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Community Housing Fund 3700 SW Murray Blvd., #190

Beaverton, OR 97005 503.846.5794

New Loan Request - Staff Review and Recommendation Date: May 25, 2017 Borrower: City of Cornelius, Oregon Project: Cornelius Place (Library) Location: 1310 North Adair St Cornelius, OR 97113 Request: $1,000,000 Secured Bridge Loan Following is a summary of information and staff recommendation related to a new request from the City of Cornelius (City) for a loan in the amount of $1,000,000, which will provide bridge financing for the library side of the Cornelius Place project (Project). Sponsor Mission and Strength: Cornelius is a small but thriving city, having shown a willingness to support its residents and their needs in a variety of ways. Recent projects and efforts such as the expansion of the flagship Virginia Garcia Wellness Center, the State Legislature’s expansion of the City’s Urban Growth Boundary, and the City’s focus on planning for the Holladay Street Industrial area demonstrate the community’s commitment to growth and development. The City has implemented a “slow but steady” economic strategy intended to make the most of its resources, resulting in modest but appreciable financial growth year over year. Via a carefully constructed and well-run capital campaign, the City has demonstrated its commitment to the Cornelius Place project, which will bring economic stimulus in the form of visitors and an estimated 6,000 library patrons; this Project will serve as the corner-stone of the effort to revitalize the town center and expand the community’s pride and cultural identity.

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Project Description:

The Project is part of a new mixed-use building that creates a new public library and community space, as well as 45 units of housing for low-income seniors. The City is developing and will own the library portion, while Bienestar and BRIDGE Housing are developing and will own/manage the housing portion. As a mixed-use project both components must proceed concurrently through the financing and construction phases.

The new library will be approximately 14,000 square feet, replacing the existing 3,025 square foot library. It will be located in close proximity to other community resources, including the Centro Cultural community center, the Virginia Garcia Health Center, and the Cornelius Elementary School.

Activities and services will be greatly expanded in the new library. Features will include a children’s area which will provide STEM and early learning programming; a café operated by a small business training program; and a community courtyard with native plants, an amphitheater, and community gathering space. The convening spaces in particular will help to transform the City by offering vibrant space where diverse community members can come together and flourish.

This Project will enrich the small community of Cornelius, where 80% of the elementary school students qualify for the free school lunch program, and 20% of third graders in one of the local elementary schools do not meet grade-level reading standards, making clear the critical need for increased educational resources and supports.

Project Sources: The Project will be constructed on City-owned land, for which the City will provide a 99-year lease at a cost of one dollar. Currently committed funds include over $4.5 million from a variety of public and private sources, including: a Lottery Bond grant from the State of Oregon, Washington County CDBG funds, Washington County Opportunity Fund dollars, and grants from Metro’s Nature in Neighborhoods program, the National Endowment for the Humanities, and the Ford Family Foundation. The City has submitted applications/requests to Meyer Memorial Trust, the Kresge Foundation, and the Nike Community Impact Fund, among many others, and concurrent efforts to raise funds from individuals and local businesses are ongoing. An additional $1,000,000 is needed to bridge the funding gap during the ongoing capital campaign and create a contingency fund to address any unexpected increases in the budget.

Community Courtyard – Cornelius Place (Library)

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Development Team: The library side of the Project will be managed by Rob Drake, Cornelius City Manager – Mr. Drake’s experience in City government includes 16 years of service as the Mayor/CEO for the City of Beaverton, which afforded him the opportunity to serve on regional, state, and national boards and to frequently lobby elected and appointed officials. The City’s team also includes: Mark Crowell, Cornelius Public Works Director, who has been with the City since 1986 and currently manages several divisions including Parks, Facilities, and Operations, as well as more than 15 staff members and an annual budget of $18 million; and Karen Hill, Library Director for Cornelius Library, who has been with the Library for more than a decade – in her previous position of 16 years with Southern Oregon University Library she co-managed a successful $23 million renovation and addition of the facility. Project partners and developers in the housing portion of the Project are BRIDGE Housing and Bienestar, both experienced affordable housing developers – BRIDGE is the largest developer of affordable housing on the West Coast, and has completed over 15,000 units since 1983; Bienestar is a Community Development Corporation which has a 34-year history and currently owns 487 units of rental housing in Washington County. The housing team includes: Destin Ferdun, Senior Project Manager at BRIDGE Housing, who has over 24 years of real estate development experience; and Sharon Nielson, principal of the Neilson Group, the Project’s community development finance consultant who has over 25 years of community development experience. The Project has engaged Scott Edwards Architecture and Walsh Construction, both of which are well regarded and experienced firms with a history of successful affordable housing and community development. Timeline:

Construction loan closing is anticipated to occur in August, 2017, with construction commencing shortly thereafter.

The tentative capital campaign completion date is mid-to-late 2018 – however, the up-to 36-month term requested by the City reflects a thoughtful approach, allowing for additional time to wrap-up a long-term campaign.

The City plans to draw about half of the CHF loan in early July, 2017, with additional draws occurring as needed.

Grand opening for the Cornelius Place project is planned for October of 2018. Children’s Area – Cornelius Place (Library)

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Sponsor Financial Strength:

CITY OF CORNELIUS FIN STMTS (in thousands) 2016 AUDITED 2015 AUDITED 2014 AUDITED

Assets & Deferred Outflows of Resources

- Governmental Activities

Cash & Investments $6,810 $5,184 $2,805

Receivables $1,027 $1,532 $1,585

Capital Assets, Net $36,607 $36,665 $34,831

Deferred outflows of resources $318 $158 $0

Total $44,778 $44,154 $39,043

- Business Type Activities

Cash & Investments $6,700 $6,110 $6,125

Receivables $750 $760 $558

Capital Assets, Net $7,554 $5,980 $5,630

Deferred outflows of resources $29 $12 $0

Total $15,085 $12,958 $12,549

Liabilities and Deferred Inflows of Resources

- Governmental Activities

Accounts Payable & Accrued Expenses $1,450 $1,332 $517

Total Long Term Obligations $2,007 $2,254 $2,492

Deferred inflows of resources $489 $1,169 $0

Total $5,520 $4,807 $3,061

- Business Type Activities

Accounts Payable & Accrued Expenses $379 $307 $399

Total Long Term Obligations $1,185 $704 $61

Deferred inflows of resources $16 $91 $0

Total $1,793 $1,109 $468

Total Liabilities and Net Position

- Governmental Activities $44,778 $44,154 $39,044

- Business Type Activities $15,085 $12,958 $12,549 Note: Governmental Activities include services such as public safety, transportation, and community development; Business Type Activities are water, sewer, and storm water services.

CITY OF CORNELIUS – ACTIVITIES (in thousands) 2016 2015 2014

Revenue

Program Revenues (total of services, grants, & contributions)

- Governmental Activities $2,090 $4,714 $3,568

- Business Type Activities $6,870 $5,511 $4,991

General Revenues (Property taxes, other taxes, & other)

- Governmental Activities $5,049 $4,574 $4,354

- Business Type Activities $51 $34 $30

Total Revenues

- Governmental Activities $7,139 $9,288 $7,921

- Business Type Activities $6,921 $5,545 $5,022

Expenses

- Governmental Activities Total $7,748 $5,581 $5,809

- Business Type Activities Total $4,454 $4,908 $4,121

Net Position

- Governmental Activities – Net Position Ending

$39,258 $39,347 $35,983

- Business Type Activities – Net Position Ending

$13,292 $11,849 $12,081

Note: Governmental Activities include services such as public safety, transportation, and community development; Business Type Activities are water, sewer, and storm water services.

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Special/Unique Considerations:

The City expects the capital campaign to complete in the third quarter of 2018 – however, their request

for a 36-month term for this loan demonstrates a cautious approach allowing for potential extension of

the projected timeline.

Although this loan exceeds the current caps set by the Board, the components of the Project mean that

CHF’s risk exposure is low. The commitment of the Full Faith and Credit of the City ensures repayment,

and the shorter term (36 months or less) means that loan funds will be repaid on a timeline which will

allow CHF to address other requests and opportunities as they arise.

CHF staff see this loan as an exciting opportunity for the fund which helps to further our goals, including:

o Increasing deployment – with a loan of this size, CHF’s deployment percentage would increase dramatically (to approximately 80%).

o Acting as a flexible and nimble CDFI, meeting the needs of our community – facilities loans such as this one, which support affordable housing projects and economic development in small communities, meet a critical need.

o Partnering more closely and effectively with local jurisdictions, and providing support in an efficient manner.

o Acting as an instrumental partner in moving forward a catalytic and high priority project for Washington County and the State of Oregon, which leverages diverse sources, including: Lottery Bond grant funds, CDBG funds, Opportunity funds, HOME funds (for the housing portion of the Project), and an effective capital campaign.

Recommendation: Staff recommends that a commitment be extended to the City of Cornelius, Oregon for a $1,000,000 bridge loan, at an interest rate of 4.5% and term of (up to) 36 months, secured by the Full Faith and Credit of the City of Cornelius.