333 S. Meridian, Puyallup, WA 98371 - 253-841-4321

City of Puyallup

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SS- 3877   2.    
City Council Study Session
Meeting Date: 08/27/2013  
Subject:    Affordable Housing Agreement - Eagles Watch Apartments
Submitted by: Katie Baker
Department: Development Services  

Affordable Housing Agreement - Eagles Watch Apartments
Purpose of Discussion
Eagles Watch Apartments (now called "Terrace on Meridian"), a 192-unit complex on South Meridian at 23rd Ave, was previously owned by the Pierce County Housing Authority and has a Land Use Restriction Agreement (LURA) in effect on its title. This LURA requires that 39 of these units be rented to residents with incomes no higher than 50% of area median income and 29 apartments be rented to residents with no higher than 65% of area median income. Additionally, the LURA guarantees that in the event of a sale, these units shall remain as affordable housing. 

In 2011, the apartment complex was sold to Dobler Management, which undertook renovations and updates to the units.  Upon completion of the work, Dobler requested that the LURA be removed from the apartment's title so that all units could be rented at market rates. The Washington State Housing Finance Commission (WSHFC), which monitors compliance with the terms of the LURA, requested comments from the City regarding the proposed termination of the LURA and the associated loss of affordable housing. In early 2013, the City Manager sent a letter to WSHFC expressing concern that the loss of these affordable units could be detrimental to the City's affordable housing goals. 

Dobler has continued to pursue all options for removal of the LURA, recently proposing that in exchange for its removal, they would pay $468,852.00 to the City to assist with the provision of affordable housing in Puyallup. In addition, Dobler notes that the City also receives increased property taxes now that the complex is privately owned (see attached letter). 

If the City chooses to support Dobler's buyout of the LURA, there is a possible opportunity to use those funds to partner with the Pierce County Housing Authority as they look to construct new affordable housing in the City of Puyallup. Alternatively, the City could turn the funds over the Housing Authority for distribution of housing vouchers to be used in the City, or identify another use of those funds toward the provision of local affordable housing. 

Staff is requesting direction from Council whether to support the buyout request or uphold the existing LURA to maintain the units at this complex at an affordable rate. Staff will forward the Council's recommendation to the Washington State Housing Finance Commission for its consideration. 
Council could recommend accepting the amount that Dobler has proposed to pay to the City in order to remove the LURA. If those funds are accepted, the City would work with the Pierce County Housing Authority, allowing them to either distribute the funds in the form of local housing vouchers or use the funds to construct new affordable housing in the City, or work with another local housing provider to increase affordable housing opportunities in Puyallup. 

Alternatively, Council could recommend that Dobler maintain the LURA agreement on this apartment complex's title to ensure that a certain number of apartment units are rented at a rate below market value.  If this is recommended, the WSHFC will likely proceed with actions to bring the apartment complex into compliance with the LURA. 
Recommended Future Action
A possible outcome of this discussion and recommendation is a policy position on the City Council's direction for affordable housing in Puyallup. 

Dobler Request Letter

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