Good evening. My name is Helen Anthony, chair of the committee on finance, and I'm calling to order our regular meeting, Tuesday, December third twenty twenty fourth at 06:26PM. Madam clerk, would you please call the roll? President, Anthony? Present.
Councilor Anderson? Present. Councilor Anderson? Counselor Councilor Sanchez? Present.
Present. Present. No. I absolutely have a problem. Thank you.
And I'd like to recognize Stephanie Shaw who is here from the solicitor's office, stepping in for Zach who was just with us. Thank you very much. We have Kathleen Harris and Protona Michardo joining us. Thank you very much for coming this evening. We've got a senior policy director in our Easter Gardner who's here.
We have our city auditor, Gina Koshdesk here. And so thank you very much. And, of course, your clerks, and Donna Lee. So so that metaphorically, the item number one. So I think we have our policy director, Aaron Gardner, and we've got.
Mike Murphy, are you gonna testify that you're just in the back? Okay. Maybe available for questions, maybe? No. The.
Karen, if you join us, please. I'll. Your right name? Since we are on the penalty of surgery, this is.
do. And please state your name and title to the records.
Aaron Gardner, deputy super staff and senior director of policy for the city council.
Mister Gardner, if you would please tell us what this article is, I'd appreciate it.
Yes. Just to give some background, this resolution was drafted on behalf of councilor William Harris for Omni Development Corporation for their property at 6 Community Somerset Street. So just to give some background as everyone, know, understands there is a state law in regarding 8 law. We call it 8% law, and it is applied to properties that actually have affordable units. There is a lot of, you know, back and forth on how should be applied, but without getting into that, we wanted to move this resolution in support, but, given the fact that they are they actually brought these units online.
This is a a 100% affordable property, but, unfortunately, they had missed the deadline this March. So they did not have their certificate of occupancy, and they did not have residents in the building by March. But as I understand it, they did actually get folks in the building towards the end of March, but they hadn't missed the deadline. So right now, they are actually they have a tax bill at the full tax amount just to put those I'll put that on record. They're taxed at $944,000 and and $944,856.
And if they hadn't qualified in time, for the 8% off, their tax bill would have been, $75,588. And what the council would look to do is to assist, you know, Omni and basically make it as if, you know, they made that deadline, and they were able to apply for eLO. So after this and moving forward, you know, they they will be eligible moving forward, but this is just a a bridge assistance to help them because they need stay at home.
So Is there anything here from Amy that you've identified? Yes. Oh, yes. Maybe we can have Yeah. Everything would come in to the table so we can make sure that we have your testimony.
If you would just stand and both of them, square you in. We're screening the penalty of perjury that has to treat the whole truth. Yes. Please take your name. Sharon Morris, executive director for Lung Development Corporation.
Miss Morris, thank you so much for coming. We really appreciate it. Can you go ahead and verify and also add any details that
you can to what we just heard from Mr. Easter partner? Sure. The well, Omnibelved Corporation, we developed 79 units in the sub province area. And one of our buildings at 16 Somerset Street, which consisted of 54 affordable units, rented to families between 3080% AMI.
We were we did not meet the the December. We did not place the building in service by 12/31/2023. We did not get our certificate of of occupancy until March 2024. And as a result of con construction delays and issues that were beyond our control, we were delayed in in completing the building. So once the building was placed in service, we got a full certificate of occupancy in in April, and we fully leased up in July 2020 for all 59 units.
All 54 units for a total of 79 units that we placed in service during the past year. We initially were underwritten to provide 16 project based vouchers in that particular building, but which is 20% of of the building. But we've exceeded that and provide the housing to more than 60% of people's income or have some form of subsidized government subsidies. We have paid the unfortunately, we we did pay the bill because we had to we had to cover it out of our out of our pocket because we didn't wanna be late, But we are this pain, this bill has caused a hardship because we're not able to meet our investors' stabilized operations definition. So we're not able to pay off our construction loan debt.
So we still have construction loan interest that we're paying in addition to other costs because we're not able to meet their definition of stabilized operations because of this excess bill.
Could you just go into detail what what caused you? You said there were some some events that happened that prevented you from meeting the deadline. Yes. So can you talk more specifically about the person I'm sorry. The heart the, yeah, the events.
So we ordered I'm not sure if you guys you know,
you looked at you guys made electric switch gears for our high rise building. So we ordered those items in June 2022. Those items were delayed for over a year. We had to, subsequently find items to, you know, had to go and find another distributor who could sell us the electrical components so that we can complete the electrical installation. We were not able to do that until I think we started doing that in September '23, and we had anticipated having that done in the spring of twenty twenty three so that we could receive our certificate of occupancy before 12:31 of twenty three.
So this was all beyond our control. It was documented with Rhode Island Housing, our investors. And so we did everything we possibly could to mitigate that, which is why when the buildings were placed in service, we were able to lease up 54 units in less than four months because we had an waiting list of over 1,200 families.
And are there any other any other parts that you're difficult to obtain other than the electrical electric switch here?
Well, there there are were electrical components we had some challenges with. We also had to that was the biggest that was the biggest one was the electrical. If we didn't have that, we would have been completed early. So we actually had buildings sit and wait in until those materials were procured and purchased and resolved. Just one more.
The third shift for the investors.
Can you just talk about that
specifically? So we have a, generally, eighteen to twenty two month construction period when you have construction loans. So right now, we are still paying construction interest on that property. I just had to provide them with another $58,000 out of our out of our pocket because we are still within our construction under our construction loan. We have to have ninety days of stabilized operations from the day that we reach qualified occupancy, which is 90% of qualified occupancy.
So your op your expenses and your income have to meet a 1.15 debt service coverage ratio. And because we were already delayed, we unfortunately offered concessions so that we can get these units occupied as quickly as possible, and that came at, you know, less income that we were able to generate. And and then with the tax bill, so we got less income and then a high tax bill, we're hoping that we will be able to get that approval any day now, so we have to submit that. But this this decision would be monumental because I can provide this information to them, and then they will give us credit for things that we're going to pay out of pocket.
So just to be clear, so you'd say you paid the bill, the 900 and No.
No. Not the $9.44 is our gross retention rate if we were inserted for full year. So that's that's how our tax that's how our 8% tax bill is calculated. Okay. Based on the grocery time we got at those fifty four minutes being placed in service for full calendar year.
Okay. And so what are you you're looking for some sort of rebate.
Is that correct? Yes. We're just looking for we said on the full tax on the full, quote, unquote, taxable even though we had it placed in service, but that is what our rent roll that's the gross potential for calendar year. So that's the calculation that our management to with with the rental that they provided to the
city back in March. Forgive me. But in terms of so alright. So we can get an abatement of $1,638.64. Is that what it is?
be about $232.38, if I give or take. That's what the the full tax bill was for the year. We didn't place the building in service until March. Right? So keep in mind, we didn't start collecting rents until May, June, and July.
So we had to pay that full tax bill out of construction proceeds because we had to pay it so that we'll be in good standing while we pursue this process. We didn't wanna have a delinquency then come ask for assistance, not be be advising of my attorney until you got a paid bill, and and then, hopefully, you'll get the the credit. Yes.
And I just wanna comment that I can wait and ask any confusion here. But when I spoke, I did say I think I might have said her tax code was $941, but I actually meant that that was the gross potential rent that they could receive from the project. So it's not gonna make it that large. It's not gonna make sure I have that. This
may be a legal question. I'm not clear. But is this more is this When must be an the tax order review? I mean, I'm just thinking. I mean So, no, tax order review when there's a tax appeal under forty four fifteen I think the process of 15.6 is all.
There's a process, administrative appeal process when you're challenging the taxes that paid. This appears to be an abatement or rather a receipt request for credit that of an overpayment. I'm I'm assuming the assuming, of course, that the tax bill was paid in full rather than on a quarterly system. Okay. That that I'm assuming that math has been vetted.
I just wanted to also add this is a de restricted a a forty thirty, forty year de restricted property. Yeah. So it that's also it has a de restriction, and we only we have three units right now. Even though we had originally underwritten 11 units at 80%, we only have three units at 80%. So we subsidized it further because of because of the need.
Okay. Let me open it up for questions. Just like counselor Sanchez.
