RESOLUTION 17-004 RE GORMAN LETTER TO HAMC RE LIHTC APP TEMPLE GROVES.PDF

January 12, 2017
Gloria Munoz, Executive Director
Housing Authority of Maricopa County
8910 N. 78th Avenue, Building D
Peoria, AZ 85345
RE: Co-Developer for Residences at Temple Groves
850 E. Mahoney Avenue, Mesa, AZ 85204
Dear Gloria:
Over the past four years, Gorman & Company, Inc. has been honored to serve as a
development partner with the Housing Authority of Maricopa County (HAMC) on the
repositioning of your public housing portfolio through the Rental Assistance
Demonstration (RAD) program. Since we were selected by HAMC as your master
development partner in 2013, we successfully applied for a RAD conversion on your
entire portfolio and have secured over $75 Million in financing for the complete
redevelopment of 444 units of public housing at Coffelt in Phoenix, at Madison Heights
and Norton Circle in Avondale, and at Watson Homes in Buckeye. We are also seeking
an additional $17 Million in financing for the redevelopment of the Clare Feldstadt
developments in Mesa on a transit-oriented site in Tempe near the Escalante Community
Center. Your forward thinking leadership has paved the way for a brand new future for
HAMC. It has been an exciting ride.
In our work with HAMC through the RAD public housing transformations, it has come to
our attention that Section 8 utilization is an increasingly difficult problem throughout
Maricopa County and that the development of housing with long-term Project-Based
Vouchers (PBV’s) is one way to ensure that HAMC will have properties in its own
portfolio, beyond RAD PBRA developments, that can ensure the successful utilization of
Section 8 vouchers in an increasingly tight rental housing market.
As you know, in our search for a replacement site for Clare Feldstadt I & II, Gorman &
Company, Inc. secured site control on two potential parcels of land, one in Tempe and
one in Mesa. It was determined that the site in Tempe was a better fit for HAMC to
utilize as a replacement site in the RAD transformation of the Clare Feldstadt properties.
Instead of relinquishing site control on the Mesa site, it was determined that the Mesa site
would make an ideal location for a Low Income Housing Tax Credit (LIHTC)-financed
development with Project-Based Vouchers, with the possibility of including a Federally-
Qualified Health Clinic (FQHC) operated by Circle the City.

We are seeking approval from HAMC to proceed with a March 1, 2017 tax credit
application for the development of the Mesa site for a 60-unit new construction project
known as “The Residences at Temple Groves” with Gorman serving as the lead developer
under a to-be-negotiated project-specific Master Development Agreement (MDA) similar
to those used for Coffelt and Madison Heights. All of the finer details can be negotiated
at a later date after we receive an award of tax credits through the crafting of an MDA.
However, similar to Madison Heights, we would envision HAMC to be the ultimate land
owner and lease the land to the tax credit limited liability company (LLC). We would
also envision a sharing of cash flow and developer fees similar to the structure on
Madison Heights. We would envision HAMC having a first option to manage the day-to-
day operations of the property and would have a right of first refusal to purchase the
property from the LLC through a refinance of the asset at the end of the 15-year tax credit
compliance period.
With all of that said, we are not asking HAMC to agree to any specific component of an
MDA at this time. We only need an agreement in principal to move forward in
partnership on this project so that we can proceed with confidence in securing an
allocation of LIHTC from the Arizona Department of Housing (ADOH). We would
submit an application to ADOH on March 1, 2017 and awards are expected to be
announced in June. If approved for funding by ADOH, we would then draft a project-
specific MDA for consideration by HAMC, its Advisory Board, and ultimately the Board
of Commissioners/Board of Supervisors.
In the interim, Gorman & Company, Inc. would take on 100% of the financial risk of
assembling the application, posting earnest money deposits on the land, developing the
conceptual architectural plans, funding the cost of third party reports and paying for the
tax credit application fees. We will do all of this at risk until a formal MDA can be
solidified and approved. We recently applied for an allocation of $500,000 of City of
Mesa HOME funds to support this project and expect those funds to be awarded later this
month. We have held one meeting with the neighborhood leaders of the Temple Groves
Neighborhood, facilitated by the West Mesa Community Development Corporation, and
there was unanimous support for the project.
Thank you for your time and consideration to this request. Please feel free to contact me
any time at (602) 354-3105 or by e-mail at bswanton@gormanusa.com. We are excited
about continuing our long term partnership with the Housing Authority of Maricopa
County that will lead to the continued revitalization of neighborhoods, and the
transformation of the Housing Authority of Maricopa County.
Sincerely,
Brian Swanton
Arizona Market President