recommended the city be given easements in the reserve areas.
Once the financing of the improvements is approved, White said 30 to 45 days would be used for engineering.
White told the council three homes, similar to the ones that will be built in the Windover subdivision, were being built on lots throughout the city.
Following discussion and clarifications, the council took the information under advisement and will make decisions at a later date.
