HomeMy WebLinkAboutPaul Nolte Memo (housing)
CITY OF
ASHLAND
Memo
DATE:
November 17, 2003 .
TO:
Housing Commission
FROM:
Paul Nolte
RE:
Alternative Building Scenarios Over Hargadine Parking Structure
The housing commission will soon be studying alternatives and making recommendations to
the city council regarding development of the airspace over the city's Hargadine Parking
Structure for affordable housing. Below is a brief summary of some of the alternatives that
could be considered.
A. .Use of the airspace for affordable housing can t~ke several forms:
1. Sale of airspace. Alan Sandler has proposed that the city sell the airspace to him for
the purpose of constructing affordable rental housing units. The units would be required to
remain affordable for 60 years. At the end of 60 years this restriction would end and the owner
at that time could make any use of the property then permitted under land use and other
applicable laws. The city would continue to own the parking structure and the land under the
structure.
2. Condominium sale. One method to sell airspace is to use the Oregon Condominium
Act, ORS Ch. 100. A condominium owner does not own the land supporting the condominium,
just -the unit itself. Condominium communities may provide shared facilities such as a pool or a
clubhouse, all maintained by the condo association, which takes care of all day-to-day
management tasks and which also sets the rules for the community.
The City of Eugene has utilized this method for developing housing over a city-owned parking
structure. The city owns two units consisting of parking levels and a developer owns two units
consisting of several rental housing units.
3. Sale of airspace with a reversionary clause. The city could sell the airspace to a
developer much as described in ei,ther paragraph on~ or .two C:lbov~, but prov!de that at the end
of certa-rn 'length .of ttme ,( say. 60 years) the property automaUcatly reverts back tiQ ownership by .
the city.
LEGAL DEPARTMENT
20 East Main Street
Ashland, OR 97520
www.ashland.or.us
Tel: (541) 488-5350
Fax: (541) 552-2092
TTY: 800-735-2900
Paul Nolte, City Attorney
Michael W. Franell, Assistant City Attorney
Sharlene P. Stephens, Legal Assistant/Claims Mgr.
Jodi Wacenske, Legal Secretary
4. Sale ()f parking structure to developer with a lease back to city of parking
levels. The city could sell the property upon which the parking structure is located, including
the structure itself. The sale would be on the condition that the developer construct and
maintain affordable housing units and that the developer lease back the parking levels for use
by the city.
5. Lease! of airspace. Airspace is an interest in property that can be leased as well as
sold. The lease can provide that the lessee is obligated to construct affordable housing units
within the airspace and maintain them as affordable units throughout the lease. The lease can
provide that-upon termination, all of the improvements revert to the lessor.
B. Evaluating the different options.
1. Comn10n elements. In any property ownership where the airspace is owned
separately from the land upon which it sits, the various owners must address the maintenance
and liability of those areas used in common. For the Hargadine Parking Structure,
consideration rnust be given to the approaches and access to be used by the residents,
including stairways, landings and elevators; the pipes, ducts, wires and utilities necessary for
construction and occupation of the housing; parking requirements for residents (if any); exterior
maintenance re!quirements, including access to the exterior; structural support for the
additional floor; and the allocation of liability should any common element fail.
T~ese considerations are relatively the same for alternatives A.1 , 2, 3 and 5 above.
Since the airspace and land would not be in separate ownership in alternative 4 above, many
of these considerations lose their importance. Sale of the parking structure, however, would
require consent from OECDD because of the grant and loan conditions placed on the financing
of the structure..
2. Financing. If any lender is involved, the lender will want to secure the construction
loan with securiity in the property. Lenders will most likely be more familiar with the
condominium-type development. In the Eugene case, the lender for the residential construction
used the developer's condo.units for security as the city would not allow the city property to be
used.
Financing under alternative 2 above would most likely be more acceptable to a lender since it
is a concept that has a track record with lenders; financing under alternative 4 would most
likely be the most acceptable to a lender since the developer would own the underlying
property.
Financing under alternative 5 would be possible, but the lender would need strong protection
. qf the le9sehold interest should the de.v~I<?per be un~ble t9 complete the project or maintain
, the ability for repayment:. .'. . .... .......... . . .' ... - . '.. ~
LEGAL DEPARTMENT
20 East Main Street
Ashland, OR 97520
www.ashland.or.us
Tel: (541) 488-5350
Fax: (541) 552-2092
TTY: 800-735-2900
Paul Nolte, City Attorney
Michael W. Franell, Assistant City Attorney
Sharlene P. Stephens, Legal Assistant/Claims Mgr.
Jodi Wacenske, Legal Secretary